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Tricks AND Treats

October 31st, 2011 . by economistmom

trick-or-treat-pumpkin

My column in today’s Halloween edition of Tax Notes (subscription only access) is called “Tricks and Treats Handed to the Supercommittee”–a reference to the variety of recommendations the select, bipartisan deficit-reduction “super committee” received from the various standing committees in Congress.  I will reprint the article in full next week (here and on the Concord Coalition’s website), but here’s a Cliff Notes version of the “tricks” and “treats” I listed:

Tricks:

  • Trick #1:  Big things off the table. Senate Republican tax writers took revenues completely off the table by saying that revenues should not come up relative to the policy-extended (business-as-usual) baseline.  Meanwhile, House Democratic tax writers relied on “tax the rich” revenue-side approaches (exactly the type Republicans most detest) and took Social Security–and what sounds like most of Medicare–completely off the table (concurring with AARP).
  • Trick #2:  The magic of economic growth. Republicans continue to suggest that cutting tax rates would grow the economy and hence reduce the deficit, ignoring the fact that dollar-for-dollar decreases in public saving caused by deficit-financed tax cuts are very rarely offset by anything close to the same amount in increased private-sector saving.  To this same old rhetoric, they have thrown in the claim that regulations on the financial sector should be weakened as well, for the sake of the economy.  Really?
  • Trick #3:  If (only) I were a (budget) hammer. (And not just a paintbrush.)  The budget committees can’t seem to bring themselves around to saying they could be a big part of the solution.  The Senate Budget Committee offered a bipartisan recommendation that offered to “pretty up” the budget process a little bit, suggesting biennial budgeting and some procedural changes to make the “vote-arama” in the Senate less tortuous.  No mention of how strict pay-as-you-go rules, with no exemptions for tax cuts, would make a huge difference.

Treats:

  • Treat #1:  Committees want to do their jobs. There were many letters from the committees of jurisdiction over spending programs, even bipartisan and bicameral letters (from the Agriculture and Veterans Affairs committees) emphasizing that they recognize that spending cuts are inevitable and that it would be far better to have the experts in charge of that spending recommend the best places to cut rather than have the cuts “brute forced” upon them, should the super committee fail to come up with the requisite recommendations.
  • Treat #2:  Recognizing that it ain’t easy. Several letters made it clear that indiscriminate cuts in the deficit can be damaging to both the shorter-term economic recovery and longer-term economic growth (if crucial investments are axed).  The super committee has to be mindful that not all deficit-financed policies–or policies to reduce the deficit–are created equal. And even as the committees display a lot of defensiveness, defending their own particular “territories,” their letters also make clear how all Americans benefit from different parts of the federal budget, and thus how cutting the budget and reducing the deficit will ultimately involve sacrifices from all of us. (And yes, it is a treat to be told that truth.)
  • Treat #3:  Still some common ground. There’s still a lot of quiet, behind-the-scenes discussion of the bipartisan ideas first developed within the Bowles-Simpson and Rivlin-Domenici commissions.  Revenue-raising, base-broadening, tax-expenditure-reducing tax reform that allows rates to stay low or even be reduced could be done in a progressive manner.  The Social Security and Medicare programs could be reformed such that the safety-net features of the program are actually strengthened and net benefits reduced only for the very highest-income households.  And we really could start paying for stuff “as we go along” if the budget process adopted some stronger rules with decent “teeth.”

And from my conclusion:

It seems clear that the deficit reduction supercommittee needs to direct the standing committees on what to do, not the other way around.

To spur action on bipartisan, deficit-reducing tax reform, the supercommittee needs to seek “reinforcements” in more than just the tax-writing committees. In particular, the budget committees and their oversight of strong budget process and rules should play a crucial role in setting a path for “big” and “super” deficit reduction in a limited amount of time.

The supercommittee needs to dictate a bipartisan, compromise position to the tax-writing committees, even before they get started really debating and drafting tax reform. The supercommittee needs to give the taxwriters a revenue-level target for tax reform, not just a top-rate goal or a competitiveness standard or even a Buffett rule. It needs to require taxwriters to treat tax expenditures as if they are the spending programs under their jurisdiction and require that those tax expenditures be more thoroughly scrutinized and debated. Tax provisions shouldn’t be given a free pass just because they’re already in the system. The supercommittee could also require that the revenue targets be achieved by a minimum amount of base broadening over statutory marginal tax rate increases, recognizing that reducing tax expenditures can easily be done in progressive ways and that raising revenue in those ways actually shrinks the size and scope of government…

[I]f the supercommittee creates hammer-like budget rules as part of its deficit reduction package, the budget committees would probably be happy to have an important role in tax reform. It will take active and forceful budget committees to change or advance policymakers’ thinking on what tax reform must be today — not just the old revenue-neutral variety, but the revenue-raising kind of reform.

So, there are candy-corn kernels of optimism to be found–at least in my mind–in the current state of affairs with the super committee.  Happy Halloween!

What Would Milton Friedman Say?

October 28th, 2011 . by economistmom

An economist friend drew my attention to this old Phil Donahue interview of economist Milton Friedman. I think it dates back to 1979 (the year I graduated from high school). It has gotten me to wonder what Friedman would say about this Occupy [fill in the blank] movement–and also how the point he is trying to make in this interview says about what the Occupy movement should really be about. Is it some inherent evil of capitalism that the 99 percent are outraged about? Is greed something you find only in capitalism and not in other economic structures? Is greed at all an essential quality of capitalism, or is it something a bit less evil–say, “self interest” in the utility maximizing or profit maximizing sense?

My daughter Emily (a freshman at Sarah Lawrence College) got me thinking about this last question. I have every incentive to pursue my “selfish” interests, optimizing with respect to market prices and my economic capacity. Does it mean I will not provide for my children or even other people’s children, or animals or the environment–or that I will argue that my taxes should be lower and my own part of government benefits larger? No, it depends on what is in my own individual utility function–what makes me “happy.” Part of what may make some of us happy is a more equitable income distribution. (Economists model “altruism” as having other people’s utility levels embedded within our own individual utility function.) Capitalism and the free market system are not necessarily incompatible with a more just society. It seems we might be blaming the economic system when the real problem is probably the political system. Neither an economic system nor a political system can change one’s basic human character. There will always be some not very nice and not very smart (i.e., not so “evolved” or “civilized”) people around, but society doesn’t have to fall because of them, depending on how much of a “say” we give them in our society. I don’t think it’s the “fault” of a capitalist economic system at all.

It strikes me that the problem with our political system is that it’s become out of sync with our individual values–those “selfish” interests (is that different from “self interests,” btw?) that aren’t necessarily inconsistent with maximizing social welfare. Like Friedman says, there will always be many “greedy” people in any kind of society–just as much as there will always be many generous people in any kind of society.  I’d like to believe that inherently, most of us are very “good” people.  I think we’re very confused people though.  We don’t know exactly what we want, and we don’t know how to communicate it within our political system.  We’re easily told by our politicians and the media what we should want and value, rather than the other way around.

And then of course, there’s always my pitch for a “benevolent dictatorship” that I could fall back on–emphasis on “benevolent.”  My daughter Emily points out that it is apparently the “feminist” in me that believes that that benevolent dictator would have to be a woman!  ;)

I find this question–exactly what are we outraged about and protesting about in the “Occupy” movement–so fascinating.  I find this Friedman video so thought provoking.  What do you think?  Is it greedy capitalism, our dysfunctional political system, or some inherent human weakness in all of us?  Please discuss!

Occupy Ourselves!

October 26th, 2011 . by economistmom

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(photo from Talking Points Memo)

So what is this Occupy Fill-in-the-Blank movement all about?   I’ve been hearing the words “openness,” “honesty,” “engagement,” “dialogue,” “listening,” “attention,” and “responsibility” a lot.  Funny that these are words one often hears in relationship counseling or personal therapy sessions.  And that’s no coincidence.  Like the situations when we are having troubles in our relationships–our interactions with others–often we learn that the first place we have to look is within ourselves.  What’s our own role in this mess of a relationship?  We may want to pull our hair out over the bad behavior of others and blame them for our troubles, but usually at least part of the blame lies within ourselves, in our own part of the interaction and how we did or did not react to what the “other” did or did not do.

And that’s why I started thinking that the Occupy Fill-in-the-Blank movement should start with “Occupy Ourselves.”  I wrote about it this way in my latest column in the Christian Science Monitor (the online version now available here):

What started as the “Occupy Wall Street” demonstration has turned into an “Occupy fill-in-the-blank” movement – with the blank being anything we blame for our own economic troubles.

The main target seems to be the vaguely defined “1 percent” – that tiny minority of the wealthiest individuals and biggest corporations, the only ones those with economic and political power seem to serve. So the Occupy movement targets the big banks – the culprits that got us into the financial crisis. Or the millionaires, because income inequality is at an all-time high. Or Congress, the lobbyists, and others in power who have failed to do good. All of them – it’s their fault.

It’s not that the outrage isn’t justified. Policymakers catering to the oil and gas industry, to Wall Street, and to the rich and powerful deserve part of the blame. So do banks, ratings agencies, regulators, and others who set the stage for the financial crisis that triggered the recent ballooning of America’s debt. And as the wealthy have gotten wealthier, policymakers have chosen to only reduce their tax burdens.

Meanwhile, policymakers seem to care much less about the poor. The share of Americans living in poverty has steadily increased over the past decade to more than 15 percent – the highest percentage since 1993 and approaching where it was when LBJ launched the nation’s “war on poverty.” How is that fair?

But we also have to recognize that our economic problems began long before the financial crisis and that the boundary between the wealthy 1 percent and the 99 percent that the protesters claim to represent isn’t so crisp. Those big subsidies to the oil and banking industries also benefit the rest of Americans through lower gasoline prices and cheaper credit. And the majority of American voters went along with politicians who proposed very expensive deficit-financed tax cuts and deficit-financed prescription drug coverage, even though our young people – the very core of the Occupy movement – are the ones who will be stuck with the bill.

We all had a role in this, not just that 1 percent.

If there is a “change we believe in,” we can’t just complain about the status quo. We have to spell out the better life we want and the trade-offs we’re willing to make to get there.

These are difficult trade-offs we each need to contemplate. Doing better for the other 99 percent of us requires real money, and that money has to come from somewhere. Are we willing to steer more federal funds to the most effective forms of spending in terms of both short-term stimulus and longer-term economic growth – policies that would also benefit Americans more broadly – and away from the less effective, less beneficial forms?

Would we be willing to receive less generous benefits from Social Security or Medicare or have our tax deductions reduced? Would we be willing to let go of our portion of the Bush tax cuts rather than insist that only millionaires and billionaires need to sacrifice theirs? And most important, if we want our “occupying” to catalyze real change, would we be willing to speak up loud and clear about our willingness to make these specific trade-offs to our policymakers?

In the end, it’s easy to occupy Wall Street and protest what’s wrong. Far harder is to occupy ourselves with the tough choices that could move America away from its crisis path and toward surer footing as the world’s leading economy.

That’s the protest message we need to hear.

Some of the same idea comes through in this interview I gave to Talking Points Memo’s Kyle Leighton, in a column titled “Bipolar Inequality” (a phrase I accidentally coined while sitting in the Milwaukee airport on the phone with Kyle; apparently sleep deprivation sometimes inspires my creativity):

Diane Lim Rogers, Chief Economist at the fiscally hawkish Concord Coalition, made similar points about the more reckless economic policies of the past decade: Much of the distaste with both Washington and Wall Street comes back to fact that DC is simply unwilling to change course.

“The difference is that during the Clinton years the rising tide was lifting all boats,” Lim Rogers said in an interview with TPM. “Low-income households were still doing better. Even then, the rich did really well, despite their taxes being raised.”

But what’s different now is that income inequality isn’t a political tenet of the left: it’s truly hurting people. Lim Rogers said the poverty rate is actually of more concern than the rich doing better given the circumstances.

“The outrage is not that the rich are richer,” she said. “It’s that the poor have gotten poorer — the inequality has become bipolar.”

Which could help explain why when OWS [Occupy Wall Street] provided the spark, many Americans didn’t discount the movement as disaffected liberals who have no real point: it’s a real issue borne out by the numbers…

While Gallup showed that only 22 percent of Americans considered themselves supporters of OWS, other polls have shown larger amounts of support. Because, as Lim Rogers points out, the movement has centered on a more inclusionary focus.

“As the definition of the rich keeps shrinking, the movement feels like it gets more spirited,” she said. “OWS is getting the support of most americans, because how can you disagree with the fact the top 1 percent has done well, but that poverty is increasing. I’m not surprised that OWS is doing well, and I think it’s justified. What Americans may not have a grasp of is that we are all part of the problem, because we continue to support politicians that support these policies.”

My point is that even those of us who are not in the top 1 percent of the income distribution may actually benefit from and at least implicitly support the policies that are perceived as “those policies that cater to the top 1 percent.”  And the policies that we think are letting down just the bottom 99 percent are actually letting down all 100 percent of us.  It’s not ever going to be as easy as neatly sorting out the blame vs. the burden into the 1 vs. 99 percent.  We’ll have to sort it out within each of ourselves first.

(Like those “protesters” in the photo above appear to be doing, actually.  Just Say “Om.”)

AARP to Super Committee: Screw Our Grandkids Or Else!

October 17th, 2011 . by economistmom

I find this AARP ad campaign so offensive.  They threaten policymakers with their 50 million votes if any of them dares to include reforms to Social Security or Medicare as part of longer-term deficit reduction.  AARP’s point?  From their website touting the ad:

AARP’s new national television ad tells lawmakers to cut waste and tax loopholes, not Social Security and Medicare. It urges lawmakers not to treat seniors like line items in a budget and lets them know that 50 million seniors are counting on them to protect their benefits.

Cuts to Medicare and Social Security benefits could:

  • dramatically increase health care costs for seniors and future retirees.
  • threaten seniors’ access to doctors and hospitals.
  • reduce the benefit checks seniors rely on to pay their bills.

Why do I hate this ad?  For the same reasons my entire organization, The Concord Coalition, explained today in this statement:

“This is the kind of tactic and rhetoric AARP has condemned in the past,” said former U.S. Senator Bob Kerrey, co-chairman of The Concord Coalition’s Board of Directors.  “Since hollowing out the rest of the budget to pay for expanding entitlements would result in more uninsured, undereducated and unemployed Americans, AARP has taken an approach which can only and honestly be described as generational warfare.  By its actions AARP has put at risk the strong inter-generational support for Social Security and Medicare.”

Concord Executive Director Robert L. Bixby added:“With its size and influence, AARP could be a powerful voice for reasonable reforms to establish a more sustainable fiscal path. Instead, it has chosen to be part of the problem by insisting that all sacrifices must be borne by someone else.

“AARP knows full well that benefits have been changed in the past and will have to change in the future. Most of the changes that have been widely discussed would not affect today’s seniors at all. Even worse, the ad perpetuates the false notion that our nation’s unsustainable fiscal outlook is merely a product of ‘waste and loopholes.’ AARP’s intransigent position will make realistic solutions all the more difficult.”

All options must be on the table to solve our nation’s fiscal problems. This includes domestic discretionary programs and defense, both of which have already been slated for cuts, as well as taxes and the major entitlement programs. Concord has long been critical of all attempts to exclude any part of the budget from scrutiny for two main reasons. First, exemptions increase the burden on those parts of the budget that remain on the table. Second, exemptions for some programs or taxes run counter to the concept of shared sacrifice and thus make necessary compromises more difficult to achieve.

Concord agrees that seniors should not be unfairly targeted in deficit reduction efforts. Any benefit changes should be phased in to prevent sudden disruptions for retirees and to give workers time to adjust and prepare for them. That, however, is a far cry from granting a blanket exemption to the nation’s two largest entitlement programs, which together comprise roughly one-third of the federal budget…

As the super committee considers its options, The Concord Coalition urges that all options remain on the table. Just as ignoring the need for more revenues is unrealistic, pretending that we can exempt important and popular programs like Social Security and Medicare from scrutiny is a good way to ensure that our fiscal problems will never be solved.

Oh, I also think it’s an offensive ad because I don’t believe most AARP members would actually agree with the AARP’s position to keep Social Security and Medicare completely “off the table” if they understood it was just insuring that even more of the burden of the debt and its negative effects on economic well-being would be shifted to their kids and grandkids.  We need a counterad to this one.  Instead of angry old, menacing people shaking their fists and threatening to vote against fiscally responsible politicians, let’s see some crying babies who have no political voice but through their parents and grandparents.

I still haven’t joined AARP (got my first invitation at 49 although I thought it wasn’t supposed to start until 50), but this certainly doesn’t endear them to me–discounts or no discounts.

A Good “I Told You So” Book

October 13th, 2011 . by economistmom

lost-decades-book

If you want a great explanation about how everything fell apart over the past decade and how we’ll still be struggling to recover over the next decade, get yourself a copy of this book:  “Lost Decades: The Making of America’s Debt Crisis and the Long Recovery” by Menzie Chinn (now a professor at U. of Wisconsin and co-author of the amazing Econbrowser blog, then one of my colleagues at the Council of Economic Advisers at the end of the Clinton Administration and first months of the Bush Administration) and Jeffry Frieden (a political scientist at Harvard).  I find this account absolutely riveting; even though I already knew a lot of the main plot, I’ve learned a lot more about the underlying subplots and the most significant (good and evil, smart and foolish) characters.  And coming from Menzie, the whole real-life story has this wonderful, reflective, melancholy “insider” perspective.  I read it as screaming  “I told you so.”

The last chapter is called “What Is to Be Done.”  If those taking part in the outrage of the “Occupy___” movement want to bring some heavy artillery in terms of policy substance into their demands, this is a good place to start.

If you’re in the DC area, both of the authors will be talking about their book at the IMF tomorrow (Friday) afternoon, and I’ll be one of the discussants.  Nobel laureate George Akerlof is moderating.  (Not bad, huh?!)  RSVP to attend the (free) event here.

Ezra on the Not-Good-Enough Stimulus

October 10th, 2011 . by economistmom

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(Graphic from the Washington Post comparing Obama Administration projections of unemployment rates with and without stimulus with what actually happened even with the stimulus.)

__________________________________________________

Here’s a really excellent article by Ezra Klein from Sunday’s Washington Post (lead story–and a majority share of–the Business section) on how the stimulus turned out to be–not a “failure”–but certainly “not good enough.”  Ezra explains the graph above:

The issue is the graph…It shows two blue lines sloping gently upward and then drifting back down. The darker line — “With recovery plan” — forecasts unemployment peaking at 8 percent in 2009 and falling back below 7 percent in late 2010.

Three years later, with the economy still in tatters, that line has formed the core of the case against the Obama administration’s economic policies. That line lets Republicans talk about “the failed stimulus.” That line that has discredited the White House’s economic policy.

But the other line — “Without recovery plan” — is more instructive. It shows unemployment peaking at 9 percent in 2010 and falling below 7 percent by the end of this year. That’s the line the administration used to scare Congress into passing the single largest economic recovery package in American history. That line is the nightmare scenario.

And yet this is the cold, hard fact of the past three years: The reality has been worse than the administration’s nightmare scenario. Even with the stimulus, unemployment shot past 10 percent in 2009.

Ezra points out that thoughtful critics of the stimulus don’t claim it didn’t help–just that it didn’t help as much as it could have:

Some partisans offer a simple explanation for the depth and severity of the recession: It’s the stimulus’s fault. If we had done nothing, they say, unemployment would never have reached 10 percent.

That notion doesn’t find much support even among Republican economists. Doug Holtz-Eakin is president of the right-leaning American Action Forum and served as Sen. John McCain’s top economic adviser during the 2008 presidential campaign. He’s no fan of the stimulus, but he has no patience with the idea that it made matters worse.

“The argument that the stimulus had zero impact and we shouldn’t have done it is intellectually dishonest or wrong,” he says. “If you throw a trillion dollars at the economy, it has an impact. I would have preferred to do it differently, but they needed to do something.”

A fairer assessment of the stimulus is that it did much more than its detractors admit, but much less than its advocates promised.

And most Democrats argue that it didn’t do enough because it wasn’t big enough:

Critics and defenders on the left make the same point: The stimulus was too small. The administration underestimated the size of the recession, so it follows that any policy to combat it would be too small. On top of that, it had to get that policy through Congress. So it went with $800 billion — what Romer thought the economy could get away with — rather than $1.2 trillion — what she thought it needed. Then the Senate watered the policy down to about $700 billion. Compare that with the $2.5 trillion hole we now know we needed to fill.

Ezra then explains the Administration’s logic–why the Administration really couldn’t hope for anything bigger (because of concerns about the debt), and how going as big as they were already going (in stimulus) means that eventually you have to spend money in less effective ways, after you use up the more effective ways:

Even if Congress had been more accommodating, there was a challenge to vastly increasing the size of the initial stimulus: The more you spend, the less effective each new dollar would become.

“We were trying to spend 10 times what had ever been spent in a year,” says Goolsbee, who chaired the Council of Economic Advisers until this year. “The tension was that the biggest bang for the buck comes from direct spending like infrastructure, but once you use up the big-ticket items, you eventually come to a point where the tax cuts are better bang for the buck than the 300 billionth infrastructure dollar.” And tax cuts, frankly, aren’t a very good bang for the buck.

Of course, the problem is that contrary to Austan Goolsbee’s description, policymakers did not line up the stimulus spending from most effective to least and pursue the most effective ones first.  Along the way they had to constantly sprinkle in lower economic “bang per buck”–but higher political “bang per buck”–spending, just to get the Republicans to go along.  How else can we explain how the Bush tax cuts for the rich became part of what was considered “stimulus” spending (in the lame duck session’s two-year deficit-financed extension of them), when those tax cuts have proven so ineffective at stimulating demand?

I’ve said this before–most recently here–that there’s lots of room for policymakers to do better in the future and to both more effectively stimulate the near-term economy and reduce the deficit, even right away, if they would consider swapping out the policies near the end of Goolsbee’s imaginary list for policies at the top.  (Here’s a “real” list, from CBO; see Table 1.)  But how can we clear out the influence of that “political bang per buck” list?  Who knows, but maybe the “Occupy ___” movement could become part of the answer.  If it turns out to be a “good enough” movement, that is.

And Now, the Guys’ Turn

October 7th, 2011 . by economistmom

It was nearly two years ago that I wrote this about the controversy over mammogram screenings for breast cancer:

I am one of those women in question–over 40 but under 50–who the U.S. Preventative Services Task Force now says shouldn’t bother with routine breast cancer screening, whether via mammograms or even self exams.  Their judgment is that for the broad group of “women in their 40s” who do not have genetic predisposition for breast cancer (unfortunately I do), the “benefits” of such screening don’t outweigh the “harms” (costs).

To me this is a very curious (and odd) proposition.  As explained in this New York Times article by Gina Kolata, the task force’s new position basically says that more information, even if free via self exams, can be a bad thing–not because the actual gathering of that information is risky, but because of how women might react to that information (with anxiety) or choose to act on that information (with potentially unnecessary surgery, perhaps with the encouragement of their doctors).  My understanding is that the health risks from the (minimal) radiation produced by mammograms is (not coincidentally) very minimal.  And of course there are no health risks from the process of self-examining one’s breasts.  So the task force is not saying that the process of gathering the information is risky; they’re saying that how women might choose to use that information is risky.  It’s a “save me from myself” argument.

But I still don’t get it.  From a pure health perspective, the potential net benefits of early detection of breast cancer–even netting out the risks associated with the various surgical and chemical treatments for the disease–can be quite large.  Not gathering the information increases the likelihood of “false negatives” and disease that goes untreated, the potential cost of which is death.  The argument against gathering the information for those women who have lower risk on average (the under-50 crowd) is that it increases the likelihood of “false positives” and overreacting with treatment that is unnecessary, has potential complications, and which can be drastic–for example, cutting off a breast.  But the decision about whether and how to act on a positive result is a woman’s personal decision, taken under the advisement of her physician who presumably helps her evaluate her own personal physical health risks (and emotional costs as well) of treating versus not treating.  I have heard stories of women with such a strong genetic predisposition to breast cancer that they opt to have double mastectomies to preempt the disease, and I assume that those women have done their own personal cost-benefit calculation and decided that they (personally) were willing to “pay” two breasts in order to guarantee they would live a full life.

I went on to tell a couple of my own stories related to the question “is testing worth it?”  Now we have the same group saying that maybe men shouldn’t have PSA screenings for prostate cancer done.  From the Washington Post’s story:

Most men should not routinely get a widely used blood test to check for prostate cancer because the exam does not save lives and leads to too much unnecessary anxiety, surgery and complications, a federal task force has concluded.

The U.S. Preventive Services Task Force, which triggered a firestorm of controversy in 2009 when it raised questions about routine mammography for breast cancer, will propose downgrading its recommendations for prostate-specific antigen (PSA) for prostate cancer onTuesday, wading into what is perhaps the most contentious and important issue in men’s health.

Task force chairwoman Virginia Moyer said the group based its draft recommendations on an exhaustive review of the latest scientific evidence, which concluded that even for younger men, the risks appeared to outweigh the benefits for those who are showing no signs of the disease.

“The harms studies showed that significant numbers of men — on the order of 20 to 30 percent — have very significant harms,” Moyer, a professor of pediatrics at Baylor College of Medicine, said in a telephone interview Thursday.

The “significant harms” in the guys’ case?  Again, from the Post account (emphasis added):

Because it is not clear precisely what PSA level signals the presence of cancer, many men experience stressful false alarms that lead to unnecessary surgical biopsies to make a definitive diagnosis, which can be painful and in rare cases can cause serious complications.

Even when the test picks up a real cancer, doctors are uncertain what, if anything, men should do about it. Many men are simply monitored closely to see whether the tumor shows signs of growing or spreading. Others undergo surgery, radiation and hormone treatments, which often leave them incontinent, impotent and experiencing other complications.

Seems pretty analogous to the case against mammograms for women.  And I think the same issues I raised on the mammograms apply here:  I’m not sure I buy the “save me from myself, as I might freak out” attitude.  The point is that the test does pick up a “real cancer” at least occasionally.  So there has to be an individual weighing of expected benefits from the test versus expected costs.  The PSA test is going to more likely pass the (expected) cost-benefit analysis when factors such as genetic predisposition (higher potential benefit from screening, in avoiding death) and age (lower potential cost from screening if one is younger and otherwise not so vulnerable to complications from surgery) work in its favor.  But that cost-benefit analysis is a very individual thing.  To suggest with blanket recommendations that the test might not be such a good idea because it just has those potential costs (regardless of the potential benefits) to me seems very dangerous.  People don’t need another reason to avoid medical tests, in my opinion.  There’s already a magnifying of the (even psychic) “costs” of getting tested relative to the potential benefits.  And at least some people will surely die from the cancer if they never find out it’s there until it’s too late.

What’s different about the guys’ case?  I find it kind of interesting that the women may overreact by cutting off their breasts, while the men may overreact and get the kinds of treatments that can leave them impotent.  Hmmm…. does this mean people would rather die than (potentially) not have (as much) sex?

Not entirely joking here.  Just wondering out loud.

(UPDATE, 1 pm:  This article, coming out in this Sunday’s New York Times Magazine, is very good at elaborating on the benefits vs. costs of the PSA test.)

Bernanke on Going Big in Both Ways

October 5th, 2011 . by economistmom


(Video from the Wall Street Journal’s website.)

It would seem we have heard this so many times before that we shouldn’t need to hear it again. The U.S. faces two major economic challenges at the same time: (1) an economy still desperately struggling to get out of (or avoid falling back into) recession; and (2) a fiscal outlook on such an unsustainable longer-term path that it threatens our near-term, and not just longer-term, economic health. The first is mostly a “lack of demand” problem, and the second is more about failing to keep up the supply of productive resources in our economy. The two challenges are very different and might suggest very different policy strategies, but we really can and should address both. We’ve heard this (”we can do both”) principle many times before, but it always helps when someone as prominent as the Chair of the Federal Reserve Board makes it crystal clear in his written and oral (and official) remarks. From Bernanke’s testimony before the Joint Economic Committee (on Tuesday), emphasis added:

To be sure, fiscal policymakers face a complex situation. I would submit that, in setting tax and spending policies for now and the future, policymakers should consider at least four key objectives. One crucial objective is to achieve long-run fiscal sustainability. The federal budget is clearly not on a sustainable path at present. The Joint Select Committee on Deficit Reduction, formed as part of the Budget Control Act, is charged with achieving $1.5 trillion in additional deficit reduction over the next 10 years on top of the spending caps enacted this summer. Accomplishing that goal would be a substantial step; however, more will be needed to achieve fiscal sustainability.

A second important objective is to avoid fiscal actions that could impede the ongoing economic recovery. These first two objectives are certainly not incompatible, as putting in place a credible plan for reducing future deficits over the longer term does not preclude attending to the implications of fiscal choices for the recovery in the near term. Third, fiscal policy should aim to promote long-term growth and economic opportunity. As a nation, we need to think carefully about how federal spending priorities and the design of the tax code affect the productivity and vitality of our economy in the longer term. Fourth, there is evident need to improve the process for making long-term budget decisions, to create greater predictability and clarity, while avoiding disruptions to the financial markets and the economy. In sum, the nation faces difficult and fundamental fiscal choices, which cannot be safely or responsibly postponed.

And don’t just take our monetary policy leader’s word for it.  How about listening to Doug Elmendorf, the director of the Congressional Budget Office, which obviously makes him one of our top fiscal policy advisers.  From Doug’s testimony before the Joint Select Committee on Deficit Reduction (a.k.a. the “super committee”) on September 13th–again, emphasis added:

There is no inherent contradiction between using fiscal policy to support the economy today, while the unemployment rate is high and many factories and offices are underused, and imposing fiscal restraint several years from now, when output and employment will probably be close to their potential. If policymakers wanted to achieve both a short-term economic boost and medium-term and long-term fiscal sustainability, a combination of policies would be required: changes in taxes and spending that would widen the deficit now but reduce it later in the decade. Such an approach would work best if the future policy changes were sufficiently specific and widely supported so that households, businesses, state and local governments, and participants in the financial markets believed that the future fiscal restraint would truly take effect.

And don’t just take the CBO director’s word for it.  How about listening to a mom–i.e., me?!  ;)  Here’s what I wrote in the Christian Science Monitor last week.  I kind of go a little further than either Bernanke or Elmendorf in the argument that you can “do both,” in that I actually believe we could do both at the same time–if only we were willing to make the tougher and better policy choices (i.e., better optimize) in pursuing both our short-term stimulus and longer-term growth goals:

Many policymakers and experts characterize this as long-term versus short-term policy and argue that the short-term spending rise needs to take priority right now.

Actually, both can be pursued at the same time, if Washington is willing to put in place policies that have been proven to work and cut those programs that are less effective.

For the short term, stimulus policies should adhere to the three T’s that President Obama’s former economic adviser Larry Summers first espoused: timely, well-targeted, and temporary. That means policies that as quickly as possible put more money in the hands of the households most likely to immediately spend the money on goods and services, and the businesses most likely to hire more workers…

Over the longer term, deficit reduction can encourage economic growth via higher national saving, while freeing up resources to go to the most productive areas of our economy. Then, instead of having a rising share of resources going toward interest on the national debt or other forms of government spending that provide no public benefits, more funds will get steered toward areas of government spending that our society values highly.

So, you hear a lot of “Go Big” advice to the super committee these days–and even the corollaries to “go long” and “go smart.” But to that we should add to do all those wise things in “both ways,” to address both of the major challenges facing the economy at the same time:  we need more jobs, and we need lower deficits.