10 Things I Want to Do in No Particular Order and I’m not Sure Why (and maybe I don’t want to do all of them)

-Enter a hot tub from a rolling start, perhaps office chair.

-Play bass guitar to the moon with no shirt.

- Get a tattoo of a giant V on my shoulder, it would stand for many different things.

- Shoot a music video. I tried this a few years ago and had three police encounters.

-Take a company public- fuck this is nearly impossible.

-Shake Merritt Paulson’s hand.

-Bravely lose an eating contest.

-Ask someone reading a newspaper in the subway to name one thing they remember from the paper they read last week.

-Jazzercise.

-You know, that one thing we did that was really sweet.

Squeezing the Triggers

Former Treasury Secretary Paul O’Neil talks in his book about how in 2001-2 he and Fed Chairman Greenspan preferred a “trigger” approach to the then proposed Bush tax cuts. They wanted to cut taxes in phases depending on the future growth of revenues relative to budget needs. There was a current account surplus at the time, and so they had no problem cutting revenues, but they wanted to do it in parts so that if a budget deficit opened again they could achieve some balance between future needs and tax reductions, by not pulling the trigger on the rest of the cuts. It was a good idea because it was extremely policy neutral. It did not oppose tax cuts at all, and would have let trillions of dollars of them go forward, just so long as they were real cuts, not just an intergenerational transfer. I think the same idea of triggers could have been useful with the American Recovery and Reinvestment Act.

Congress could have developed three $250 billion segments, with only the contents of the first chunk really spelled out in the legislation. The first segment would be spent immediately, and the President and his advisers would submit a plan to spend the other two when they needed them, allowing them to adapt as the economic situation evolves. This would have focused funds on the areas where they can be spent the fastest, made passing the bill even quicker, allowed an opportunity for “lessons learned” in the remaining two sections, allowed the nation to essentially test how well the stimulus worked (for instance by comparing White House job creation estimates to reality), given control over the amount added to the deficit by not spending the whole amount if the economy began significantly rebounding, and essentially improved the package over time by seeing where the most jobs are created for the least amount of money and where investments enhance productivity the greatest.

Now anyone in favor of the stimulus would surely point out that it was so big because the challenges are so big, and two, passing it once was no sure thing, so why repeat it. On the first point, in all actuality there are very real constraints on how fast that volume of money can be spent. Infrastructure grants typically take 5 years to administer, any job in an emerging field (like green energy) by definition has a scarce labor market and so there needs to be new technical training and certification, which can take years. Even just obligating the money, e.g. signing contracts to spend it, is subject to either a formulaic application process, competitive bidding, or the state legislative process – all of which takes time. And then often there is design work or studies that have to be done before people can even be hired. That’s why the White House estimates about 75% of the funds will be spent within 18 months. That’s quick, and about as quick as it could be reliably done, but it’s by no means particularly streamlined. So long as the three triggers are pulled within a year or longer, the funds will get out the door at the same rate as the consolidated version, and because of learning and technology, it might even become more efficient. Right now Energy Secretary Chu, a brilliant Nobel chemist, has over $150 billion in credit authority that he can place basically anywhere he thinks will advance green technology and create jobs. And understandably, he’s still trying to figure out the best way to do it. This inevitably involves wading through thousands of applications from mainly promising sounding companies who applied via their states for a piece of the action. Figuring out which ones to give money is tough. Figuring out how to make all those loans into a cohesive system is tougher. And knowing if you spent the money as well as could be done, for instance that you didn’t deny the next Google of energy, is probably impossible. If the money was spent in waves, and appropriated in triggers, they could adapt their lending based on real results in the field and be surer that they’re making the best investments for the economy and for the future. The worst situation would be to invest in an idea or project that becomes obsolete, then people are unemployed all the same once it’s built, but then are stuck with a less productive economy because of antiquated technology, and now will have to pay higher taxes to pay off the debt from the stimulus. A triggered approach would provide real-time information to make the soundest investments.

On the issue of passing three parts, one has to look no further than the Troubled Asset Relief Program. It had two parts, where the President had to request to use the second half of the funds and get a majority vote to receive the funds. Now I think the TARP has been very successful given its point. There was a clear and present risk of systemic failure of the credit markets in early October. In the course of a week there was a string of huge financial institutions failing, and each one lost weakened the remaining. Since TARP passed and the banks recapitalized, there have been no major failures and now that basically seems out of the question. The point wasn’t to create a boom or solve every firm’s problems (in fact you don't want to do that because it deflates the important value of risk appreciation), it was to ensure the continued operation of the capital markets, and it did. Secretary Paulson and Chairman Bernanke had essentially a weekend to come up with a plan, and I think they did a brilliant job. And they structured it in a way that taxpayers will almost certainly see every dime back. So the stimulus could have been done in the same way, where the President has to submit a plan for spending the remaining section when he wants it, and then a 51% vote is required in Congress. Given the majority’s comfortable cushion, the request could be passed in an afternoon. Only the bill itself authorizing this structure would require 60%.

I also think that the stimulus bill could have been more creative, and not cheesy idealistic creative, but 21st century creative. Basic infrastructure is important. We need bridges and wastewater plants and sidewalks. States and localities already spend enormous sums on this every year and there are large revolving funds provided by the federal government annually in these areas. The stimulus needed $100 billion immediately going to the states to cover current deficits, and it needed money for basic infrastructure and schools and transportation. But how about incentives for new investments? What about a venture fund to invest in new research and companies? In a hyper-competitive and growing (on net over the 21st century the world will almost assuredly see the largest creation of wealth in history, China and India alone are on pace to pull almost half the world into the middle class) we must make long-term investments. As Friedman recently wrote, what about recruiting the best Ph.D’s from around the world by issuing more skilled worker visas, so they can build companies here and create new demand via buying surplus houses and supporting American businesses? The world becomes less brick and mortar every day, yet this bill seems to lay a lot of bricks. This stimulus is probably one of the greatest domestic policy achievements of a President in the first month in office ever. There is no perfect policy, yet this one is quite good. How good is very hard to know, unless you waited for some of the smoke to clear before pulling the trigger again.

Executive Compromise: The Contrarian View

There has been much populist celebration over President Obama’s recent freezing of bank executives’ salaries who receive federal money, and before that the freezing of his senior staff’s salaries. I’m not adamantly against this, but I don’t see how it accomplishes much of anything. So I’ll take the contrarian view – the usually more fun view. Firms already have every reason to avoid taking government money - because they’re not getting “bailed out” at all. They’re giving up huge stakes in their companies and the future profits that go with it, and assuming new debt to pay the government back. AIG gave up nearly 80% of its assets in the form of preferred stock and warrants. This means everyone who has parked money with them is now in the back of the line behind the federal government for dividends or shareholder privileges, experienced huge price dilution, and will likely see the government slowly and painfully liquidate their holdings. The shareholders don’t want that, the executives don’t want that, employees don’t want that, no one wants that – it’s a last resort. So the notion that they’re willing to basically give up the entire company so they can get their hands on public money just so they can get their holiday bonuses seems implausible. Also, Wall Street bonuses typically make up about a third of the NYC tax base in a given year. Without these bonuses, the city faces an even bigger budget gap, has to cut more services in a time where government purchases are needed to create demand, and ironically some of the very funds being loaned to banks in the first place.

And then there’s the whole issue of incentives. There are very few people who have the experience or capacity to run large financial institutions, let alone fix them when they are awash in problems, and it’s not like they have nothing better to do. The Jamie Dimons or Lloyd Blankfeins are not short on job opportunities. Cutting compensation 95%+ isn’t exactly the recipe for recruiting the best managers and thinkers in a time when they are most needed to sort through a menagerie of problems. The financial downturn was precipitated by a phenomenal disregard for basic due diligence. Most people put more effort into buying a used car than Citi did buying $100 billion of bonds, as Robert Rubin put it – “it was an afterthought.” Jamie Dimon largely protected JP Morgan in the summer of ’07 just by realizing he couldn’t really explain the slight uptick in defaults, and once they realized that they also realized they had no idea why the bonds were rated so high, so they divested. And diligence, as the word suggests, is not easy or particularly enjoyable. These firms will avoid further trouble only when they have executive committees that take their time and scrutinize their every step. If they’re not rewarded, if incentives are muted, it becomes less clear that they have a motivation to perform this diligence. Misaligned incentives (like in securities bundling or rumor-fueled short selling) got us into this situation; a system capable of preventing it will not emerge until these basic incentives are realigned. And last, the success or failure of these firms does not hinge on the value of their relatively meager salaries. President Obama has about 300 senior staff that earn about $180,000 a year and usually get a 5% annual pay increase. Assuming Obama keeps this freeze in place for 8 years this amounts to $24m in savings. The economic system is facing challenges on the order of millions of jobs and trillions of dollars. And during this time, good policy, and the hard-working men and women behind developing it, are more important than ever. Saving a few million bucks and cutting pay to the people you most rely on doesn’t seem to accomplish much.

What people really care about is “are they doing a good job”. People care about good decisions, good investments and good profits. If the firms were above water today, no one would raise a peep about their compensation. Targeting annual bonuses confuses the issue, which is ultimately one of bottom line performance, something that usually requires more compensation, not less.

Improving, not just saving, Social Security

Yeah, yeah, yeah. You’ve heard it all before. Social security is not looking so secure, but why does it really matter? I think most people would probably say because it would certainly be nice to get that monthly check in the mail once they’ve retired, particularly when 7.5% of every paycheck is taken out for it. Who likes to pay something for nothing? After all, the current system is projected to take in less money than it pays out around 2017, which means it will eat up the budget, which means even tighter capital markets and higher future debt. And then of course it’s projected to go bankrupt in 2040. It’s all very boring.

But the bigger reason we should fix social security - and not just patch it up with a million clever little ideas, say by lowering the inflation index or pushing back the retirement age, which will succeed only in postponing insolvency and making people work harder for less, but not really improve anything - is because of the enormous… opportunity cost! I wish it could cut aluminum cans in half or something, but we’ll have to settle for opportunity cost. Think about the difference between every dollar of your paycheck that goes into the Social Security Trust Fund, and then is subsequently spent immediately and preserved in the form of debt, versus every dollar going going into a well balanced mutual fund and earning interest. And then multiply over, oh, say four decades. Say on average you make a real income of $50,000 a year for the next 40 years, and the standard 7.65% of this is contributed to payroll taxes, this is $153,000 in principal. When that money goes into the Trust Fund, the government at best will nullify the deleterious effects of inflation, and worse yet, may actually lose purchasing power depending on the spread of government bonds versus inflation, or still worse, may decide never to pay it.

On the other hand, pick any ten year period of the stock market, any 10 year performance period of Wall Street, and the average returns will never be below 7%. Not during the Great Depression, not during S & L or dotcom, not now, not ever. Business cycles are real, they happen, but the ups and downs average to a healthy trend. Saying something is reliable because it has never failed is all you can really go on. For instance, people banking on the Social Security Trust Fund paying them out around the middle of this century often cite how much more reliable a Government IOU is because the government has never defaulted on its debt. True, but then the rationale of the safety of Wall Street is no less reliable. The government has never defaulted on its obligations. And Wall Street has never produced less than 7% per decade in returns, let alone a loss. So say over the 40 years you’ve contributed that $153,000 to the government and the market just hits the bottom of that 7% return, you still turn that money into over $600k. Assuming the best, this is a 400% difference from what the government would pay out, a very steep opportunity cost. Now there are no guarantees. And if people would like to play the “more conservative card” of just paying into the fund and getting a government guarantee, they should be able to. But, just like U.S. Senators, people should have the choice to contribute their income into actual funds. The Regular ol’ Person system could be essentially the same design as the Senators’. There would be a pension board that oversees 5 or so broad investment plans, divided by their equity/fixed income ratio, but all diversified and managed by professionals and overseen to regulate leverage and risk (something missing since about 2004 when the SEC removed net capital holding requirements). The point is people couldn’t just invest wherever the mood struck them, there would be a small menu of balanced funds to choose from. And because of the simplicity of the rules - 5 plans, no more than 10:1 or so leveraging, it would be clear whether funds were being abused/Madoffed in any way.

I hope that any future modification to Social Security does not reflexively deny individuals a choice in how their earnings are used. I think this is the compromise that can be struck - people who like the current system (retooled with some painful actuarial adjustments) can stay with it. But not allowing individuals a choice to place their payroll earnings into a balanced fund seems to me to be denying people an awful lot, and for nothing but the concerns of other people who would be unaffected. It would have the added benefits of freeing the government up from a lot of debt and providing much needed private capital injections to our financial institutions. A lot of this could be used to do things like deploy clean energy, build smart grids, in short create good jobs. And of course there are details, there always are. When money from current workers is placed in an investment fund, and not siphoned towards current retirees, there will have to be bridge financing in the form of more debt. Yet so long as much of Asia has a 30% savings rate, and so long as there are sovereign wealth funds, there will be ample capital to absorb a few more government securities. Plus, paying these off in the future will be easier than waiting for the system to slide into debt and paying then, as the pension system will be more sustainable and profitable thanks to new productivity from deeper capital markets and decreased government retirement obligations - meaning a broader economic base. And there will have to be cut off points for when people can make the transition. And there will have to be a little bit of private earnings skimmed by the Board as reserves to provide insurance to people who might pick particularly unlucky times to retire – in this way they would be guaranteed a minimal payment not below the regular system. Bueller?

But the point is, legitimate debate about the system doesn’t have to ruin anything. Those who think the government is the best universal retirement planner and want that legal guarantee can have it. And those who would prefer to fund government managed private investments with their money can do that. Now this is bipartisanship This isn’t a parlor room discussion or a game of gotchya between editorialists (oh how Stiglitz, Krugman, Summers, Brooks et. al. love to seem the smartest guy in the room). It’s a very pragmatic day-to-day kitchen table decision. And I think given the choice, people should be given more opportunity, not less.

On another note, the CBO recently scored the House stimulus bill. It estimates 7% of the energy investments will be spent within 2 years and less than 50% of the transportation dollars spent in 4 years. This is too slow to provide immediate stimulus and generally conforms with what the Council of Economic Adviser's new chair Christina Romer has shown in her work. I think the second half of TARP ($150b to buy up worst assets, $150b for continued recapitalization and $50b for mortgage refinancing, which could save 1m+), combined with a more focused $100b stimulus could have great effect.

"I always go through the process of hating it, hating myself, thinking I've fooled them, I can't actually do this." –Heath Ledger

When Heath Ledger is nominated next Thursday for his second Academy Award, exactly one year since his death, he will have fooled no one. In his final role he made vintage Jack Nicholson look bad, and he appeared to barely be trying. My favorite line in the Dark Knight is the baptismal bedside conversion of Harvey Dent into Two-Face, where the Joker slurs, “You know, they’re schemers. Schemers trying to control their worlds. I’m not a schemer.” This line belays the Joker as the twisted half-brother of Holden Caulfield, or Ben Braddock in the Graduate, or the American transcendentalist Thoreau - someone lost , but almost entirely because they are searching too hard to ever notice when they've stumbled onto something. The great irony is that one year after his death; Heath Ledger will have found what he always thought was alluding him. I hope now Heathy can get some rest.

Peace in the Middle East

Almost as reliable as the turning of pages on a calendar is the cycle of violence in the Israeli-Palestinian conflict. Here’s to ’09 being a peaceful year in the Middle East, but it’s looking all too predictable. Let’s be clear – the rockets being launched out of Palestinian territory that perennially kill innocent Israelis is completely unacceptable. It is tragic, it is wrong, and it is terrorism. The international community is in agreement that the goal is to stop this scourge (and I would add there are many other goals, but this is the most immediate). The debate among reasonable people seems to be what the best mechanism to achieve this end is. I would argue that there needs to be considerably more effort placed in pulling the rug out from under extremists by drying up their recruitment base and trying to fill the vacuum that is left by poverty and deprivation. The June '07 illiberal democratic election of Hamas is entirely predictable given the extreme living conditions in the West Bank and Gaza. Crippling poverty, hugely underproductive land, overpopulation, disease and little prospect for the future, not to mention connections to many family and friends who have died in previous violence, makes for the perfect platform for extreme ideologies to flourish. Reverse these conditions and you will almost certainly see a considerably more liberal democracy emerge and Israel achieve its objective of not having a terrorist organization ruling across its border. I think we have seen for decades that the current approach (heads of state signing pieces of paper and militaries launching offensives) has not produced a lasting solution. Decrees, promises, foreign observers, summits, envoys, seem to be trying to force a solution in many respects, rather than trying to actually build one . So long as the fundamentals on the ground remain the same for millions of people in Gaza and the West Bank, these top down solutions will likely continue to lack a mechanism capable of enduring stability and peace. It is imperative that sovereign countries protect themselves, yet so long as innocent blood is spilled on both sides, and so long as there is extreme poverty and deprivation (particularly in Gaza and especially under the current blockade) there will be no scarcity of people willing to give their lives for tragically backwards causes. This is exactly why Defense Secretary Gates, in an unprecedented move, lobbied last summer for a doubling of the foreign assistance budget for the State Department, because he knew it would translate into direct security benefits.

The best long-term approach to weakening radical extremists (like elements of Hamas) is to eliminate their resource base. Yes this means more traditional approaches like cutting off supply lines and raiding weapons caches, but even more it means providing an alternative of hope in the face of despair (and just as importantly, being seen as providing an alternative). Extreme poverty and deprivation is a surefire accelerant of extremism. Over a period of years if the international community, perhaps led by Israel, were to step up humanitarian relief and development assistance for its impoverished Palestinian neighbors, I think it is very likely that a vast majority of the extremist recruitment base could be dried up. Clothes, food, medicine, fertilizer, seeds, generators, schools, community centers, hospitals - basics - would help ensure another generation of youth is not caught up in the cycle of a false but often too attractive violent ideology. Extreme ideology feasts on the kind of fatalism brought upon by miserable conditions. Such assistance would literally be the physical embodiment of a neighbor’s compassion and would win hearts and minds from ideological zealots. Building an economy and investing in a viable alternative and moderate political coaltions will engender stability and a 2-state solution infinitely better than a team of pro negotiators and yet another rounds of furious document signing. One approach leverages a concrete mechanism to drive moderation, the other merely ordains it. Political parties are more an appendage of the prevailing situation and desires of the people than an apparatus capable of executing whatever U.S. statesmen broker. In other words, invest in a viable alternative, not simply agreeable language.

Ad hoc security crackdowns or another round of well-branded Summits will unfortunately fall short without treating the situation on the ground. Let's also be clear here - there will always be evil people for whom a military response is the only appropriate solution, and here Israel and the West must remain vigilant. Yet so to must the West realize that there are inherent risk factors that make it relatively much harder or much easier for extremists to operate. Opportunity and hope remains a vastly underutilized weapon in the war against extremism.

The Top 10 Technology Trends of 2009: I Pick them!

10) Mobile. It’s the future. Mobile cars, mobile cigarettes, mobile gummy bears. Mobile is the buzz word out there and it’s here to stay. If it’s mobile, invest in it. In 2009 your i-phone will become the j-phone, it will become not just a restaurant locator, credit card and way to ignore other people in awkward social circumstances and seem busy, but also become truly mobile based, leveraging mobility, perhaps even becoming a vehicle, much like the segway.

9) Breakthrough in the toilet industry. This is an often overlooked piece of technology, literally! But can you imagine the market size here, I estimated it at over $19 million annually, in toilets alone! I actually predict a facebook app that will predict when you have to use the restroom, and then just go for you! I’m thinking it will work via some kind of anal catheter maybe directly connected to your i-phone that will be RSS based with your profile. Can you imagine that shit?

8) Green. Again, just one of those buzz words people keep talking about, just over and over again, everywhere, just constantly yapping about it non-stop. So it must be good. It’s right up there with mobile for slick little web 2.0 mini-segments on the Today show and faddish editorials in the WSJ. I think the biggest green technology in ’09 will almost assuredly be tote bags. Think purses, but bigger. People will not want to use things or purchase things anymore, waste not want not! So they will have to carry everything that they could possibly have to use during the day with them at all times. Car oil, knives, cat nip, Kleenex, Styrofoam, all in the new green tote bag. It’ll get heavy, so I’m thinking the deluxe models could be on wheels with smallish gasoline engines to propel them. BIG $.

7) 2012 Presidential election. We just got through one of the quietest political seasons ever, with very limited citizen involvement, and people will look to finally get back off the sidelines and there could be real excitement for the upcoming 2012 election in ’09. To tell you the details I would need you to sign a non-disclosure, but I am heavily invested in a new web-based news platform that will basically focus exclusively on politics, providing a sort of insiders look at the campaigns and key players and general political intrigue. Huge untapped market with absolutely no competition here. I’m still looking for that breakthrough once in a generation candidate, but ’09 could be the year we finally get one.

6) Robotics. Ever since most of us were kids we knew this was just going to be a money factory some day. It has already been 8 long frustrating years since Stanley Kubrick set our expectations so high with his masterful space drama 2001 a Space Odyssey. It’s bound to happen in ’09 baby, I mean it is two-thousand –and-nine. Come on already Honda! Figure it out!

5) Professional sports franchises. If you find yourself in a position to become the owner of a major league sports team in ‘09 I highly recommend pulling the trigger. You will not regret it. I am currently exploring turning my fantasy NFL, NBA, NHL and MLS teams into actual franchises. It’s legally complicated, but I think the courts have left some wiggle room here. If I pull it off I will pretty much be living in one of those sweet luxury boxes full-time! And with several owners out there clearly senile, I’m talking to you Al Davies and Steinbrener, it is a wide open competitive landscape.

4) Anti-counting movement. Counting will really lose momentum after being the mainstay of societal organization for over 15,000 years (15,000 is now so whatever!) The world is all 0s and 1s anyway. So yeah, 10 is way bigger than I thought so I’m skipping to number 1.

1) Credit default swaps. I am up to my eyeballs in these things. I swap agreements on e-trade on an hourly basis, betting on everything from daily rainfall totals in the Amazon basin to municipal tobacco ordinances to John Mayer’s relationship status to pooled toxic-ass mortgages and I just keep going in deeper and deeper. I am clinically addicted to credit default swaps. Anything that sounds as pro as “credit motherfuckin’ default swaps” has got to be just sick. In 2009 AIG will emerge from this little bumpy patch unscathed, and look for Lehman Brothers to rebrand with a sexier Lehman Sisters and as Kanye says, watch the money pile up.

A Housecall for Incoming Health and Human Services Secretary Daschle

HHS Secretary-designate Daschle will have a lot on his plate. He will oversee the largest federal agency, administering everything from Medicare to the FDA to global health initiatives, at a time when his boss has promised massive reforms in healthcare. It’s going to be a tough job. To kick things off, Daschle has said he plans to embark on a discussion of healthcare reform with households all across America, a sort of big-tent experiment in brainstorming. This is a genuine and admirable goal, if not hard to understand coming from a man who has spent the last 30 years visiting people as a professional politician. Both Obama and Daschle have literally been on the road for years, and they are not short on (often very personal) stories about healthcare in America. But how could a couple more months of it hurt? I think Secretary Daschle should focus on three key areas if he hopes to simultaneously improve the quality of care Americans receive, and the number who receive it.

One, he needs to contain costs. Healthcare expenses are growing far faster than the revenue base is expanding and at the current trajectory, non-discretionary spending will eat up the entire federal budget in about 25 years. A good model of controlling prices can be found in Japan, where they have half the per capita healthcare costs and twice the per capita utilization rates as Americans. That sounds good. In Japan the government has sole purchasing power of pharmaceuticals and healthcare procedures. They use their massive negotiating power to exert downward price pressure on everything from the cost of antibiotics to the cost of an EKG. Private insurance providers can still design their own policies and set their own prices, but the basic inputs that go into those plans are purchased in bulk by the entire government. The same concept is already pervasive in the private sector, where a few key buyers negotiate entire supply chains. Secretary Daschle’s HHS would be a great place to house the Office of Negotiation, where they set up 5-year forward purchase agreements on the largest and most common drugs and procedures.

Second, just like decoupling in the electric utilities sector, there needs to be decoupling in the medical sector. Utilities over the last decade or so have realized that electric providers in a normal market have no incentive to be efficient; in fact they have an incentive for their customers to use as much energy as possible because it translates into larger profits. This results in excess energy usage and general inefficiency. This has been more or less solved via utilities taking a percent or two out of monthly electric bills and redistributing it based on a formulaic measure of a company’s energy efficiency. Suddenly energy efficiency is monetized and energy providers start paying attention. The same basic idea should be established in the medical industry, where doctors, particularly specialists, have an incentive to carry out, and charge for, expensive procedures. Daschle’s HHS should charge a small fee to existing healthcare providers (maybe .5%) and reward medical providers who are particularly efficient in their utilization. This does not mean doctors will be rewarded for not doing expensive procedures for sick patients who need them; it means they will have an incentive not to do procedures just because they are profitable (which is perfectly rationale). HHS could measure certain key and widely available statistics, like referral and utilization rates and costs per treatment at the institutional level, and then reward those institutions accordingly, decoupling profit from wasteful overutilization.

And three, if Obama and Daschle really want universal coverage they will have to subsidize about the lowest quintile of American households. This is a decision Americans will ultimately have to make, but controlling prices and rewarding efficiency will still not be enough to provide universal coverage. Obama proposes instituting a healthcare tax on employers who do not contribute to their employees’ coverage as a means to fund subsidy programs. This seems like a good idea, as it preserves price parity across the market, as every firm will have to meet the same basic operating costs (chipping in to provide basic healthcare and not free-riding on firms that already do). Revenues here could be distributed by Daschle’s HHS based on a family’s combined income level to provide basic coverage for the uninsured.

I don’t think Secretary Daschle will be knocking on my door anytime soon, but I hope that once he hears from all these households that he starts getting specific soon. Generic goals or hollow bromides have gotten us nowhere with healthcare reform in the past, and today’s no different. Healthcare reform will be a long difficult debate, and policymakers should start working on the nuts and bolts now. None of these ideas is easy or particularly desirable, but neither are higher taxes in the future for worse benefits.