WONKBLOG

Dodd-Frank is hard to understand, and that’s why it has so many enemies

While Mitt Romney was speaking at the U.S. Chamber of Commerce on Wednesday, chamber members from across the country descended on Capitol Hill to tell Congress to get the government off their backs.

Mitch Stebal, for one, was prepared to give Sen. Dick Durbin’s office an earful about overregulation. An employee of Busey Bank in Champaign, Ill., Stebal came to the U.S. Chamber’s annual confab for small businesses this week with a delegation from McLean County (“not Chicago,” he points out). Stebal said he mostly worried about the impact of Dodd-Frank on the industry, pointing out how the Durbin amendment had forced retail banks to limit debit-card swipe fees. But when pressed to explain how the law would affect his own work in commercial banking, Stebal didn’t have a long list of examples – and explained that was part of the problem: The new regulations are so complex that no one on Main Street knows what’s really going on, and it’s going to cost them to figure it out.

Health Care

The health insurance plans, they are a-changing

Health insurance plans will have to beef up on benefits if they want to stay in business under Obamacare, according to a new study out Wednesday afternoon from Health Affairs.

The health overhaul law mandates a wave of new requirements all intended to make health insurance more robust. It requires health plans to cover a set of “essential health benefits,” a comprehensive package of benefits outlined in the law. Health plans are also required to foot the bill for, on average, at least 60 percent of subscribers’ health expenses. In the individual market, insurers must also cap annual out-of-pocket expenses at $6,050 for individuals and $12,100 for families.

Environment

How to avert the end of fish? A little fish forensics might help

There are all sorts reasons why fish stocks are rapidly dwindling around the world. But one underrated problem is illegal fishing. One recent study found, for instance, that as many as one-third of the fish haul in areas like the Southwest Atlantic Ocean were caught illicitly.

And that’s a real problem for conservation. Let’s say that the cod population in the North Sea is endangered. European regulators might put a moratorium on cod fishing in that area, to allow the population to rebuild. Meanwhile, the industry would be allowed to catch cod in areas with healthy populations, like the Eastern Baltic. But how can anyone verify that the cod that appears in the supermarket is actually coming from the legal areas? What’s to stop fishermen from illegally harvesting the North Sea? Who’s going to know?

Businesses more willing to use bribery and fraud, in one chart

When we found out that Wal-Mart bribed officials in Mexico, it was a huge scandal. But it’s a practice that’s becoming increasingly acceptable among business around the world. A new global survey from Ernst & Young finds that companies are more likely to use cash bribes in hopes of improving their performance than they were two years ago: 15 percent of respondents (who included some firms’ chief financial officers) said they are willing to make cash bribes, compared to 9 percent in E&Y’s 2010 survey.
(Ernst & Young)

Similarly, 5 percent said they “might misstate financial performance” to make themselves look better, compared to 3 percent in the last survey. Ernst & Young explains that bribery and other corrupt practices are significantly more likely to happen in “rapid-growth markets” in the developing world, pointing out that 39 percent of survey respondents said that bribery and corruption occurs frequently in their countries.

Posted by Suzy Khimm

Which party will reap the boom?

We’ve talked a lot about “the fiscal cliff.” But the Congressional Budget Office’s report on the subject estimates what you might call “the fiscal plain” scenario: The world in which we extend all the tax cuts, put off all the spending cuts, etc. The economy, they say, would grow by 4.4 percent next year.

That sounds fairly optimistic to me. But let’s assume, for a minute, it isn’t, and that it actually happens. Then either Barack Obama or Mitt Romney, without introducing any major new policies of their own, would be presiding over 4+ percent growth. Politically, that would be huge for them and their party. The midterms would likely be a cakewalk -- you don’t want to change horses mid-gallup, do you? And it would likely have the effect of legitimizing whatever their platform was.

Lunch break: The world’s smallest fire truck

Oh Canada, you never let us down:

Posted by Brad Plumer

Environment

Just how dirty are Canada’s oil sands, anyway?

Once again, Congress is debating whether to approve the Keystone XL pipeline, which would bring oil from Alberta’s tar sands down to the Gulf Coast. Republicans want to fold it into the transportation bill. And scientists like James Hansen warn that harvesting tar sands would be “game over” for the climate.

A cup of heavy oil from Alberta. (TODD KOROL - REUTERS) So let’s get some numbers: What would the actual impact be? The Congressional Research Service just put out a new report that takes stock of various academic studies on the subject. Crude from Alberta’s oil sands is heavier, more viscous, and contains more impurities than other types of oil. So it takes more energy to extract and process. When you consider the entire life cycle — from digging the stuff out of the ground to burning it in your tank — oil from tar sands produces 14 to 20 percent more carbon emissions than other oil the U.S. imports.

Overall, the CRS report estimates, approving the Keystone XL pipeline would be the equivalent of boosting U.S. global-warming emissions by between 0.06 percent and 0.3 percent per year. (That assumes the pipeline spurs additional production in Candada.) At the high end, that’s like putting 4 million extra passenger cars on the road.

That may not, in itself, be “game over” for the climate. Though seeing as how the United States has pledged to cut its carbon emissions 17 percent by 2020, it would also be a slight step in the opposite direction.

Republicans don’t like regulations, except for when they do

Republicans typically don’t like federal regulators to stick their nose into Wall Street’s business. But when something goes dreadfully awry in the markets — and even the CEO can’t account for what’s happened — they tend to change their tune.

At a Senate Banking Committee hearing Tuesday, Republicans grilled top regulators about JPMorgan’s estimated $3 billion loss on derivatives trades, sounding incredulous that the government didn’t have broader oversight of the market. “You didn’t really know what was going on — the problems — until you read the press reports?” Sen. Richard Shelby (R-Ala.) asked Gary Gensler, chair of the Commodity Futures Trading Commission. “That’s what I said,” Gensler replied.

How can Obamacare succeed? Romneycare offers a few clues.

BOSTON — Massachusetts passed its universal health coverage on April 12, 2006. The day after, a cross-section of health-care providers, consumer advocates and businesses huddled on the 11th floor of a Boston office building.

All health reform supporters, they gathered to discuss one question. “The question was, what can we do to educate the public?” recalls John McDonough, who teaches at the Harvard School of Public Health. “Then we pretty much went about explaining to the state what this law was.”

It’s a question the White House now finds itself grappling with, too, as it looks to publicize a law that few Americans understand. It’s now taking flak for awarding a $20 million public relations contract to highlight the Affordable Care Act’s benefits.

Republicans have blasted the contract as wasteful, a political ploy to hype a polarizing law. Historically, there has been a bipartisan distaste for this kind of investment: Democrats blasted President George W. Bush when he used government funds to promote Medicare’s new prescription drug benefit in 2004.

Architects of the Massachusetts reforms, however, say this is the exact kind of investment that the Obama administration needs to make right now — and hasn’t done enough of yet. As they learned from experience (and I’m now learning on a week-long trip to Boston, sponsored by the Kaiser Family Foundation), making an insurance expansion work hinges in no small part on making sure people actually know about it.

Fewer Americans identify as pro-choice, but support for abortion rights isn’t dropping

The headline out of Gallup’s new abortion poll is that the number of “pro-choice” Americans has hit an all-time low: 41 percent of Americans identify with the label, down from 49 percent in 2009 and an all-time high of 56 percent in 1996.

This, however, seems to say very little about Americans’ support for abortion rights. There, views hold steady: 52 percent believe abortion should be legal under “certain circumstances,” a slight tick up from 50 percent in 2011.

Two views on private equity

Noah Smith defends it:

Fact 1: In Japan, there is no big private equity industry, because it is very difficult to do a leveraged buyout of a company. The Japanese government allows companies to defend themselves from takeovers in ways that are illegal in America. Also, Japanese companies often hold each other’s shares, a practice known as “cross-shareholding,” which tends to prevent hostile takeovers. Cross-shareholding creates huge financial risks; however, many of the Japanese companies that engage in cross-shareholding are big banks that are backed by the government (much as ours are here in the U.S., but more explicitly), so this risk is assumed by the Japanese taxpayer. For a comprehensive primer on Japanese corporate governance, see here.

Upshot: In Japan, private equity firms cannot buy companies and force them to restructure.

Fact 2: Japan has a productivity problem. We think of Japan as being super-productive, and in fact some industries (and most export-oriented factories) are. But overall, Japanese productivity kind of stinks. Since at least the 90s, Japan’s Total Factor Productivity has lagged far behind that of the U.S. Nor is this due (as Ed Presott has tried to claim) to a slowdown in technology; it appears to be a function of how resources are allocated within and between Japanese companies.

Wonkbook: Falling off the fiscal cliff

Wonkbook dashboard

RCP Obama vs. Romney: Obama +1.9%; 7-day change: Obama +0.1%.

RCP Obama approval: 48.7%; 7-day change: +0.7%.

Top stories

Reconciliation

— How Obama’s reelection team is using controlled experiments and microtargeting to track the impact of campaign messages.

— How Gawker wants to monetize comments.

— Eleven cell-tower climbers died during AT&T’s rush to expand 3G service from 2006 to 2008.

— The Atavist’s long-form experiment takes off.

— McSweeney’s ultimate guide to writing better than you normally do.

Posted by Suzy Khimm

The economics of Momofuku

Momofuku’s David Chang tells Bloomberg that rising prices for pork and beef have forced him to a duck-heavy menu. It’s an interesting look at how food trends that can seem faddish or random to consumers can actually be the restaurant industry responding rationally to changing price signals.

Posted by Ezra Klein

Environment

Mapping the global water trade

The current issue of Scientific American has a bunch of great charts on which countries use the most fresh water. Not surprisingly, most of the world’s water goes toward agriculture — only a tiny fraction is for household use — and the biggest users are China, India, and the United States.

But the most unexpected aspect of water use is the massive global trade in what’s known as “virtual water.” Japan, for instance, imports a lot of food and other products from abroad. Other countries need to use their water to make those products. That makes Japan the world’s biggest net importer of “virtual water,” followed by Mexico, Italy, and Germany. By contrast, countries like the United States and India are net exporters of virtual water.

The contraceptives lawsuits, explained

Forty-three major Catholic institutions on Monday filed a dozen lawsuits, in courts across the country, challenging the health reform law’s mandated coverage of contraceptives.

The legal documents are complicated — one suit, from Notre Dame, comes in at 57 pages. But the thing to know is this: Everything hinges on how courts interpret a law called the Religious Freedom Restoration Act, or RFRA.

Will self-driving cars mean the end of parking?

What a self-driving car sees. (AP) Tim Lee ponders how self-driving cars — of the sort Google’s working on — could reshape our cities. For instance:

It’s likely that once all cars are self-driving, we’ll barely need any off-street parking spaces at all. During peak periods, virtually all cars will be on the roads driving people around. During off-peak periods, cars will still be on the roads, they’ll just pull over to the side of the road and stop.

As Brad Templeton points out in the middle of the night cars could double- or triple-park on 6- or 8-lane boulevards, park in front of driveways, and so forth. This won’t be a problem because they’ll be able to instantly get out of the way if they’re blocking the path of another car.

One question is whether a world of all self-driving cars will require less energy (transport will be so efficient) or more (we’ll use them more often).

Posted by Brad Plumer

Lunch break: Opening a beer with a chainsaw

It can be done — and without spilling a drop:

Via.

Posted by Brad Plumer

Economy

What austerity looks like around the world