07-27-2002

LETTERS: Letters to the Editor for July 27, 2002

What the Public Thinks


Julie Kosterlitz's cover story on the corporate fiasco/wrongdoing/etc. was
excellent ["To the Rescue?" 7/20/02, p. 2148]. However (and you
knew that was coming), there were two points that I think she might have
overlooked.


First, in opinion research we've done on the issue, the pretty clear
message we've gotten is that people believe that moral decline-rather than
systemic breakdown -is the principal reason for the problem. That
indicates, at least to us, that the desire for systemic fixes is not quite
as strong as it otherwise would be. I realize that politicians always feel
compelled to do "something," but in this case, citizens are not
at all sure that there is anything to be done other than enforce the laws.
I also understand that it is difficult for the legislative process (and
its participants) to grapple with something as nebulous as "moral
decline." The rotten roots/bad apples conceit was pretty good; I
think the research done to date indicates that people believe this moral
decline is pretty widespread.


The second point is the notion that whatever Washington does (or fails to
do) is going to restore confidence. There is not much in the data I've
seen to support that assumption. I realize we work in the center of the
universe, but investors just are not looking to the policy process for
solutions.-Mike McKenna, President, Andres McKenna Research,
Washington


Farm Bill's Not the Problem


I find it surprising that a publication of your experience and insight
would exhibit the lack of depth and analysis evident in your July 13 cover
story, "Finding It Hard to Say `No' " [p. 2066]. Particularly
distressing was the complete lack of understanding of the budget for the
farm bill. There is no evidence that your writer discussed the piece with
anyone from the Agriculture Committee; for if he had, he would have
discovered that the 2002 farm bill in no way meets the criteria of being a
harbinger of reckless, uncontrolled spending.


In fact, federal spending on farmer programs (including conservation)
averages $20 billion each year for the entire six-year life of the farm
bill, according to the Congressional Budget Office-much less than the
recent three-year average of $24 billion annually. You also extrapolate a
10-year cost rather than the lower-cost, actual six-year authorization for
the farm bill. You then allow the false impression that farmers get every
bit of farm-bill funding, when in fact the farm bill includes sizable
portions for conservation, food stamps, rural development, research, trade
promotion, and bioenergy initiatives.


Your story ignored the real story: Washington's overspending from
Congress's yearly discretionary spending "indiscretions." The
2002 farm bill ends the unbudgeted, ad hoc farm spending of recent years
with a fiscally responsible safety net-the opposite of your portrayal of
the bill as the starting gun for a spending spree.


It's been said that critics complain about agriculture with their mouths
full, but my goodness, National Journal should at least know to chew
before you swallow a story whole.-Rep. Larry Combest, R-Texas, Chairman,
House Agriculture Committee


Worth a Mention


Ask the pharmaceutical industry how they would feel about an $18 billion
hit to their bottom line as the direct result of action by House
Republicans. Their response would not be one of glee.


Ironically, this hit is exactly what House Republicans voted for in my
bill, the Medicare Modernization and Prescription Drug Act. Unfortunately,
National Journal readers wouldn't have known this key fact by reading
Peter Stone's 4,641-word account in "Peddling Prescription
Plans" [7/13/02, p. 2072].


Stone ignores the verification by the Congressional Budget Office that one
provision of our drug bill will save seniors and taxpayers $18 billion on
their prescription drugs over 10 years. And this savings comes directly
out of the pockets of the pharmaceutical industry, not small pharmacists
or others in the distribution chain.


Under the current Medicaid "best-price" policy, the largest
discount a pharmaceutical manufacturer negotiates in the private market
must be passed along to the Medicaid program. But the
"best-price" policy has led to minimal discounting by
manufacturers. Arbitrary price floors are created, and consumers pay the
price because competing manufacturers have less incentive to steeply
discount their prices. We eliminated this inane "best-price"
provision in our bill, and force drugmakers to more heavily discount
medicine for seniors.-	  Rep. Nancy L. Johnson, R-Conn., Chairman, House
Ways and Means Health Subcommittee


Communism It's Not


Is Jonathan Rauch happy now? Should we all breathe sighs of relief now
that someone has finally compared militant Islam to Marxism [7/13/02, p.
2063]? Should anyone bother to explain to him Communism and its variations
and misapplication? Or perhaps even the ideological incompatibilities
among the groups who were reduced into one essentially evil and
anti-American entity? Rauch's "Social Studies" commentary, which
has no basis in any kind of science, and which lacks a social, historical,
and political context, has articulated a great deal of ignorance that is
constantly fueling this alleged clash of civilizations. The article's
worth is zero, and I hope your journal becomes aware of the garbage it has
flung at its readers.-Mazen Wehbe, Beirut, Lebanon


It Doesn't Add Up


Julie Kosterlitz ["The Social Security Wonk Wars," 6/29/02, p.
1964] performs well below her usual exemplary standards in failing to
explain what the analytical debate between Charles Blahous, the staff
director of the president's commission on Social Security reform, and two
of his academic critics, Peter Diamond and Peter Orszag, is all about. She
certainly fails to convey the simple fact that on key issues, Blahous is
simply wrong, his critics are right, and the issue isn't even
close.


Take the matter of whether the commission plan central in the debate makes
"heavy" use of general revenues. Blahous says no. Even if every
eligible person used individual accounts to the maximum possible extent,
the plan, according to Mr. Blahous, would use only a bit more than
one-third of the general revenues that it would take to restore balance to
the current system.


He reaches this conclusion with two bits of statistical legerdemain.
First, most of the deficits under the commission plan come early, while
most of the deficits in Social Security come 40 or more years in the
future. Blahous treats $1 billion of general revenues paid today as
equivalent to $1 billion paid in 2075.


Neat trick! He thereby ignores that cash owed in 75 years is worth about
11 percent of what the same amount of cash is worth today because of
interest costs. (Ask your lender if he will wait until 2075 to receive
next month's mortgage payment with no interest penalty for the delay.)
Adjust for these costs, and the fraction doubles from a bit over one-third
to two-thirds. Would anyone treat the value of money spent today as no
greater than that of money spent in 75 years? Of course not. This issue
isn't close.


Neither is Mr. Blahous's indefensible defense of the commission's practice
of using savings from large assumed cuts in benefits for the disabled and
young survivors to hold down the size of cuts in retirement benefits that
are necessary to balance the system and then denying that the commission
embraces these cuts in benefits for the disabled or young survivors. I'll
bet accountants at Enron and WorldCom wish they had thought that one
up.


If one takes interest costs properly into account and doesn't take credit
for benefit cuts one claims not to endorse, the commission's plan takes
more than 80 percent as much general revenue to balance the books as it
would take to restore balance without individual accounts. The same
commission that frets about the massive deficit facing Social Security
then says that it doesn't make much use of general revenues.


As former Sen. Daniel Patrick Moynihan was fond of saying: "Everyone
is entitled to his own opinion. But everyone is not entitled to his own
facts."-Henry Aaron, Senior Fellow, The Brookings Institution,
Washington




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