31 March 2010

GAO Reviews Major Weapons Programs

A new GAO report summarizes the state of 70 out of 102 defense major acquisition programs that are non-secret and in the R&D or early stage production stages (182 page pdf document). Previous reports in the series have led to the Secretary of Defense recommending the cancellation of major projects in the R&D phase and early termination of major projects in the production phase. In response to the earlier reports:

The Secretary of Defense proposed a fiscal year 2010 budget that ended or curtailed all or part of at least a half dozen major defense acquisition programs such as the Air Force’s F-22A Raptor, the Army’s Future Combat System, the Navy’s DDG 1000 destroyer, and the Missile Defense Agency’s Multiple Kill Vehicle—that were over cost, behind schedule, or no longer suited to meet the warfighters’ current needs.

The Department of Defense failed to meet deadlines to give information about its programs to the GAO as a representative of Congress, in the 2009 Presidential transition year, and was roundly criticized for taking on projects that were too technologically ambitious and for letting design and manufacturing issues linger unresolved far too late in the procurement process.

The one to two page program assessments are one of the easiest and most accessable sources for a comprehensive and comparable set of explanations of what's new in U.S. military technology. This is also a report card for the nation's major defense contractors and defense procurement officials, a mostly bad one although some signs of improvement were noted.

Deep problems were identified with programs including the F-35, both prototype designs of the Littoral Combat Ship (and each of its mission modules), and the Expeditionary Fighting Vehicle.

Oldest Man Made Structure Found In Greece

A 23,000 year old stone wall in front of Theopetra cave in Kalambaka, Greece (in the middle of the Greek mainland), probably built to protect its residents from cold winds at the height of the last ice age, is the oldest known example of a man made structure.

Some of the what was found, like remnants of fire, flint and quartz tools, early jewelry from deer teeth, animal bones and stone implements, are typical of the Mesolithic human archaeological sites. Other elements of the find were more notable:

Of interest are finds from the Mesolithic age related to ceramic production and cultivation. There is barley, wheat, and lentil in wild (Paleolithic age) form, but also as cultivars, which suggests that these people had discovered cultivation as the result of millennia-long efforts and not as the result of population movements from the Near East.

Implications For The History Of Food

There is considerable evidence that agriculture came to be, first, through collection of seeds from wild plants and probably cultivation of the wild plants, and then through the domestication of the wild species through selective planting with traits that made the plants more useful as food sources.

But, 23,000 years ago is very old for this kind of evidence. Wheat is native to Southwestern Anatolia, and lentils and barley are also part of the ancient Near Eastern agricultural package.

But, cultivation of domesticated versions of these crops is generally dated to around 11,000 to 13,000 years ago, give or take a millennium. Physical evidence can be used to track the arrival of this package of domesticated crops as it radiates from the Balkans to the West and North (and as it expands to the Indus River Valley in the East) over a period of many thousands of years.

The general assumption has been that agriculture didn't arise much before this date, because the ice age climate was not friendly to agriculture, and that it did not in fact arise much earlier than this date because it would have spread widely soon after agriculture using domesticated plants and animals was developed.

The agricultural part of this find that one would expect in Greece something like 8,000-12,000 years ago, not 23,000 years ago, although the existence of the an ancient wall that old does make sense.

This find, if it is dated properly, would put the earliest evidence of domestication of Near Eastern crops in Greece rather than in the Fertile Crescent of the Near East, a few hundred miles to the Southeast. It also implies a much longer span of time between the domestication of plants and their expansion elsewhere.

My strong suspicion is that this is a cave that was regularly inhabited from 23,000 to 8,000-12,000 years ago, and that the evidence of the ancient wheat, barley and lentils are from the later period which the dating methodologies used failed to distinguish. This would still support the less extraordinary claim that the Greek mainland was part of the same cultural community that developed agriculture in the Fertile Crescent and the Levant in the earliest part of the Neolithic Revolution, without necessitating a conclusion that agriculture originated ten thousand years earlier in Greece than it did in the Near East or anywhere else, and only then spread widely after that very long period of isolation.

This would still be significant, because it would indicate that proto-agricultural people were actually cultivating, exporting the idea of cultivation of, and intentionally carrying with them wild version of the crops in the Near Eastern food package in a fairly large geographical and cultural sphere that would have ranged at least from modern day Israel to Kuwait to Turkey and mainland Greece, before the domesticated version of these crops so central to human history emerged.

The more typical view to date, has been that each crop was cultivated in wild form (sometimes hard to localize because the wild crop had a wide geographic range at the time), and then was domesticated in one or two geographically distinct location for each crop, with dispersal of the agricultural crops and cultivation methods taking place only after the more useful domesticated crop arose. The more typical view to date has also been of a highly culturally and linguistically fragmented society that didn't begin to become a cohesive cultural unit until the wild crops were domesticated and that this society then would have been dominated culturally (at least) by people from the original very localized areas where that domestication happened.

An intermediately exceptional hypothesis is consistent with the possibility that the store of wild versions of Near Eastern crops really was 23,000 years old, although the domesticated examples would have to be more recent. If this was the case, then proto-agriculture probably arose around the time of the peak of the last ice age rather than just a few thousand years because it was a necessary reaction to the fact that people were forced to retreat to refugia in Southern Europe and the Near East as glaciers and the cold weather that preceded them creating higher population densities than those to which they were accustomed and reducing available food supplies from hunting.

Regardless of the exact date that it happened, the mere discovery of evidence of organized collection, and probably cultivation, of wild ancestors of Near Eastern crops that do not originate in mainland Greece is significant.

This would also suggest that it is almost impossible to determine the location of the jump from cultivating wild plants to the domestication of those plants, because the pre-domesticated versions of those plants were already being cultivated over a wide area by a geographically widespread culture whose participants had regular contact with each other in time frames to small to distinguish with radiocarbon or other archaeological dating methods. In this scenario, members of the proto-agricultural culture are first cultivating wild crops as a package throughout the Near East and the Balkans and then, once new and improved domesticated strains of the plants arise, spread that domesticated version across the entire Near Eastern and Balkan sphere in a matter of decades or to a couple of centuries or so.

Linguistic Implications

This community might have included, but wouldn't necessarily have had to include in order to be consistent with the evidence, an at least weakly linked, interacting subcommunity of proto-Indo-European language speakers (or speakers of a direct predecessor of proto-Indo-European) in some part of the North end of this Balkan and Near Eastern region. Indo-European languages are associated with early agricultural communities (both herders and farmers) although we don't know for sure if they were a first wave of food producing people, or a later but early wave of food producing people or cultures.

If that proto-agriculturalist subcommunity of proto-Indo-Europeans had a fairly wide geographic expanse, which would be plausible for hunter-gatherers (with a selective edge due to seasonal proto-agriculture) who travel more than true pure horticulturalists, this could also help explain why it has been difficult to localize the homeland of the proto-Indo-Europeans, who have been most plausibly localized to Anatolia, the Balkans or the area of Central Asia between the Black and Caspian Seas associated with the Kurgan culture over periods spanning a period of several thousand years. People who are members of a community whose members regularly interact with each other are less prone to see their languages diverge from each other in the entire geographic area of the community, even over long periods of time.

In other words, the "proto-Indo-Europeans" might have shared a territory that stretched from the Balkans to the Northern Near East and even into the parts of Central Asia associated with the Kurgan culture for thousands of years from a time pre-dating the appearance of domesticated versions of plants.

By 5500 years ago, in the Near Eastern Bronze Age, non-Indo-European language speakers of Afro-Asiatic languages (e.g. Semetic and Coptic languages) and speakers of whatever language family Sumerian belonged to, were engaged in agriculture. But, the could have been either part of the original agriculturalist community in the Near East, or those languages could have arisen as a result of pre-historical events thousands of years later.

Meet Rajiv Sethi

There are far too many economists of far too great importance who do mediocre, intellectually shallow (if technically rigorous) work. But, then there are economists like Rajiv Sethi who bring depth and insight to their analysis by acknowledging the role played by the human beings, processes and institutional contexts that are actually present in our economy, rather than merely trying to glean wisdom from sterile equations, government statistics, and far less grounded assumptions about the real world.

His blog is a great read and I've added it to the sidebar.

30 March 2010

How Much Would Colorado High Speed Rail Cost?

A study prepared by the Rocky Mountain Rail Authority pricing out proposed high speed rail options for Colorado is complete.

Where Would High Speed Rail Go?

A complete high speed rail system from Fort Collins to Pueblo, more or less along the I-25 corridor and from DIA to Eagle, more or less along I-70 would cost $21.1 billion to build. A map of this proposal is on page 18 of the executive summary.

The proposed routes only loosely match those of the existing I-25 corridor, instead using mostly "greenfield" construction dozens of miles over in some places and parallel to the interstate highway, more or less. This greatly reduces the cost of the project, allows for faster routes and allows for more convenient station locations.

Exending the line beyond Fort Collins, Pueblo and Eagle would be very expensive with only modest additional ridership according to the study:

[T]he parts of the system north of Fort Collins, south of Pueblo and west of Eagle County Airport comprised 40-50 percent of the system’s capital cost, yet only generated 3-6 percent of the system’s ridership.

High speed diesel trains were considered for these areas, but they would operated at a more than 50% operating cost loss and would provide little that intercity buses can't provide since they travel at about the same speed as interstate highway traffic and these areas don't have a problem with traffic congestion on their major highways.

The DIA portion would run parallel to the FasTracks light rail portion:

The Regional Transportation District's airport train will serve local transit patrons with a 30-minute trip for what might be a $5 fare. . . while the high-speed alternative might make the same trip in 12 minutes for a $15 fare.

The study proposes to develop high speed rail in the state in four phases, shown with the capital costs (including trains):

(1) DIA to Colorado Springs Airport with eight stops and twenty to twenty-five trips per day ($3.32 billion),

(2) Downtown Denver to Copper Mountain with eleven stops and twenty-five trips per day during ski season ($9.55 billion),

(3) Denver to Fort Collins with two stops and Colorado Springs to Pueblo with a single new stop each served by eighteen trips per day ($4.1 billion which breaks down as Fort Collins $2.1 billion; Pueblo $2.0 billion), and

(4) Copper Mountain to Eagle with three new stops, and a spur route to Blackhawk with a single stop each served by about eighteen trips per day ($4.15 billion which breaks down as Copper Mountain to Vail $1.75 billion; Vail to Eagle $1.69 billion; Blackhawk $0.91 billion).

The first phase would be an eleven year project; the next three would be fourteen year projects, in each case including environmental impact statements and pre-design planning. The entire system could be in place by 2035.

The facts of the study, however, make a reasonable case for limiting the I-70 corridor project in phase four from Copper Mountain to Vail, eliminating the part of the proposal from Vail to Eagle, at a savings of $1.69 billion in capital costs.

The study assumes that fares of 35 cents per mile (about $40 one-way from Denver to Pueblo or Vail) would cover all operating costs as they do in the Northeast Corridor high speed rail lines. The study estimates that a complete system would carry 35 million passengers a year by 2035, generating more than $750 million in passenger fare revenue.

What Kind of Trains Would Be Used?

The proposed system would operate using a "very high speed electric train" comparable to the German InterCity Express, French TGV, and Japanese Shinkansen, which have an average operating speed of 120 mph to 200 mph, and a peak speed of 150 mph to 220 mph. Average travel speed is lower because the train has to stop to pick up and drop off passengers. Average speed is expected to be 90-100 mph in the I-25 corridor, and 60-70 mph in the I-70 corridor.

This is about 10% slower in practice than the Maglev system used in Germany and Shanghai. These systems cost about three times as much to install in the I-25 corridor and about 17% more in the I-70 corridor, but is offset by lower operating costs. And, most of the extra cost of the maglev system is in the Vail to Eagle portion of the line that may not even make sense to build. The speed benefits are modest and they would slow down the system if installed in the I-70 corridor only, by making it necessary passengers from DIA to disembark and change trains at Union Station in downtown Denver (where a very high speed electric train must be used to serve the rest of the I-25 corridor).

The proposed system is faster than the electric rail systems used by Eurostar in U.K./France/Belgium, German InterCity Express-T, and American Acela systems. The proposed very high speed train would cost about $3.1 billion more in the I-25 corridor as this alternative. But, downgrading the I-70 corridor part of the plan to the slower Acela grade high speed electric rail system would increase the cost of the I-70 part of the system by $2.3 billion, and requiring a train change at Union Station for passengers from DIA would remove some of the speed benefits of high speed rail.

By comparison Amtrak's non-high speed rail systems average an operating speed of 30-50 mph and have a peak speed of 79 mph. High speed diesel trains such as the Spanish Talgo and German InterCity Express-TD have an average operating speed of 50-70 mph and a peak speed of 110-130 mph, and would work out in practice to have speeds in the I-25 corridor of 72-79 mph running parallel to highways.

The study indicates that ridership on a high speed train that is faster than driving would be 3-4 times as high as on a high speed diesel train traveling the same speed as a car, and 7-10 times as high as on existing Amtrak trains that are much slower than driving. The faster a train travels, the more heavily it is used.

Is It Worth It?

The public benefits of the I-25 corridor part of the system that would serve 3.5-4 million people, and provide a renewable energy compatible way to provide a faster connection Colorado's major cities for less than $7.5 billion without an operating cost subsidy are clear. The first phase of this high speed rail system should be commenced ASAP.

The public benefits of the I-70 corridor part of the system that would mostly serve affluent ski resort and mathematically challenged casino bound tourists are less obvious. Apart from peak ski season weekends, it would provide little speed advantage over the buses already used. The cost is very large compared to the benefit that would be provided to the ski industry economy, and the case that this benefit should come from government funds is much weaker. The proposal would reduce pressure for Colorado to widen I-70 and would become a signature attraction of the state. But, $13.6 billion is not chump change. This looks very much like economic welfare for casinos and ski resorts. If these industries, which are the primary beneficiaries of this high speed rail corridor are willing to pay for it, or a private venture with a state monoply to wants to build and operate the line, fine. But, if not, it isn't clear that the people of the state of Colorado should.

Pointedly, the study does not clearly separate the costs and benefits of the I-25 corridor part of the rail system from those of the I-70 corridor part of the rail system.

I would, at least, be inclined to put in place the third phase of this project before the second one, to insist the the casinos pay for the entire capital cost of the Blackhawk spur, to cut the line off at Vail, and to insist that the ski resorts pay the lion's share of the I-70 corridor expenses. And, of course, later phases could be abandoned if the earlier most likely to suceed phases of the project did not perform as well as expected.

29 March 2010

Stop the ACTA

The administration is currently negotiating an intellectual property treaty known as the Anti-Counterfeiting Trade Agreement (ACTA).

It is one more example of a secret, non-democratic process being used to promote an end, strict enforcement of copyright laws, that is far more controversial than it is described as being. It has become increasingly clear that "strong" intellectual property laws are seriously harmful to liberty and the economy. But, the entertainment industry carries on trying to push for it as an uncontroversially good thing anyway.

The Obama Administration should drop out of the discussions and abandon the proposed act immediately.

Ford Sells Volvo

China's Zhejiang Geely Holding Group will pay Ford $1.8 billion for its Volvo brand under a deal that has been negotiated since October. Ford bought the brand for $6.45 billion in 1999 and has been trying to sell it since 2008.

The privately owned Geely was ranked 11th in total sales last year in China and will benefit from Volvo's research center and reputation for high safety standards.

The Chinese company will allow Volvo to operate largely independently. Volvo will keep open its manufacturing plants in Sweden and Belgium while looking to open facilities in China.

The sale is a $4.65 billion loss for Ford over an eleven year period. But, it represents something of a victory for the sole U.S. automobile manufacturer to have escaped to need to go bankrupt or secure a government bailout. It was the first of the Big Three to seriously try to reinvent itself and has been the first to reap the rewards. Ford realizes a substantial amount for a small, unprofitable division that it vitally needs to provide that working capital that other major automakers are obtaining through government loans.

General Motors is also starting to turn around. Its reasonably strong surviving brand sales are buried for the moment in the declining sales from its discontinued brands for now. Chrysler meanwhile, is a source of considerable reorganization noise, but the results of these efforts are less obvious. The Fiat contribution is invisible in sales figures and while Chryler's minivans are selling, many of its other models are not.

This is yet another step in the process of unwinding a wave of automobile industry consolidations with each of the Big Three retaining four major divisions in the U.S. market:

Chrylser will be left with Dodge, Chrysler, Jeep and will add Fiat.

Ford will have Ford, Mercury, Lincoln, and a financing arm.

GM's North American dealers will have Chevrolet, Cadillac, GMC and Buick, with the GMC-Buick dealership channel consolidated into a single channel.

GM has four more foreign brands:

GMDaewoo (70.1%), Holden, Opel, and Vauxhall. Opel/Vauxhall's fate is currently being negotiated (Vauxhall makes right hand driver's seat versions of Opel model for the U.K. market); it may be spun off or sold [or kept]. Holden is the Australian based subsidiary of GM and also is the direct parent company of South Korean based GMDaewoo.

General Motors brands Hummer, Pontiac and Saturn will cease to be produced. Similarly, Chrysler's Dodge Viper will discontinue production this year after efforts to find a buyer for the iconic model failed. Saab, Volvo, Jaguar and Land Rover have been spun off, as have GMAC, Chrysler Motor Credit and the military division of General Motors (now a part of General Dynamic).

Fewer brands are a necessary response to selling fewer cars, and often doing so at a loss.

While big three U.S. automakers shed brands, Toyota added a low end Scion subline to its Toyota and Lexus lines, and Hyundai has made an affordable entry into the high end market with its Hyundai Genesis models. Companies from China and India meanwhile are considering plays to move into export and international markets.

26 March 2010

HCR II Done. Where Are We Now?

Health Care Reform Fixes Passed

The second part of the Health Care Reform bill (and accompanying legislation replacing private sector federally funded student loans with a direct loan program from the Department of Education that eliminates the private sector middle man) has passed and awaits President Obama's signature, which is certain to be promptly forthcoming. Thus, fears that House changes in the Senate passed version of the Health Care reform bill, which was signed by the President on Tuesday of this week, have proven unfounded.

This is a second case where Senate Democrats have found a way (in this case through a reconciliation process), to overcome Republican obstructionism seemingly putting an insurmountable sixty vote barrier to taking action. Previously, Senate Democrats thwarted an effort to put a hold on almost all of President Obama's nominations by threatening to make recess appointments.

The House "fixes" to the health insurance reform increase subsidies for middle class families to buy health insurance and reduce the bite of a new tax on premiums of expensive health insurance plans, which will make health insurance available to several million more people, and more generally provides a health care reform closer to the one that the President and Democrats have sought within the general framework of increased coverage through increased use of private health insurance and expanded Medicaid eligibility.


The bill makes access to health care much easier for those with pre-existing conditions, the self-employed, people who work for small businesses, and the poor. As a sole practitioner attorney, this will be a huge help to me. It costs me something like $10,000 a year more than it would a comparable attorney in a large firm to get the same health insurance (if I could get it at all), something that this bill will cease. This bill will also provide thousands of dollars more in subsidies to my family's cost of paying for health insurance in years when business is bad, providing a critical safety net for a self-employed attorney like myself whose profitability is quite cyclic.

The bill also greatly improves the financial situation of primary care physicians who serve significant numbers of Medicaid patients. These are among the lowest paid group of physicians in the United States today, and will be needed in far greater numbers now that many more people will be eligible for Medicaid benefits.

And, the bill places the cost of expanding the scope of Medicaid coverage entirely on the federal government, rather than using the usual 50-50 state-federal split of Medicaid costs. This amounts to long term federal suppport for cash strapped state governments which generally don't have an ability to run sustained deficit budgets the way that the federal government does.

The bill also makes progress in improving the lot of those who have health insurance and are mistreated by their insurance companies, such as people who have their benefits terminated based upon alleged deficiencies in their stale applications for insurance coverage.


The down side of the bill is that its core provisions that expand access to health care don't take effect until 2014. So, we'll have to endure about 45 more months of a slightly modified version of the status quo (and some of the earlier effective date reforms under the bill, like the creation of high risk pools, already exist in Colorado). This is a long time to have to muddle through the problems in the existing system, but it is better than the "possibly sometime" date for reform before the bill was passed and leaves open a clear path to moving the key dates forward is the public becomes more comfortable with the legislation now that it has been passed.

The bill passed is light on measures to reduce health care costs, although it does have some. Reducing the ranks of the uninsured by itself, reduces health care costs for people with private insurance by trimming thousands of dollars of costs shifted by providers from patients who provide only partial or no payment. Reducing the ranks of the uninsured also makes it easier to direct people to low cost primary care and preventative and maintenance health care providers rather than high cost emergency room providers. The bill limits health insurance company's administrative costs and profits (other than investment income) to 20% of premiums, and takes some baby steps towards encouraging competition. The bill adjusts reimbursements under Medicare and Medicaid in a way that is suppposed to signficantly slow the growth of public sector health care spending, and takes a first stab at controlling prescription drug costs.

But, the bill does little to address one of the main reasons that health care in the United States is the most expensive in the world by far, which is the very high rates at which health care providers (e.g. doctors, nurses and hospitals) are compensated, and the lack of incentives in the system for the people who are paying those providers with other people's money to drive harder compensation bargains.

While some of the easiest cost control measures are now law, harder cost control measures with a serious impact remain on the horizon.

Prospects For Progress

The status quo in American legislation tends to be very stable, so it is unlikely that the main elements of the health care reform bill will be rolled back before they take effect in 2014, even if Republicans make gains in the 2010 and 2012 elections significantly greater than anyone anticipated now.

When the bill does take effect, the American health care system will start to resemble that of the German, Dutch and the Swiss who also have near universal health care provided predominantly through private insurance plans. The fact that the system we are moving towards have first world precedents that have a reasonably long history of working well is comforting.

The current round of health care reform has cut the big Gordian knots standing in the way of change. Now, there is plenty of room for isolated, modest, incremental changes that build on this major health care reform in ways that address the remaining problems. Also, many of these proposals, unlike the larger health care reform bill, have some hope of being adopted and working on a state by state, or even a local level.

For example, I assert that it will be much easier to pass a narrow bill to create a government chartered but not funded health insurer (i.e. a public option) in the model of Fannie Mae and Freddie Mac (perhaps limited to states with a lack of competition), to put competitive pressure on existing health insurance companies, now that this concept will be harder to confuse with an attempt to "socialize medicine" or nationalize health care providers. This slight attempt at cost control has had strong majorities of popular support throughout the health care debate, but was scuttled out of concern that it representated a move towards socialized medicine (i.e. long waits and rationing in Soviet style health care provision) inaccurately suggested by the name. Freed of the room for confusion created by its interaction with the larger health care bill, this cost control measure may be irresistable, particularly if Republican campaigns in 2010 based on opposition to health care reform don't work as well as the GOP has hoped.

Similarly, the exclusion of undocumented immigrants from the effort to expand health care coverage, while politically popular, may prove problematic in practice. Uninsured people create externalities for their communities regardless of the reason that they lack access to health care. Either in an immigration bill (whose prospects of passage in 2010 look dim at this point) or in future health care legislation either at a state or a federal level, there is going to be a need to figure out how to provide some sort of health care for undocumented immigrants who can't afford it. My suspicion is that this effort will start by shoring up health care options for children and pregnant women, perhaps through school and community based clinics, and improving treatment options for infectious diseases, at least in places with large numbers of undocumented immigrants.

There is now plenty of time to let the dust settle, determine exactly what the reforms passed by Congress actually do, and prioritize the next steps. Some of the next steps may be controversial, although they will influence far fewer interest groups and thus provide far less of a battle royale in Congress when they come up.

Cost Control: The Next Big Health Care Battle

Some of the key next steps should be able to secure bipartisan support. Now that almost everyone will have access to health care, the big questions will be: (1) what can we do to control health insurance premiums, and (2) what can we do to control public spending on health care while still providing access to health care for existing beneficiaries.

Just about everyone who pays taxes or health insurance premiums, other than profitable health insurance companies and well paid providers will have a shared and similar interest in promoting legislation that will make this happen. Further, the existence of a large comprehensive system of subsidizing the cost of buying private health insurance through the tax code will only add to the intense pressure placed on federal budget writers, already present due to the fiscal crisis created by growing Medicare and Medicaid expenses, to control health care costs.

American businesses and individuals have been fed up with much larger than inflation increases in health care costs almost every years for decades. The health care industry, which suffered less than most other industries in the tech bust and financial crisis, remains a fat target for populist outrage.

Health care providers who we know personally and who provide us the gift of life and good health, have managed to parley the good will that exists towards them into relatively lenient treatment in the current round of health care reform. But, at some point, there is going to be no more room to squeeze health insurance companies who are the bearers of bad news, have been doing a poor job of doing their job and are as a result wildly unpopular.

As the cost of health care mounts (and this year has brought us another record increase), political pressure to do something, anything to ease the pain will rise on a bipartisan basis.

The problem is that while lots of garden variety policy wonks had very good ideas about how to expand health care coverage and were able to find a politically feasible formula for doing so, the ranks of policy wonks with good ideas about how to cut health care costs without undue pain (beyond savings that simply result from universal access to health care) are far thinner, and the level of consensus on one or a handful of general approaches that are likely to be effective are much thinner.

One group of policy wonks wants to move to a single payer system, on the theory that this reduces wasteful costs associated with insurance company bureaucracies and strengthens the negotiating position of this payer vis health care providers. This would probably work (Canada does it, for example), but is politically out of reach, for now.

Still, there must be a solution, because other countries with private insurance based universal health care like Germany, the Netherlands and Switzerland, manage to provide quality health care at a far lower cost. Now that we have made a national decision on what kind of model to use to achieve near universal health care, we need to example the systems whose model we have emulated more closely, see how they manage to control costs, and act likewise. While this takes serious research, some of which was already underway for the current health care debate, this is a project that the nation's think tanks and policy wonks can make real progress upon in a just a few years. If they do their jobs well, they can pave the way to a better informed debate on cost control, freed of the divided priorities that characterized this round of health care reform.

Not Socialized Medicine

The "socialized medicine" concern was widely heard in the health care debate. The round of health care reform that was just passed keeps both providers and health insurance in the private sector to essentially the same extent that they were before the bill was passed. The expansion of Medicaid does expand government provided health insurance, but only to people who overwhelmingly lacked any health insurance before the bill was passed. Most of the reduction in the ranks of the uninsured will come from more people buying health insurance from private health insurers.

For all but the poor, health care reform basically amounts to a new set of tax incentive to buy health insurance paid for mostly with increased tax rates on the unearned income of high income taxpayers. Essentially, the bill leaves the group health insurance market for employees of big business and their families, which was working well enough, although it was expensive, unchanged, while making major reforms to the way the the small group and individual health insurance markets, which were failing to function, operate and are funded.

For states that want to move beyond the default private insurance based model, the bill also makes it possible for states to innovate, for example by moving to something close to a single payer system, so long as they can maintain the health care coverage levels of the status quo bill. But, there is no sign that this kind of effort will happen anywhere, let along sweep the nation, any time soon.

Americans have given the private sector in the health care and health insurance industries a kick in the butt and another chance. If the system works very well, it may even be possible to privatize the some of the public clinics and public hospitals that have served an interim solutions to providing health care to people who don't have it. If it fails, we may have to revisit options that call for a greater level of direct governmental management of the health care system.

Cheaper Diesels Coming Soon

Diesel engines in cars and other vehicles need catalytic converters, which require platinum, to control their otherwise unacceptably noxious emissions. Platinum costs $1,590 per ounce, which is considerably more than the price of gold. The need for a catalytic converter with platinum in it drives up the cost of a diesel car by $1,000 to $5,000 each.

But, now General Motors scientistis have found a cheaper material, perovskite, that works about as well, but is much cheaper.

[P]erovskite oxides made of cobalt or manganese combined with oxygen. By adding a bit of strontium and lanthanum into the mix, . . . manganese-based perovskite catalysts converted NO to NO2 about as well as platinum-based ones did. The cobalt-based perovskite catalyzed the reaction at rates significantly higher than platinum. . . . The new catalysts are not, however, entirely free of precious metals. The team had to add a bit of palladium – which goes for about one-quarter the cost of platinum – to eliminate some sulfur buildup.

The result may be a new generation of less expensive diesel vehicles. This is good news because diesel engines are more fuel efficient, are reliable because they have simpler designs (they don't need spark plugs), and are more easily adapted to biofuels. The process for making biodiesel is easier than the process for making biofuel substitutes for gasoline, such as ethanol.

Diesels have long been more popular in Europe than in the United States, because fuel is more expensive there making fuel efficiency more important. But, it is only a matter of time before the United States faces similar economic pressures.

24 March 2010

American Revolutions 1.0 and 1.5

Before there was the American Revolution that lead to the creation of the United States of America, there was Leisler's Rebellion in New York, which lasted from 1689 to 1691, during the brief republican period in England, which deposed the king's representative, instituted democratic government and attempted to put in place redistributive economic policies. Like the first French Revolution (1789), that followed a century later along the same lines, it failed. When the English Civil War was won by a new British monarch, he dispatched a new Governor-General to New York who was returned to power under force of arms and the leaders of Leiser's Rebellion were gruesomely executed for treason.

Similarly, in 1754 in Albany, New York, at the Albany Congress, Benjamin Franklin proposed to delegates from nine American colonies the formation of a union of the American colonies under a constitution similar to that of the Articles of Confederation (1781) adopted after the Declaration of Independence (1776) and before the current United States Constitution (1789) and Bill of Rights (1791) were adopted. This proposed Albany Congress union would have retained the British monarch as a nominal supreme leader (along the lines of Australia today). It was approved unanimously by the delegates at the conference but failed to receive approval from the colonial legislatures, so the idea was dormant for a while. Franklin mused that it might have prevented the revolutionary war and the British acts that led up to it, if it had been adopted.

All of which is to say that there are dress rehearsals in history, but they don't get as much press.

Denver's Infill Driven Growth Outpaces Suburbs

Once again, Denver proper is proving to be one of the healthiest cities in the nation and is in better shape than its suburban counterparts.

Denver's population spurt accelerated last year as it became the Front Range's growth-rate leader for the first time in decades . . . The populations of both Denver and El Paso counties rose above 600,000, with Denver maintaining a 6,000-person lead, according to new U.S. Census Bureau data released Tuesday. The census estimates showed that the city and county of Denver grew by 2.9 percent between July 2008 and July 2009 and now is home to 610,345 people. That's a faster pace than former poster children for growth Douglas and Weld counties. . . . Census records show that Denver has not been the fastest-growing county in the metro area since at least the early 1970s.

"Denver was always shrinking," said State Demographer Elizabeth Garner, who estimated that the consolidated city-county last surpassed the suburbs in growth during the 1950s or 1960s. Denver also ranked fourth in growth among the nation's 100largest counties. . . . She said the records also show a steady stream of new residents from California, especially Los Angeles County, and from surrounding Colorado counties such as Boulder. Denver had a net gain of 10,620 people in addition to an overall 6,776 increase in births minus deaths. During the decade's first half, Denver saw more people leave the city than move in, Garner said.

From here.

Looking behind the overall population growth number, Denver looks much better positioned than its neighbor to the South.

Growth in Colorado Springs pretty much comes down to a single factor. The military decided to close a lot of military bases and many of those bases were consolidated to the base locations in and around Colorado Springs. Heavy reliance on the decisions of a single federal government agency for your municipality's health isn't healthy, particularly when most of your local population wants to shrink the federal government and your Congressman is an impotent junior member of the minority party in the House of Representatives with a poor record for working across party lines.

Colorado Springs recently decided to make dramatic cuts in municipal services, such as shutting down the suicide prevention hotline, turning off a third of its street lights, deciding to let the grass in all of the municipal parks die, selling the police helicopter, and closing many of the city's recreation centers, rather than slightly increase its very low property taxes. This is hardly a good way to attract residents who aren't moving there as a result of a Department of Defense fiat.

Denver, in contrast, has a diversified, mixed public and private sector driven economy. It is the center of state government in Colorado, is home to regional headquarters for many federal government agencies, is a financial center, is a regional distribution center for goods, serves as a agricultural economy hub, continues to have some manufacturing employment, is home to multiple colleges and universities, is an entertainment hub, is a retail destination, and is a base of operations for many information technology, biotechnology and oil and gas firms. It isn't dependent, as it was at many times in the past, on isolated industry like interstate rail travel, gold mining, silver mining, oil production, cattle slaughtering, or tuberculosis treatment. Unlike its suburbs, Denver has more jobs than people, which serves it well as people are increasingly trying to reduce their commuting time and expense.

Indeed, in the reverse of the Colorado Springs development model, a significant share of Denver's growth is related to mostly private sector infill development in places that the Department of Defense vacated.

Also unlike Colorado Springs, Denver has managed to continue to upgrade its municipal services through resident support for modest tax increases, has managed to contain cuts to municipal services and is upgrading its transit capacity in projects like an upgrade of Union Station. Denver's leaders have managed to get its residents to believe that it is worth their money to invest in a city worth living in and that investment is produced positive results.

Denver's approach is also in stark contrast to that of neighboring Aurora shut down half of its libraries rather than slightly raise property taxes, cut other municipal services, has long had municipal services inferior to Denver, and has bet its transportation future on an underused toll road (E-470).

My Grandchildren's World Part III: Medical Technology

In my children's and grandchildren's lives human genetics will be much better understood. Relatively inexpensive tests will be able to flag a host of conditions with genetic causes in infants and screening for them will become as routine as vaccinations and blood typing. The immune systems and its autoimmune disorders will also be much better understood, as will the biological basis of many mental health conditions. There will be other biotechnology based treatments as well, some flowing from the understanding of gene biology that drives health conditions.

Continued Advances In Treatments For Physical Health

The physical health applications of this knowledge will flow naturally from the existing state of medicine.

Gene therapies will permanently cure conditions like hereditary blindness in children. Chronic autoimmune diseases like diabetes type I, multiple sclerosis, and lupus will have cures. A childhood mouth rinse at the dentist will greatly reduce their susceptibility to cavities. Gut bacteria transplants will become a common tool to help treat obesity. People at high risk of developing certain kinds of cancers will start early and regular screening tests, and cancer therapies will work more often and produce fewer side effects. Sometime in my grandchildren's lives, there will probably be a cure for AIDS, and there will be effective immunizations against most forms of hepatitis. An improved understanding of nerve cells will make it possible to cure paralyzing spinal injuries. A quick and cheap test will be able to diagnose most cases chronic fatigue syndrome and an anti-viral drug regime will provide an effective treatment for it.

Cheap home test kits you can get at a drug store, like the pregnancy tests available now, will allow you to determine if your kids have bacterial (and if bacterial, whether it is a antibiotic resistant strain) or viral infections so that parents can provide the appropriate treatment for routine childhood illnesses without going to a doctor. Similar test kits will allow people to test themselves anonymously for all of the major sexually transmitted diseases with a single pinprick of blood.

Combination drugs that deliver "drug and vitamin cocktails" will replace the handfuls of pills taken by so many of us end up taking as we get older in a single pill that extended release methods will allow us to take just once a day.

Kits and response training for conditions that require swift treatment, like drugs to administer during strokes, electric shock treatment for cardiac arrest, and liquid wound sealers for major traumas will become as commonplace as CPR training.

Multiple forms of long term vision corrective technologies will make glasses and contacts anachronistic. Non-invasive surgeries and drug therapies will make long hospital stays and major surgeries rare. Once the patents on these new breakthroughs run their course, it will become much cheaper to treat some of the most expensive diseases. We won't necessarily extent the maximum lifespan very much; our bodies are built to self-destruct at a certain point. But, far more of us will be living into our nineties and even beyond a century. Our lifespans will be extended by a about a generation, and the percentage of us whose quality of life is impaired by ill health will greatly decline.

The commitment made this week in the United States to provide health care through a system that doesn't deny coverage based upon pre-existing conditions, already adopted in most of the world, will remove many of the privacy fears associated with diagnostic and genetic testing for physical conditions.

Forensic Technology

It is only a matter of time, that will have probably arrived sometime in my grandchildren's lives, before there are comprehensive databases of DNA profiles, finger print patterns, retinal scans patterns, and dental records for identification purposes for everyone on the planet. This will be used for purposes ranging from identifying people who can't communicate, to powering security systems, to establishing paternity, to making identity theft and false identities impossible for all but the most sophisticated to maintain, to identifying criminal suspects.

Non-invasive brain scans will be able to reveal signs that children have suffered traumatic child abuse in ways that existing physical evidence cannot.

Ubiquitous digital surveillance devices of increasing quality on police cars, in police stations, and in a variety of public places will make it easier for juries to evaluate allegations of police misconduct, statements from criminal defendants, and identify suspects who may have committed crimes in public places.

Arrest and conviction rates in impulsive stranger rape cases will soar to well over ninety percent. All but the most meticulous burglars will be caught before they have an opportunity to commit hundreds of crimes. Crime scene investigation units will be used far more widely, because they will be able to solve such a wide percentage of crimes.

People on probation and parole will probably routinely receive implants that track their location twenty-four hours a day and scan their systems for prohibited drug use (or for failure to take mental health drugs that they are required to take as a condition of probation or parole) many times a day.

Mental Health

The way new medical technologies impact mental health will have much greater social consequences.

In my grandchildren's world, mental health conditions will be identified much more strongly with a specific biological basis and classified accordingly, and diagnosis will involve medical tests to a much greater extent.

A few genetic mental conditions may be succeptible to treatment. Mental retardation from single gene disorders like Lesch-Nyhan disease, Gaucher disease and phenylketonuria (PKU) may be particularly receptive to gene therapies that can at least limit their impact.

Since so many mental health conditions have a strong hereditary or other biological component present at birth, parents will know from the time a child is an infant that the child is at high risk for conditions ranging from schizophrenia, bipolar disorder, autism spectrum disorders, ADHD, many anxiety disorders, select learning disabilities or psychopathy, and parents will be told what to expect and approximately when.

Early genetic tests will be able to determine if a child is likely to be resilient in the face of traumatic events or exceptionally vulnerable to them, and will be able to tell is a child is likely to be able to sustain stable personal relationships and marriages, or is likely to be prone to unstable long term personal relationships. A child's susceptibility to substance abuse problems will be revealed. Parents will know if a child will have a tendency towards novelty seeking behavior or impulsively. It may even be possible to make an initial assessment of a child's likely IQ range (or at least if the child is likely to be mentally retarded based upon conditions present at or shortly after birth), is anticipated aptitude for facial recognition, has propensity to stutter, or is likely to have a strong musical aptitude.

Early testing will be able to determine is a child is likely to have a homosexual or transgender identity (and probably to identify multiple subtypes of these gender identities, such as distinctions between people prone to be "butch" or "fem" lesbians).

Life may be particularly difficult for people who have mental health conditions that are not placed on a definitive biological basis, despie the fact that they are real. These people may face something like the problems that people with chronic fatigue syndrome, whose primary biological basis has jsut been discovered, have experienced in the last few decades, forced to advocate for theselves in the face of deep skepticism from the medical establishment which will be even more revered then than it is now.

Treatments will remain more elusive, and even the desirability of treating these conditions will remain controversial. Finding satisfactory long term treatments for many complex mental health conditions will prove far more difficult than developing diagnostic tests to determine if they are present, and many of these conditions will remain incurable. But, relatively easy permanent cures to some conditions, like phobias or PTSD that involve memory or problem concepts, may be possible in a handful of one time sessions.

Not everyone will want to know what these tests could tell them. Our society has spent thousands a years moving away from a sense that our mental lives and futures are governed by fate or destiny and moving back in that direction will be uncomfortable to say the least. The evolving science of mental health may become as hot of a topic in my children and grandchildren's lives as reproductive health has been in the last half century. Just as reproductive health had missteps that dramatically influenced the attitudes of whole generations (like attitudes towards IUDs caused by the defective product the Dalkon Shield), there will probably be missteps in the rapidly developing world of mental health treatment that transform our attitudes about this field. A drug touted as safe will turn out to have harmful side effects when taken on a long term basis, or will become simultaneously less effective and addictive, or will lead to inner mental discomfort for people strongly pressured or forced to take them because it changes a core part of who they are.

On the other hand, an increasingly biologically oriented view of mental health may move the criminal justice system from a punishment orientation to a treatment orientation for a much broader array of mental health condition driven behavior.

The way that society chooses to deal with the knowledge that some individuals are at particularly high risk of criminal or anti-social behavior in a way determined with indisputable medical tests is also going to pose profound moral and philosophical, as well as practical challenges.

23 March 2010

Colorado AG Joins Frivolous Lawsuit

Colorado Attorney General John Suthers has joined a frivolous political complaint seeking to find health care reform unconstitutional which was joined by on our behalf.

The complaint argues in legal reasoning worth of tax protestors and conspiracy theorists that the 10th Amendment deprives Congress of the power to impose a modest tax on businesses and individuals that fail to obtain health insurance, and that the regulation of health insurance does not fall within the Congressional interstate commerce power. It also argues that it is impermissible to condition government spending on compliance with federal funding conditions.

Those who thought that Attorney General John Suthers was a career law enforcement officer, and not craven political tool who doesn't exercise reasonable professional legal judgment, should think again.

Alas, it isn't clear that the Democrats will mount any meaningful challenge to him this time around, so he will probably be re-elected anyway. Apparently a Democrat is seeking a nomination in the campaign, but has done nothing meaningful to seek the office.

Health Care Reform Part II Vote By Saturday

Democrats need just 50 votes on each of the proposals made by Republicans (and the final vote) to prevail on health care reform part two (summarized here) which will be voted upon by Saturday, since the Vice President can resolve any ties in their favor and the rules don't allow for filibusters in this context.

The bill would tweak provisions of the already passed and signed health care reform part one blogged earlier today at this site.

At this point, it looks like part two is likely to pass.

Ordering The City

Prawfs blog has a great compendium of posts inspired by the book "Ordering the City," by Nicole Stelle Garnett. I sum up some key insights form those posts below:

* Urban planning is best by baby steps and should be aware of discrepencies between the views of urban elites and the other people who live in neighborhoods subjected to urban planning.

* Neighborhoods are perceived as more disorderly than they are when they have a higher percentage of black residents, even by the black residents themselves.

* Zoning regulation is authority to be used particularly cautiously because it often has effectively irreversible consequences manifested in the built environment. Other forms of regulation of urban disorder can be more easily reversed if these approaches turn out in hindsight to have been ill advised.

* Even when single use zoning reduces crime, it comes at the high cost of trapping people in their limited neighborhoods or even their homes, and excessively stratifies the community.

* Urban vibrancy that looks like harmful disorder in poor neighborhods can sometimes actually be helpful economic and social capital building activity. Informally ordered activity is often more structured than it seems. But, making vibrant areas safe for people to be out interacting may require more aggressively interventionist policing strategies.

* Encourage small scale economic activity in cities (including home businesses). . . preserve non-conforming uses . . . reduce regulation of mixed-use zoning and [reduce regulation of] the rehabilitation of vacant buildings.

* [A]n organic order tends to be superior to a government-imposed one; "commercial land uses stabilize poor neighborhoods and destabilize wealthier ones," "fear of the police is also a major predictor of fear of crime" and

[U]nder-policing is a serious problem in poor minority neighborhoods, and minorities exercise their increasing political power to demand that urban officials prioritize public safety. . . .[but] foot patrols and community policing do the most to reduce the fear of crime . . .[not] militaristic “swat team” strategies, which tend to alienate community residents. . . . an obsessive focus on crime statistics likely generates bad incentives for police . . .

an emphasis on . . . “aesthetic order” likely works to the detriment of minority neighborhoods. . . . the aesthetic of the day—new urbanism—is clearly an elite one (despite promises of . . . community involvement galore). Moreover, the new urbanist’s regulatory alternative to zoning (“transect zoning” or “form-based” coding) increases development costs and could well dampen development hopes in poor communities, which arguably need less land-use regulation, not more. . . . the intersections between perceptions of disorder, race, and urban policy arguably weigh in favor of devolutionary approaches to both land-use and policing policies . . . the ability of police officers to exercise force, combined with the possibility that the exercise of force will be unjust and discriminatory, is a reason to approach questions of police discretion with great caution. But, I am not sure that . . . these realities weigh in favor of planners rather than the police officers as disorder-controllers.

UPDATED (3/24/2010) to add a link to a new post in the series:

"[I]t’s difficult, if not undesirable, to rescue cities from obsolete historical forms (including past planning mistakes) through incremental changes. . . former industrial zones, decommissioned ports, and failed, late 20th century commercial centers—occupy big swathes of land that require “big planning” to transform these areas into living neighborhoods. These sites often require decontamination, dramatic aesthetic rescue, and infusions of a critical mass of population to create conditions for safety."

Fannie and Freddie Policy Statement

The Treasury Department has announced in detail the policy it intended to follow in rebooting the mortgage financing system anchored by Fannie Mae and Freddie Mac.

The bad news, is that the policies are so comprehensive that it is hard to tell in what way this differs from the status quo. The key points seem to be to create incentives to underwrite only loans that are not likely to default in the long run, to make clear when loans are federally backed, and to extract compensation from entities that benefit from federal guarantees to cover the risk undertaken.

What Is Projected Disposable Income In Chapter 13?

In a Chapter 13 bankruptcy a debtors is required to commit all projected disposal income to payment of creditors under the payment plan under the bankruptcy reform act adopted in 2005. How is projected disposable income calculated?

This is the question before the U.S. Supreme Court in Hamilton v. Lanning (08-998) in which it heard oral arguments on Monday.

Normally, disposable income under the revised bankruptcy code means average monthly income based on the six months prior to bankruptcy reduced by certain statutorily allowed expenses. But, what if everyone knows when a Chapter 13 plan is presented that the previous six months income is going to produce a result that is more than the debtor can pay?

In Hamilton, the six month figure was inflated by a severance bonus. The bankruptcy trustee argued that income should nonetheless be projected based on average income for the six month period times duration of the plan in months.

Attorneys for the debtor argued (with the concurrence, more or less, of the solicitor general), that it makes more sense to read "projected disposable income" as something different than ordinary disposable income times the number of months in the plan. The debtor's attorneys argued that projected disposable income for the purpose of determining what should be paid under a Chapter 13 plan should include changes in income that the parties know will happen going forward (in the case in question, that there will be no more severance payments and that the debtor will cease to receive income from the job from which she was fired).

The questioning at oral arguments made clear that the court is likely to side with the debtor on this issue. Whether the know changes favor or disadvantage the debtor, it simply makes more sense to figure in changes in income that the parties know will happen, when projecting the amount of disposable income available for creditors in a Chapter 13 plan.

Background: Implications of the Projected Disposable Income Rule

The calculation of projected disposable income has a potentially great income on who files for bankruptcy. People who have less than the median state income or have no significant disposable income can file under Chapter 7 (the test is, of course, more complicated than that), but most high income debtors do not qualify for Chapter 7 and must instead file for bankruptcy under Chapter 13, usually with a five year payment plan.

In the case of debtors with high incomes, payments of "all projected disposable income" under Chapter 13, if reasonably calculated, will often exceed what creditors would have received outside of bankruptcy over a five year period, because there are limitations on the amount of wages that a creditor may garnish.

Before the 2005 reforms, in contrast, it was frequently possible to do a three year Chapter 13 plan which paid creditors only slightly more than they would have received in a Chapter 7 liquidation bankruptcy with no payment plan, even if the debtor had far more disposable income. As long as the payments under the plan made up for the exclusion from the bankruptcy estate of assets that would be otherwise available to creditors (e.g. home equity), the plan would usually pass muster.

To only modestly oversimplify, taken together, the means test for Chapter 7 and the new rules for Chapter 13 plans under the 2005 bankruptcy reforms mean that high income debtors deal with their creditors outside the bankruptcy process unless forced into bankruptcy involuntarily, that middle income debtors must enter into tough five year payment plans to have their debts discharged (but may get to keep key assets like a home), and that low income debtors can have their debts immediately discharged with no payment plan.

The cutoff between low income debtors and middle income debtors is slightly over the state median income (most people who exceed the state median income are also barred from filing under Chapter 7 by the means test). The effective cutoff between middle income debtors and high income debtors is in the ballpark of $100,000 a year for a head of a four person household.

Turning Point

Passage of health care reform feels like a turning point in the Obama Presidency.

The Basics

The basic points are simple enough: Medicaid eligiblity will increase to 133% of poverty (about $29,327 for a family of four) and subsidies will be available for purchases of health care for families earning up to 400% of poverty (about $88,000 a year). Employers will be required to provide health insurance, and those who don't have employers will be required to buy it or face a tax penalty. There are some subsidies for employers. These core provisions take effect in 2014.

This is supposed to bring the percentage of people insured to about 95% of the people, bringing access to health care to 32 million people. Of the 5% left out, about a third are undocumented immigrants (about 8 million), about a third a Medicaid eligible people who don't apply for Medicaid, and about a third will be subsidy eligible families who still can't afford health care. A small number will be willful people who prefer to pay fines than get health insurance even though they can afford it.

The Medicaid eligible will be able to be brought swiftly into the system with little penalty once they get sick, and the willful who stayed out of the system will likewise be able to buy in even though they didn't get in until the had a condition, with penalties they can afford. The middle class affordability gap will probably be narrowed by the package of fixes headed to the Senate and subsequent legislation, much as the Medicare Part D "doughnut hole" has been.

Earlier, the Medicare Part D "doughnut hole" will be filled with a $250 credit, the national equivalent of the subsidized "Cover Colorado" high risk pool insurance will be made available to all, children can stay on their parent's policies until age 26, pre-existing condition limits will go, and cancellations for sick insured won't be allowed.

In 2011, insurers will be rquired to spend at least 80% of premium dollars on medical services. Medicare reimbursements will be cut. In 2013, singles making more than $200,000 and couples making more than $250,000 will see an increase in Medicare payroll taxes and in taxes on interest, dividends and unearned income. In 2018, a 40% tax on large premium health insurance policies kicks in.


No government subsidies can be traceable to abortion coverage. There are about 1.2 million abortions per year in the United States, with an average cost of under $500 and a range of $90-$1,800 in most cases. About 14% of that cost is paid for with state level public funding in liberal state for poor women. The total cost of abortions provided in Colorado is on the order of $5 million a year. This is a sum within the scope of what private sector funds and individuals on a fee for service basis can finance.

This minor political win for abortion opponents, in line with prior policy, leaves that movement with little to fire up its base.

Summing Up

Some details may change if the Senate passes the reconcilation bill this week or next, which seems rather likely, although it may pass some amendments that take one more vote from the House afterwards.

The final deal is remarkably modest. There is no public option, no new government healthcare program, no new network of healthcare providers, no takeover of private health care providers, no takeover of insurance companies.

Essentially, the bill makes health insurance mandatory, cuts some slack for those almost eligible for poverty based health care coverage, and engages in some utility-like regulation of private health insurance companies.

But, this bill puts us on a new moral foundation. Our system now assumes that everyone should be have access to health care. It assumes that health care providers should receive compensation on a fee for service basis for almost everyone without major acts of charity or risks of bad debt.

We will have to wait. Pray that you stay healthy for another four years. But, the writing is now on the wall.

Health Care Politics

Every single Republican in the House, a few conservative Democrats, and almost every Republican in the U.S. Senate is on record opposing this health care reform. So are about a dozen state attorney generals who are getting ready to file frivilous constitutional challenges to the bill.

I suspect that this united front against health care reform will do dire harm to the GOP politically. They offered no reasonable alternative. This political call will rank up there will GOP opposition to civil rights legislation, and with the extreme pockets of the GOP who still want to repeal Social Security and Medicare.

It is easy to stir up fear based upon straw man legislation that might be passed by Congress. But, once the dust has settled, individuals and businesses will be able to see how they came out in the health care debate and a great many Republican voters will learn that they are better off and that the fears that they had didn't materialize. It is much easier to be a myth bustered once an act is on the books to compare against political claims.

Further Incremental Change

The passage of this health care reform also clears the decks for further incremental change.

In the midst of a wide ranging debate over health care reform, it is easy for a public option to become muddled into a discussion of socialized health care. In a debate over a short, narrow bill eliminating an anti-trust exemption for health insurance companies and creating a new government sponsored, unsubsidizied non-profit health care company, it is far harder to twist a public option into something menancing, rather than as one more tool for cost control.

Debates over which public program subsidizes health care coverage for whom are less likely to push debate into the fenzy we've seen so far in the health care debate.

Debates over reducing one small revenue tax, such as an excise tax on large premium health care plans, in favor of some other small revenue tax, like the self-employment taxation of stock options, are likewise likely to be more contained.

Simplying eligibility for Medicaid in a way that increases the percentage of people with health care coverage is easier once it becomes clear that most people really are getting private health insurance coverage and that the easier eligiblity requirements don't have much of an impact on program cost and prevent providers from being stiffed.

When it turns out that many people who can afford COBRA coverage end up receiving Medicaid coverage, the budgetary barriers to subsidizing COBRA coverage will fade.

New legislation will try to provide more coverage to undocumented immigrants and their children who are pregnant or children. Improving access to dental care is also likely to become an issue.

There may be experiments with providing more health care to children through the public schools.

Now that the big debate over near universal coverage is concluded, the far more technocratic issues of cost control will take center stage. The reforms made in this round will leave private insurance companies more fat and less prone to overplay their cards in the political arena. But, control of excess provider costs will start to take a more prominent part of the debate. Legislation will probably take a divide an conquer approach. One round of legislation will address cost control in the pharam sector. Another will address medical equipment.

Others legislation address compensation for professionals, probably indirectly at first, by giving insurance companies and others more bargaining power and requiring more transparency in pricing. Professional compensation parity between Medicaid, Medicare and private insurance is likely to become an increasingly pressing priority for health care professionals.

Health Care Reform Implication

State legislative support for this health care reform will surge when it becomes clear on the ground how much relief greater levels of private health insurance coverage is going to provide to publicly funded emergency care and public health care clinics, hence easing their budgets. Many public health care institutions that previously relied heavily on public spending will now become nearly autonomous economically.

Dramatic reductions in bad debt levels and charity care are going to ease provider cost inflation. Establishing new primary care practices in low income areas will begin to look much more attractive than it once did. Many newly minted doctors just starting medical school now will choose to start these practices which will become economically viable right around the time they are done with their medical training. These doctors will also become commmunity leaders and a force for advocacy in the communities where they establish their practices (filling a gap that declining ranks of personal injury lawyers once filled).

Greater availability of health care is probably going to decrease the number of people who feel that they should file personal injury lawsuits, and will indirectly lower liability insurance coverage costs of all kinds. This may lead to a resurgence of no fault automobile accident regimes, in which health insurance is primary over automobile liability insurance for medical expenses. Universal health care coverage is going to take a great deal of pressure off worker's compensation regimes and will probably eventually lead to a major overhaul on a state by state basis of the worker's compsenation system.

These developments in personal injury and worker's compensation law are going to take the wind out of the sails of the tort reform movement, and are going to cause many personal injury lawyers to seek out other practice areas.

Preventive care utilization will go up a little, chronic care utilization will go up meaningfully, acute care utilization will go down a little, and medical cost related bankruptcies will decline a great deal.

Crime rates will go down incrementally as more people gain access to psychiatric care, and as people who previously had access to health care only while incarcerated will now have it when not incarcerated.

Greater access to health care is going to spur a boom in small business formation, as it will be possible to start a new business while having health care. This boom may be the biggest driving economic force of the decade or so from 2014 to 2024. It will greatly reduce the benefits of being part of a large firm or franchise.

Mandatory health insurance expenditures are going to drive up the cost of low skilled work in the small business sector relative to the cost of full time work from office workers and manufacturing sector employees. The mandate will be the biggest compensation boost to workers in the bottom 80% of the income scale, despite the fact that this mandate will probably mute wage and salary increases for a considerable time.

Independent insurance agents offering individual health care plans will see a huge boom in business comparable to the boom seen in the ranks of mortgage brokers and realtors during the housing bubble.

American public health indicators like infant mortality rate and death rates from preventable diseases are going to improve.

Regualtory suspicion of new ambulatory surgery centers will decline, as the need to avoid the economic obligations that come with ER status fade, but ERs should be under much less financial pressure than they were.

A decreased likelihood of having savings wiped out by medical emergencies will make savings more attractive for working class people.

Political Climate

The health care reform dispels the notion of the Democrats as impotent. They promised change and this is the biggest change, although not the only one, that they will be able to deliver. This influences the large political climate.

The Iraq War and health care reform were the two most important issues for President Obama's supporters, and he can now fairly claims to have delivered significant results on each of these matters.

Foreign Wars

Before the 2010 election, a major drawdown of troops in Iraq will be complete, and the situation in Iraq appears to have stablized. Political and ethnic violence hasn't ended, the quality of life has still probably not returned to pre-Iraq War levels, and the country is far more ethnically segregated than it was before the Iraq War. There remains a large population of Iraqi exiles, many formerly middle class, who are actively involved in Iraq. But, they seem likely to settle into being communities in exile for the time being, rather than returning en masse. The elected civilian government in Iraq seems capable of managing to function in a stable manner secure in the knowledge that safety blanket garrison force of about 50,000 U.S. troops are there on a long term basis and could intervene if things get out of hand. Before President Obama's term ends, if the civilian government in Iraq manages to keep its house in order, he may be able to withdraw even more U.S. troops.

The U.S. war in Afghanistan, now going into its tenth year, seems to be on track. Our allies have not departed. The civilian government we helped put in place seems to be managing a limited by stable functionality. Taliban activity seems to be done there and in neighboring Pakistan, and the al-Queda and Taliban forces seem to be on the back foot, which is not to say that they are fully and finally defeated. The U.S. is still entangled in what looks to be a long term counterinsurgency to help maintain a regime that is not ready to have the training wheels taken off. But, it is certainly not an obviously lost cause and U.S. casualties seem to be under control for now.

The likelihood of new military engagements involve Iran, North Korea or China seems lower now than it did during the administration of George W. Bush, despite the fact that tensions remain. The U.S. also does not seem to be on a collision course with Russia, and the situation in Israel does not look likely to deteriorate rapipdly in the near future.

Economic Legislation

Congress has passed multiple rounds of stimulus legislation and preliminary responses to the abuses found in the financial crisis. Many of the programs seem to have been only marginally effective (such as the housing credit). General Motors and Chrysler and AIG have all become government owned enterprises, and Fannie Mae and Freddie Mac have entered government receiverships. What matters is that Congress did something which may have helped, and that the worse seems to be over.

Some form of major regulatory reform on a par with Sarbanes-Oxley in scope and signficance seems likely to become law before the next election. Confidence in the ultimate passage of some sort of financial system regulatory reform is enhanced by the success of health care reform. The details will matter only to professionals and historians, but but fact that something significant gets passed will again help Democrats dispel the notion that they are impotent and convey the ideas that the adults are in charge again in Washington.

The Courts

President Obama has put Justice Sotomayor on the bench and she has fit comfortably into the place on the left side of the bench that she is filling. The President will likely get to replace the liberal and aging Justice Stevens as well, and history suggests that stopping a U.S. Supreme Court nomination is very hard, even when opponents have more seats in the U.S. Senate than they do now.

The President is lagging in appointing lower court judges, but should have time and the political ability to get these posts filled with judges generally favorable to his political philosophy, even if Democrats lose a few seats in the Senate in the 2010 election.

War on Terrorism

The President has taken a decidely military approach to foreign terrorism in a number of low profile military actions (like providing military support for Kenyan intervention in Somolia), while waivering between a criminal justice and a George W. Bush style enemy combatant approach to suspected terrorists domestically.

President Obama is fumbling around having immense difficulty meeting his campaign promises related to Guantanamo Bay and war on terrorism methods, but the Guantanamo Bay problem is partially resolving itself as other countries bit by bit offer homes to detainees, reducing the number of people whose cases have to be resolved. Soon there will be scores of cases to deal with, instead of hundreds.


Despite bipartisan support, Colorado's rural conservative city of Yuma recently passed a resolution asking for action on immigration reform, for example, immigration reform looks like it may not get action before the next Congress.

The basic thrust of Obama's proposal is straight forward: a path to citizenship for those who are already hear and want to play by the rules, easier access to legal visas, tighter identity paper standards, tighter border control and stronger employer sanctions for hiring illegal immigrants. Most Democrats and a significant minority of Republicans prefer this approach. But, a widespread consensus on the issue is not likely to emerge.

The lesson of health reform, that consensus isn't necessary to pass legislation and show that you can accomplish something, and the experience of successfully passing financial regulatory legislation may be necessary before the Obama administration gets enough fire in its belly to tackle immigration reform.

In the meantime, immigration policy is being made peacemeal. The exclusion of illegal immigrants from the benefits of the health care reform package was predictable, but a notable win for anti-immigrant forces. Criminal prosecutions for immigration offenses are way up, flooding the nation's jails, in a policy that seems to be more of a holdover from the last administration than the current one. Enthusiasm for a Berlin Wall/Israeli border style border fence seems to be waning in light of environmental and practical concerns over its construction.

The facts on the ground are changing too. Two of the industries most stereotypically associated with illegal immigration, construction on one hand, and motel and hotel service on the other, have been hurt by the recession more than almost any other inudstries, leaving many illegal immigrants without jobs and causing many illegal immigrants to return to their countries of origin. The total number of illegal immigrants in the United States is declining rather than increasing.

An increased supply of legal visas and a path to citizenship would reduce the ranks of the undocumented even more. It would also further cement the bond between the Democratic party and all manner of minority groups in its political base. But, it isn't clear if there is the political will to make this happen.

War on Drugs

President Obama's administration has created a truce by agreeing not to prosecute marijuana trafficing in compliance with state medical marijuana laws.

A compromise bill to reduce crack cocaine penalties relative to power cocaine penalties seems likely to pass. It is less than one might reasonable hope for and maintains an irrational distinction, but still significantly reduces currently draconian prison terms for about three thousand federal criminal defendants a year.

Many states are going far further and Colorado may be among them, both in tolerating marijuana and in reducing stiff penalties for illegal drug related crimes.

The administration has not taken bold moves so far on criminal justice issues, despite saying positive things in speeches, other than the marijuana issue, and has even dragging its feet on shutting down a Bush Administration program that puts immense resources into cracking down on the non-problem of pornography to the point where federal judges are starting to band together and ask the United States Sentencing Commission to rethink existing sentencing guidelines in that area.

President Obama, perhaps wary of the political consequences, has also let his pardon power go unused, rather than using it as a powerful political tool.

Gun Control

Imminent U.S. Supreme Court recognition of a weak individual Second Amendment right to bear arms for self-defense that can be used to invalidate state and local government laws is likely to be come a reality later this year (the right already has been established vis-a-vis the federal government). President Obama has repeatedly said on the campaign trail that he believes that such a right exists, despite paranoia in anti-gun control circles afraid that the administration will confiscate their guns.

While the substance of the right isn't something that most liberals would favor, like TABOR in Colorado, it helps Democrats by making the fears of those who oppose gun control less credible, and by giving the Second Amendment an authoritative interpretation that is less extreme than the one ascribed to it by gun rights activists.

The Balance of Political Power

The current session of Congress has the most liberal collection of Senators and Representatives in a century or more, but has prior to the health care reform victory, failed to exercise that power effectively. There have been times when there have been somewhat larger percentages of Democrats in the past century, but in those eras a large percentage of them were Southern conservatives. Now, conservatives make up only a small share of the Democratic caucus and are counterbalanced by a handful of remaining moderate Republicans. Liberal leaning Democrats now hold narrow majorities in the House and the Senate, both the President and Vice President are liberal leaning Democrats, and four of the nine justices on the United States Supreme Court are liberal leaning, while a fifth, Justice Kennedy, is a moderate conservative. Liberals, conservative Democrats and moderate Republicans and independents combined in the U.S. Senate hold a filibuster proof sixty seats in the U.S. Senate.

Liberal leaning Democrats still need to make compromises in Washington, but they are now the clearly most powerful faction in our national government, while conservative Republicans are at their nadir, are divided amongs themselves, are out of touch with the American people, have no ideas, and have no mechanisms to offer up policy agendas of their own. Conservative Democrats and moderate Republicans haven't been shut out, but they can be voted down in the U.S. House, and have no home in the White House. They need the protections of the anti-democratic rules of the U.S. Senate of the moderate swing vote of Justice Kennedy on the U.S. Supreme Court to continue to exercise power. They can be powerful deal makers, but they don't drive the agenda.

Campaign Finance

The U.S. Supreme Court in its Citizens United case has seriously impaired the ability of any campaign finance system to limit the role of corporate and union money in political debates, including those over candidates.

Practically speaking, this doesn't matter much from a dollar perspective. The old campaign finance rules were already full of loopholes. But, the changing campaign finance rules will have some impact on how political campaigns are conducted.

More spending hurts Democrats a lot less now, when they can attract support through incumbency, than they would have at a time of Republican dominance.

But, it isn't clear how the new rules will play out in practice.


With the passage of health care reform, the Obama administration finally seems to have some hope of going into the 2010 elections with significant accomplishments to campaign on that will be popular with the public when the dust settles.

It has taught the administration how to win legislative battles and the political importance of having legislative accomplishments. These are critical lessons for an administration that has a strong position in Congress.

22 March 2010

F-35 price tag now $135 million each

[A]ccording to DOD’s Cost Assessment and Program Evaluation (CAPE) office. Total JSF program cost is now estimated at $329 billion for a 2,443 aircraft buy, up from the original 2001 baseline estimate of $197 billion for 2,852 fighters (all figures are in then year dollars) [the $197 billion would be about $240 billion in current dollars].

From here.

The new price for an F-35 is $134.7 million each. The 2001 price was $69 million each (about $84.2 million each after adjusting for inflation). Thus, the F-35 per unit price has increased by 60% in inflation adjusted dollars since 2001; it is $50 million per plane overbudget in real dollars, which is $89 billion all together.

Some of this is a result of a reduction in the proposed by of 409 units, which should increase the R&D cost per unit by 35%. But, the R&D cost should be only a fraction of the proposed 2001 price, and the increased per unit price far exceeds the amount of increased R&D cost attributable to the reduced purchase size. But, the surging cost of the F-35 is very simply, from a fault perspective, a case of a military contractor who has failed to deliver a product that is on budget or on time.

In the case of the F-35, a.k.a. the Joint Strike Fighter (JSF), this is a particular concern because a chief selling point of the JSF was that the per unit price would be kept low by combining programs to replace the Air Force's F-16 Falcon and A-10 Warhog, the Navy and Marine's F-18 Hornet, and the Marine's AV-8B Harrier (also used by all of the aircraft carriers of countries allied with the United States). The F-22 Raptor was the replacement for the F-15 Eagle.

The State of the Joint Strike Fighter Program

The F-35A is conceptually the simplest of the three variants. It is designed to do what the existing F-16 does, but better with stealth features and other improvements. There is some realistic hope that deliveries might begin in 2011. While the F-35A makes improvement over the F-16s now in U.S. Air Force service, no one expects the F-35A to be the best in the world air to air combat fighter that is the F-22, despite the fact that it is a newer design.

The F-35B, a short takeoff and vertical landing version of the F-35, successfully demonstrated its short takeoff and vertical landing capabilties for the first time this month in test flights. But there are many months of testing and final adjustments left for this design, and it will be years before these planes are coming off the assembly line in production numbers and ready to be used operationally. The Harrier AV-8B is out of production and could not realistically have production restarted for a lower cost than going forward with the F-35B program. There is no reasonable alternative out there right now or in the works for the Marines and foreign navies that would like to continue to be able to fly modern manned fixed wing fighter aircraft from small aircraft carriers. Realistically, deliveries will start in 2012.

The F-35C is currently the last in line to be put into military service. To my knowledge, no test flights with this variant landing and taking off from aircraft carriers have been completed to date. Deliveries will probably begin no sooner than 2013 and could come later.

Armed Drones To Replace Fighters Not Quite Ready For Prime Time

There are prospects that armed drones may be able to replace fixed wing small carrier based aircraft on many missions in the near future, but that development is still several years out beyond the F-35B program, and the Harrier AV-8B fleet continues to get older and harder to maintain.

The States of A-10 Replacement

It is now widely acknowledge that the F-35A is not, as originally intended, a good substitute for the A-10 fleet, which is designed for low speed air to ground missions. The U.S. Air Force has committed to extended the service light of the existing A-10 fleet, rather than replacing them with F-35A aircraft, and is now looking, along with the U.S. Special Forces for commercial off the shelf replacement aircraft for them.

The State Of The F-16

The F-16A (single seat) and F-16B (two seat) modesl of the F-16 entered operational service in the United States Air Force in 1980:

The USAF bought 674 F-16As and 121 F-16Bs, with delivery completed in March 1985. The F-16A/B had a unit cost of US$14.6 million (1992). . . .The F-16C (single seat) and F-16D (two seat) variants were introduced in service in 1984. A total of 1,261 F-16Cs and 205 F-16Ds were delivered to the USAF. The F-16C/D had a unit cost of US$18.8 million (1998). . . . The F-16E (single seat) and F-16F (two seat) are the latest version of the F-16. They do not exist in the USAF inventory and are currently an export variant only.

A model F-16IN in being developed for India and is in late stage testing. The F-16E/F variant is being sold to foreign Air Forces for "US $26.9 million (2005)."

Thus, while the United States has not bought any F-16s for many years and has an aging F-16 fleet, there is a current version being sold to foreign Air Forces in production, and the F-35's current cost is 4.5 times as much as that version of the F-16.

The State of the F-18

The Navy can keep buying and is continuing to buy new F/A-18E/F Superhornets (the E has one seat, the F has two seats) because it is still in production and costs around $90 million a copy. This reduces the pressure the Navy faces to get the F-35C carrier based version of the joint strike fighter (the largest of the planes) that is intended to replace it into service. At current prices, each F/A-18E/F that the Navy buys instead of an F-35C saves the military $45 million, and makes it unnessary for the Navy to train its pilots to operate, train its sailors to maintain a new carrier based fighter design, and modify its aircraft carriers and aircraft carrier parts inventories to serve a new fight model.

The F-35C is supposed to be superior to the F/A-18E/F model currently in service (which entered service in 1999) with the U.S. Navy, but inadequate fighter capabilities have not been a major complaint of the U.S. Navy. The F-35C offers the Navy a somewhat longer range, a slightly larger ordinance payload and stealth that the Superhornet does not provide. The biggest benefit of the F-35C would be most relevant in a stealth strike capacity, where stealth aircraft from the Air Force (i.e. the F-22 fighter, F-35A fighter, F-35B fighter and B-2 bomber) were not available as quickly, and in missions where radar based anti-aircraft weapons were a threat faced by the carrier based aircraft.

Both the Superhornet and the F-35C offer significant improvements over the aging F-18C/D that would be replaced, which has a shorter range and smaller payload than either and has other more dated design features.

The State of the F-22 program

"The F-22 cost about $360 million per copy." F-22 production has been capped at about 180 units and is not authorized for export. This is considerably fewer units than the Air Force had wanted and does not fully replaced the F-15 fleet on a plane for plane basis. F-22 R&D costs are sunk costs and the marginal cost of producing new F-22s was about $220 million. It is probably not too late to restart the line at a modest cost if desired, although that window is rapidly closing.

There are reports of significant maintenance difficulties with the F-22s which are in the field and they have not yet been used in any major military engagements that test its capabilities in the field.

When giving up an F-22 meant getting three F-35s, many in the Air Force thought that having more planes that were somewhat less capable was a good deal. Now, with 3-4 F-35s costing as much as 2 F-22s, given the stunk costs and lack of risk of delay or technological failure with the F-22, the tradeoff looks less desirable to many in the Air Force. The Air Force also has a strong inclination to value its air to air combat mission for which the F-22 is optimized more than other missions like dropping significant bomb payloads, which the F-35 is more qualified to do than the F-22.

Marginal Costs v. Sunk Costs

The research part of the R&D budget for the F-35 is basically a sunk cost. At this point the designs have been created and final stage testing is in progress.

Abandoning the F-35B varient is extremely difficult because we have foreign commitments to allies who have no other alternative to produce it, and because the Marines are very committed to this purchase.

The F-35A or F-35C variants could be abandoned, because they have almost an exclusively U.S. purchaser, but since most of the research costs are already sunk, the only savings from discontinuing one of these variants entirely is the production cost avoided from actually having the planes built and the costs of getting a production line up and runing for a new variant.

The division of costs between R&D and production costs in the F-22 program was roughly 1/3rd R&D (about $20 billion) and 2/3rd production costs (about $40 billion). A third of the current F-35 program cost projections would be $106 billion, give or take, but this is probably too high. The F-35 program R&D costs shouldn't be as great a share of the total as those of the F-22 because the F-22 has to spread its R&D costs over 180 planes, while the F-35 budget plans now call for R&D costs to be spread over 2,446 planes. Even if the F-35 took three times as much R&D expense as the F-22 (since the program really involves 3 different plane designs), that would stil be only $60 billion. An even higher figure of $64 billion of R&D costs accounting for a little inflation, would account for only 20% of the total F-35 budget. Thus, the marginal cost of new F-35 aircraft should average about $108 million each.

Once sunk costs are disregarded, new F-35s will cost about four times as much as new F-16s are costing our allies, and they will cost about half of the marginal cost of new F-22s. Given sunk costs, the real premium in the cost of a new F-35 at this point over the cost of a new F-18 is about $18 million per plane.

What Should We Buy?

Starting over with the F-35 program without buying commercial off the shelf alternatives like the current models of the F-16, the F-18 and the F-22 would mean many, many years of delay. It takes something like ten or fifteen years from starting to draft a request for proposal for a new fighter aircraft to the entry into service of the first aircraft of that type, if one isn't using an already existing design.

If the United States remains committed, as it has been in the past, to purchase a major military system like a significant number of manned fighter aircraft from a domestic defense contractor, the F-16, the F-18 and the F-22 are the only models that could be delivered before 2020 to 2025.

It isn't unreasonable to think that by then, an armed combat drone might make a new manned jet fighter an obsolete concept. Planes without people in them can handle much more intense aerial manuvering than any plane with a person flying it could.

Purchasing new F-16s would be a major cost savings and would solve the problem of an aging F-16 fleet while providing the U.S. military with a moderate upgrade from its current capabilties, but would be inferior to the F-35. An F-16 can't be used on a carrier and doesn't have short takeoff/verticle landing capabilities, so it isn't a substitute for the F-35B or F-35C.

Purchasing new F-18s instead of F-35Cs would produce a modest cost savings, would solve the less urgent problem of an aging F-18 fleet, and would not provide any meaningful upgrade from existing capabilities because this is what the U.S. Navy, and part of the U.S. Marines fleet uses now.

The Air Force could also buy some model of F-18s with little delay or development cost, rather than F-35As.

Buying more F-22s would cost twice as much per plane as buying new F-35s ignoring sunk costs which are almost all sunk in any case at this point, and would allow new planes to be provided at a similar schedule. But, it isn't clear that we need more of the capability of the F-22 for which we have already paid a premium price, given the air dominance that the United States already has with its existing F-22 fleet.

How Many Planes Should We Buy?

In addition to the question of which planes we should buy, there is the question of how many we should buy. The original planned buy of F-22 and F-35 aircraft combined was intended to replace all of the A-10s, F-15s and F-16 in the Air Force, all of the AV-8Bs and F-18s in the Marine Corps, and all of the F-14s and F-18s in the Navy on a roughly one to one basis. So, the current aircraft fleet of the United States military is really based on estimates of how many planes the U.S. military needed in the 1970s and 1980s, with the technologies available then and the Cold War as the pre-eminent concern, reduced somewhat but cuts to air craft fleets made immediately following the end of the Cold War in the late 1980s and early 1990s.

The world has changed.

Many of the opponents that look likely today are less technologically sophisticated than the Soviet/Warsaw Pact Air Force that was the primary threat considered when the requirements of U.S. military air power were developed, and the size of those forces have withered and developed technology more slowly than anticipated, although the Russians are starting to catch up again in terms of fighter technology.

The importance of air to ground missions against non-radar equipped targets for some portion of our air fleet has become clear. In these engagements radar stealth, extreme manuverability, and supersonic speed are far less important, and an ability to remain aloft and loiter for long periods of time at moderately low altitudes while carrying substantial bomb payloads are more important. The utility of simply reliable air to ground oriented fixed wing aircraft, relative to attack helicopters was shown in the early days of the Iraq Qar and has also been apparent in the conduct of the war in Afghanistan.

The importance of military aircraft to fill a domestic air security role, for example, over the skies of Washington D.C. and New York City, has also become much greater in the wake of 9-11. The F-16 has been used for that role, but is costly to use in that role and has many capabilities that are irrelevant to this role. The lack of fit to this mission was not a major problem when the F-16 was designed, but this has since become a major Air Force mission.

Fighters dropping bombs are much more accurate than they were when the fleet requirements that the current buy is derived from were developed. The old estimates didn't give as much weight as we can now to the ability of the U.S. Air Force to swiftly relocate fighters from one part of the world to another using air tankers to extent the range of fighters. Increased guidance systems that make bombing runs more accurate also make it more feasible to use high altitude bombers with large payloads for bombing missions that previously would have required lower altitude missions that called for the grater capabilities of fighter aircraft.

Military experience since Vietnam with modern aircraft has showed us that battles for air dominance are intense but short, rarely lasting more than a few months, after which air dominance is secured and relatively few air power resources are needed to continue to have air dominance. It has also shown us that every major air engagement that might strain our air fleet has been conducted with significant allied air fleet support.

The F-22 is supposed to be the dominant air to air fighter in the world, far surpassing the capabilities of its F-15 predecessor or leading foreign models in service.