Economy Department with Ezra Klein: Senate hearing on Bernanke, the fate of HSAs, Top Chef predictions, whatever happened to those toxic assets?

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Ezra Klein
Washington Post Business Blogger
Thursday, December 3, 2009; 12:00 PM

Trying to understand health-care reform, but getting lost in the weeds? Don't worry, Washington Post blogger Ezra Klein can help. From individual mandates to health care exchanges, Klein explains it all. He was online Thursday, Nov. 19 to take your questions on health-care reform, economic and domestic policy, the latest episodes of Top Chef and pretty much anything you can attach a chart to.

A transcript follows.

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Fort Worth, Tex.: Fed question: what do you hope happens in today's Senate hearing with Bernanke? Most people seem pretty split into either thinking he's gone out of his way to make sure Wall Street is happy or that he single-handedly avoided WWIII (or something equally catastrophic). Thoughts?

Ezra Klein: It's hard. I think he did an excellent job in the days after the crisis. Not perfect, but then, his information wasn't perfect. The Federal Reserve, however, was far more important than the Congress in averting collapse and sustaining demand. It was a command performance, driven in large part because Bernanke is haunted by the Great Depression.

That said, you hire a firefighter to put out fires. Not to rebuild your house. Maybe someone else is better in this moment. Maybe Bernanke is too concerned with inflation, or not concerned enough about employment. Maybe it's worthwhile to show that the priorities of the Federal Reserve, if not its actions, should be influenced by the democratic process. It's hard to say, and I guess I don't have a very strong opinion.

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A Cube in Rosslyn, Va.: Ezra, Now that the health care bills are taking shape, is there any word on what will happen to health insurance plans that are high-deductible with a health savings account? I've heard that we may not be able to keep using it. My wife and I really like our HSA and would like to be able to keep using it. Thanks!

Ezra Klein: There will still be HSA plans, and arguably, more of them (when you're only covering 60 percent of likely expenses, as happens in the Senate bill, you're looking at high deductibles). There are some plans on the individual market that won't be comprehensive enough to qualify, but if you're in one of those plans and you like it, that's probably just because you haven't gotten sick yet.

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New York: Ezra, this question has been keeping me up at night -- What's going on with all those toxic assets that were responsible for our long economic nightmare? I mean, where are they? Still on the banks books? Has someone bought them? Or are they still lurking behind the curtain, waiting to jump out just when we're feeling a little better? Every time there's a plan to deal with them, you never seem to hear about the follow-through. Can you talk me down, please?

Ezra Klein: I can try. The assets are, if some of the experts are to be believed, in detox. It wasn't that these assets were literally worthless. Somewhere deep in that tranche of CDOs was an actual, wood-and-nails house, which actual people are actually interested in living in.

When Geithner tried the PPIP plan, it failed largely because the banks didn't want to sell these toxic assets at firesale prices. They believed that they could get a better deal for them down the road, when the market calmed. The question was whether they could do that and have enough liquidity to survive between now and then. The answer, barring another triggering event, seems to be yes, largely because the taxpayers handed them that liquidity. So the answer is that the assets are there, and some of them are being sold, and some of them are waiting to be sold, but the basic process is detox, or at least that's the hope.

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Washington, DC: Hi Ezra,

I've been reading your chats for about the last two months, and I'm not quite sure what to make of you yet- whether you're a straight shooter, or pushing an agenda. One columnist I do believe I get unbiased economic analysis from is Robert Samuelson. Can you please critique his Monday column on the current proposed health care reform? It sounds a lot scarier than what you've been talking about.

Ezra Klein: I didn't think it did a very good job following its own premises. Samuelson is right that America faces a long-term deficit threat that has the potential to literally bankrupt the country. It is a threat as serious, if not more so, than the financial crisis. But his argument, then, is astonishing. Even though the Senate bill reduces spending, he thinks Congress won't stick to the terms of the legislation.

That may be right, but it's nihilism. Given the trends. Samuelson knows perfectly well that we go bankrupt with or without health-care reform (the bill is equivalent to 2.1 percent of projected federal spending over the next 10 years -- it's very small in the scheme of things). The question is whether Congress can begin the hard work of cost controls. Here's a bill where they actually do begin. And he's saying reject it, because they may not stick to it?

Fair enough, I guess, but then what? We just wait for the fiscal crisis to hit? If you want to reduce the deficit, you need to reduce the deficit. That means passing bills that reduce the deficit. It may be that we try to do that, and we fail. But if we don't try, we definitely fail.

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Arlington, Va.: Ezra, your last post on Uncivil Debate has left me depressed. Every year my insurance premiums go up and my coverage goes down. If I ever lose my job, I'll never get insurance again due to preexisting conditions. And yet I'm one of the lucky ones because at least I have health insurance now. I just don't see how they can justify their stupid games.

washingtonpost.com: Uncivil Debate (Ezra Klein, Dec. 2)

Ezra Klein: It's depressing.

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San Ramon, Calif.: Hey Ezra,

Two things:

1) How likely is it that Collins and Snowe actually wind up supporting health care?

2) Has the "Climategate" changed the prospects of a climate change bill? It seems to me that it's mostly confined to the right wing so far as I can tell, so the senators most susceptible to pressure from them (Lincoln, Nelson, Landrieu) should be the ones already voting against it, right?

Ezra Klein: If health-care reform passes, I think it's pretty likely that at least one, if not both, is on the final bill. HCR is popular in Maine. And they get more substantive concessions by voting for the bill than voting against it. So once the legislation hits inevitability status, and maybe even before that, it's hard to see what prevents their participation.

As for Climategate, I don't really think so. It's a good talking point for the right, but I don't think it's changing many minds on the reality of global warming. The bigger problems, I think, are the ones that have already existed: the bill hits certain states, it's a tax increase, etc. If Climategate was all that was standing between America and cap and trade, id be a happy man.

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Inside the Beltway: Hi Ezra,

So could the jobs bill currently under construction be passed with the reconciliation process?

Ezra Klein: In general, yes. Specifically, it depends what's in the bill.

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Washington: Hi Ezra, Thanks for taking questions. I have a non-health-care query here. Many economists (including a certain Nobel Laureate at the NYT) are advocating that the Fed both keep interest rates low and not unwind the quantitative easing measures. Given that, can we expect to see more liberal appointments to the Federal Reserve from this administration? Other than re-appointing Bernanke, has Obama made any other appointments to the Fed? What are the odds that his appointees will push to fight unemployment rather than inflation (which shows no signs of emerging?)

Ezra Klein: The question isn't what many economists think. It's what the relevant economists think. Until we know where Larry Summers stands on inflation, it's hard to predict what will happen in the appointment process. But I do know that Krugman, among others, is well-read at 1600 Pennsylvania, so they're hearing these arguments.

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Wilmington, N.C.: Hi Ezra. In reference to Chris Bowers' support for the current bill, you refer to the way historically social programs (Medicare, Medicaid, Social Security) expand. But with the exception of the public option, what significant "social policy program" is in the health bill? I don't consider an insurance exchange to be a "social policy program" for example. Thanks!

Ezra Klein: The individual mandate, paired with the subsidies and the insurance regulations and the exchange, are a major new social policy program. It is a basic structure for universal health care, which we have never had in this country. And as more people move to the exchanges over time, and the mandate and subsidies are strengthened to go the final few miles to universal health care, it will become more so.

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California: Is there any chance of Paul Krugman taking over for Ben Bernanke?

Ezra Klein: No.

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Laramie, Wyo.: I still don't understand who will decide if a state opts in or out of the public option?

Nobody has been able to tell me the decision-making process beyond "Take a look at which states went blue or red in 2008" which seems odd since Barack Obama was the "There is no Red State American or Blue State America but the United States of America"

Either way, I'm not holding my breath for Wyoming to support it but I'd like to know who and how my state or other will end up opting out of it and if I convince my folks to help out with my out-of-state tuition after high school.

Ezra Klein: The governor in conjunction with the legislature. You need the two branches of government to agree to opt-out before anything happens. I think that would be rare in practice, and the public option would be pretty near to national. But I don't think the opt-out option looks very likely anymore.

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Cambridge, Mass.: About filibusters and amendments- Stupak was not included in the Senate version, but everyone's favorite "Democrat" Ben Nelson is introducing it. As I understand, it would take 60 votes to add it because pro-choice Senators could filibuster the amendment. However, if they do so, does that hold up the entire bill as well? Could Republicans kill the entire bill by finding an amendment 1) Supported by 51 to 59 Senators so it can't be defeated outright but 2) Opposed by 41 to 49 Senators so they'll filibuster and bottle up the whole process?

Ezra Klein: Right. The issue here is that folks like Nelson can pretty much demand whatever changes they want because their vote is needed for the final bill. To see this more clearly, imagine they want Amendment X, which no one else wants, but without it, they won't vote for the bill. In that world, the prime sponsor's of Amendment X become the Senate leadership, as they need to round up 60 votes for cloture on the bill.

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College Park, Md.: Wow, your live chats have gotten so much more serious.

I can remember when the central question was "Who is your favorite Beatle" and a bunch of folks thought Ringo Starr had died.

Undecided what I think about the tone of the live chats.

Ezra Klein: If you want funnier answers, ask funnier questions!

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New Haven, Conn.: Now that the final three is set, do you have a Top Chef finale prediction? Could they really chose between Voltaggio brothers?

Ezra Klein: I'm going with Kevin. He's been more consistent than the brothers, and has a clearer vision of his own food. I think he's somewhat less likely to overreach or crack under the pressure. But it'll be close. I can't remember a previous Top Chef where the finalists were so evenly matched, or of such incredible skill level.

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washingtonpost.com: Stick around to chat with Economy Watch blogger Frank Ahrens on the White House jobs summit at 1 pm.

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Louisville, Ky.: Ezra,

Regarding passage of the Health Care Reform bill: The prospects of Senator Reid garnering 60 votes for cloture look bleak, to me. I'm sure he has "cards" to play, like watering down/eliminating the Public Option, etc. But what does the Reconciliation route do to the bill. I've heard some elements would be eliminated. Can you summarize the impact that route would take on the bill? Thanks.

Ezra Klein: You lose insurance regulations, a lot of delivery system reforms, and all sorts of things that, to make it more annoying, we simply can't predict. I think you lose a lot more than you gain, to be honest.

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Minneapolis, MN: I'm baffled by the near universal support for the filibuster in the Senate. Realistically, unless you are or are likely to become the 59th, 60th, or 61st most liberal or conservative senator, the filibuster isn't going to ever accord you much influence. In fact, it seems to me that killing the filibuster would increase the influence that rank-and-file senators would have on implemented legislation. Is there some incentive for supporting the filibuster I'm missing, or is senatorial support of the filibuster just grounded in a ubiquitous irrational status quo bias? Do senators just truly believe that preserving the ability to obstruct the other party is more important than actually governing?


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