Category Archives: Economic policy
By Mollie Hemingway October 14, 2014
As the Ebola situation in West Africa continues to deteriorate, some U.S. officials are claiming that they would have been able to better deal with the public health threat if only they had more money.
Dr. Francis Collins, who heads the National Institutes of Health (NIH), told The Huffington Post, “Frankly, if we had not gone through our 10-year slide in research support, we probably would have had a vaccine in time for this that would’ve gone through clinical trials and would have been ready.” Hillary Clinton also claimed that funding restrictions were to blame for inability to combat Ebola.
Conservative critics have pointed out that the federal government has spent billions upon billions of dollars on unnecessary programs promoting a political agenda rather than targeting those funds to the fight against health threats.
Other limited government types point to the Progressive utopian foolishness seen in opposing political factions, both sides of which seem to agree humanity could somehow escape calamity if only we had a properly functioning government. People who don’t want an all-powerful government shouldn’t blame it for not having competence when crisis strikes.
What’s particularly interesting about this discussion, then, is that nobody has even discussed the fact that the federal government not ten years ago created and funded a brand new office in the Health and Human Services Department specifically to coordinate preparation for and response to public health threats like Ebola. The woman who heads that office, and reports directly to the HHS secretary, has been mysteriously invisible from the public handling of this threat. And she’s still on the job even though three years ago she was embroiled in a huge scandal of funneling a major stream of funding to a company with ties to a Democratic donor—and away from a company that was developing a treatment now being used on Ebola patients.
Before the media swallow implausible claims of funding problems, perhaps they could be more skeptical of the idea that government is responsible for solving all of humanity’s problems. Barring that, perhaps the media could at least look at the roles that waste, fraud, mismanagement, and general incompetence play in the repeated failures to solve the problems the feds unrealistically claim they will address. In a world where a $12.5 billion slush fund at the Centers for Disease Control and Prevention is used to fight the privatization of liquor stores, perhaps we should complain more about mission creep and Progressive faith in the habitually unrealized magic of increased government funding.
Lay of the Land
Collins’ NIH is part of the Health and Human Services Department. Real spending at that agency has increased nine-fold since 1970 and now tops $900 billion. Oh, if we could all endure such “funding slides,” eh?
Whether or not Dr. Collins’ effort to get more funding for NIH will be successful—if the past is prologue, we’ll throw more money at him—the fact is that Congress passed legislation with billions of dollars in funding specifically to coordinate preparation for public health threats like Ebola not 10 years ago. And yet the results of such funding have been hard to evaluate.
See, in 2004, Congress passed The Project Bioshield Act. The text of that legislation authorized up to $5,593,000,000 in new spending by NIH for the purpose of purchasing vaccines that would be used in the event of a bioterrorist attack. A major part of the plan was to allow stockpiling and distribution of vaccines.
Just two years later, Congress passed the Pandemic and All-Hazards Preparedness Act, which created a new assistant secretary for preparedness and response to oversee medical efforts and called for a National Health Security Strategy. The Act established Biomedical Advanced Research and Development Authority as the focal point within HHS for medical efforts to protect the American civilian population against naturally occurring threats to public health. It specifically says this authority was established to give “an integrated, systematic approach to the development and purchase of the necessary vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies.”
Last year, Congress passed the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 which keep the programs in effect for another five years.
If you look at any of the information about these pieces of legislation or the office and authorities that were created, this brand new expansion of the federal government was sold to us specifically as a means to fight public health threats like Ebola. That was the entire point of why the office and authorities were created.
In fact, when Sen. Bob Casey was asked if he agreed the U.S. needed an Ebola czar, which some legislators are demanding, he responded: “I don’t, because under the bill we have such a person in HHS already.”
The Invisible Dr. Lurie
So, we have an office for public health threat preparedness and response. And one of HHS’ eight assistant secretaries is the assistant secretary for preparedness and response, whose job it is to “lead the nation in preventing, responding to and recovering from the adverse health effects of public health emergencies and disasters, ranging from hurricanes to bioterrorism.”
In the video below, the woman who heads that office, Dr. Nicole Lurie, explains that the responsibilities of her office are “to help our country prepare for, respond to and recover from public health threats.” She says her major priority is to help the country prepare for emergencies and to “have the countermeasures—the medicines or vaccines that people might need to use in a public health emergency. So a large part of my office also is responsible for developing those countermeasures.”
Or, as National Journal rather glowingly puts it, “Lurie’s job is to plan for the unthinkable. A global flu pandemic? She has a plan. A bioterror attack? She’s on it. Massive earthquake? Yep. Her responsibilities as assistant secretary span public health, global health, and homeland security.” A profile of Lurie quoted her as saying, “I have responsibility for getting the nation prepared for public health emergencies—whether naturally occurring disasters or man-made, as well as for helping it respond and recover. It’s a pretty significant undertaking.” Still another refers to her as “the highest-ranking federal official in charge of preparing the nation to face such health crises as earthquakes, hurricanes, terrorist attacks, and pandemic influenza.”
Now, you might be wondering why the person in charge of all this is a name you’re not familiar with. Apart from a discussion of Casey’s comments on how we don’t need an Ebola czar because we already have one, a Google News search for Lurie’s name at the time of writing brings up nothing in the last hour, the last 24 hours, not even the last week! You have to get back to mid-September for a few brief mentions of her name in minor publications. Not a single one of those links is confidence building.
So why has the top official for public health threats been sidelined in the midst of the Ebola crisis? Only the not-known-for-transparency Obama administration knows for sure. But maybe taxpayers and voters should force Congress to do a better job with its oversight rather than get away with the far easier passing of legislation that grants additional funds before finding out what we got for all that money we allocated to this task over the last decade. And then maybe taxpayers should begin to puzzle out whether their really bad return on tax investment dollars is related to some sort of inherent problem with the administrative state.
The Ron Perelman Scandal
There are a few interesting things about the scandal Lurie was embroiled in years ago. You can—and should—read all about it in the Los Angeles Times‘ excellent front-page expose from November 2011, headlined: “Cost, need questioned in $433-million smallpox drug deal: A company controlled by a longtime political donor gets a no-bid contract to supply an experimental remedy for a threat that may not exist.” This Forbes piece is also interesting.
The donor is billionaire Ron Perelman, who was controlling shareholder of Siga. He’s a huge Democratic donor but he also gets Republicans to play for his team, of course. Siga was under scrutiny even back in October 2010 when The Huffington Post reported that it had named labor leader Andy Stern to its board and “compensated him with stock options that would become dramatically more valuable if the company managed to win the contract it sought with HHS—an agency where Stern has deep connections, having helped lead the year-plus fight for health care reform as then head of the Service Employees International Union.”
The award was controversial from almost every angle—including disputes about need, efficacy, and extremely high costs. There were also complaints about awarding a company of its size and structure a small business award as well as the negotiations involved in granting the award. It was so controversial that even Democrats in tight election races were calling for investigations.
Last month, Siga filed for bankruptcy after it was found liable for breaching a licensing contract. The drug it’s been trying to develop, which was projected to have limited utility, has not really panned out—yet the feds have continued to give valuable funds to the company even though the law would permit them to recoup some of their costs or to simply stop any further funding.
The Los Angeles Times revealed that, during the fight over the grant, Lurie wrote to Siga’s chief executive, Dr. Eric A. Rose, to tell him that someone new would be taking over the negotiations with the company. She wrote, “I trust this will be satisfactory to you.” Later she denied that she’d had any contact with Rose regarding the contract, saying such contact would have been inappropriate.
The company that most fought the peculiar sole-source contract award to Siga was Chimerix, which argued that its drug had far more promise than Siga’s. And, in fact, Chimerix’s Brincidofovir is an antiviral medication being developed for treatment of smallpox but also Ebola and adenovirus. In animal trials, it’s shown some success against adenoviruses, smallpox, and herpes—and preliminary tests show some promise against Ebola. On Oct. 6, the FDA authorized its use for some Ebola patients.
It was given to Ebola patient Thomas Eric Duncan, who died, and Ashoka Mukpo, who doctors said had improved. Mukpo even tweeted that he was on the road to recovery.
Back to that Budget
Consider again how The Huffington Post parroted Collins’ claims:
Money, or rather the lack of it, is a big part of the problem. NIH’s purchasing power is down 23 percent from what it was a decade ago, and its budget has remained almost static. In fiscal year 2004, the agency’s budget was $28.03 billion. In FY 2013, it was $29.31 billion—barely a change, even before adjusting for inflation.
Of course, between the fiscal years 2000 and 2004, NIH’s budget jumped a whopping 58 percent. HHS’s 70,000 workers will spend a total of $958 billion this year, or about $7,789 for every U.S. household. A 2012 report on federal spending including the following nuggets about how NIH spends its supposedly tight funds:
- a $702,558 grant for the study of the impact of televisions and gas generators on villages in Vietnam.
- $175,587 to the University of Kentucky to study the impact of cocaine on the sex drive of Japanese quail.
- $55,382 to study hookah smoking in Jordan.
- $592,527 to study why chimpanzees throw objects.
Last year there were news reports about a $509,840 grant from NIH to pay for a study that will send text messages in “gay lingo” to meth-heads. There are many other shake-your-head examples of misguided spending that are easy to find.
Indeed. The Progressive belief that a powerful government can stop all calamity is misguided. In the last 10 years we passed multiple pieces of legislation to create funding streams, offices, and management authorities precisely for this moment. That we have nothing to show for it is not good reason to put even more faith in government without learning anything from our repeated mistakes. Responding to the missing Ebola Czar and her office’s corruption by throwing still more money, more management changes, and more bureaucratic complexity in her general direction is madness.
by Howard Kunstler via Kunstler.com,
The rot moves from the margins to the center, but the disease moves from the center to the margins. That is what has happened in the realm of money in recent weeks due to the sustained mispricing of the cost of credit by central banks, led by the US Federal Reserve. Along the way, that outfit has managed to misprice just about everything else — stocks, houses, exotic securities, food commodities, precious metals, fine art. Oil is mispriced as well, on the low side, since oil production only gets more expensive and complex these days while it depends more on mispriced borrowed money. That situation will be corrected by scarcity, as oil companies discover that real capital is unavailable. And then the oil will become scarce. The “capital” circulating around the globe now is a squishy, gelatinous substance called “liquidity.” All it does is gum up markets. But eventually things do get unstuck.
Meanwhile, the rot of epic mispricing expresses itself in collapsing currencies and the economies they are supposed to represent: India, Turkey, Argentina, Hungary so far. Italy, Spain, and Greece would be in that club if they had currencies of their own. For now, they just do without driving their cars and burn furniture to stay warm this winter. Automobile use in Italy is back to 1970s levels of annual miles-driven. That’s quite a drop.
Before too long, the people will be out in the streets engaging with the riot police, as in Ukraine. This is long overdue, of course, and probably cannot be explained rationally since extreme changes in public sentiment are subject to murmurations, the same unseen forces that direct flocks of birds and schools of fish that all at once suddenly turn in a new direction without any detectable communication.
Who can otherwise explain the amazing placidity of the sore beset American public, beyond the standard trope about bread, circuses, and superbowls? Last night they were insulted with TV commercials hawking Maserati cars. Behold, you miserable nation of overfed SNAP card swipers, the fruits of wealth and celebrity! Savor your unworthiness while you await the imminent spectacles of the Sochi Olympics and Oscar Night! Things at the margins may yet interrupt the trance at the center. My guess is that true wickedness brews unseen in the hidden, unregulated markets of currency and interest rate swaps.
The big banks are so deep in this derivative ca-ca that eyeballs are turning brown in the upper level executive suites. Notable bankers are even jumping out of windows, hanging themselves in back rooms, and blowing their brains out in roadside ditches. Is it not strange that there are no reports on the contents of their suicide notes, if they troubled to leave one? (And is it not unlikely that they would all exit the scene without a word of explanation?) One of these, William Broeksmit, a risk manager for Deutsche Bank, was reportedly engaged in “unwinding positions” for that that outfit, which holds over $70 trillion in swap paper. For scale, compare that number with Germany’s gross domestic product of about $3.4 trillion and you could get a glimmer of the mischief in motion out there. Did poor Mr. Broeksmit despair of his task?
Physicist Stephen Hawking declared last week that black holes are not exactly what people thought they were. Stuff does leak back out of them. This will soon be proven in the unwinding derivatives trades when most of the putative wealth associated with swaps and such disappears across the event horizon of bad faith, and little dribbles of their prior existence leak back out in bankruptcy proceedings and political upheaval.
The event horizon of bad faith is the exact point where the credulous folk of this modern age, from high to low, discover that their central banks only pretend to be regulating agencies, that they ride a juggernaut of which nobody is really in control. The illusion of control has been the governing myth since the Lehman moment in 2008. We needed desperately to believe that the authorities had our backs. They don’t even have their own fronts.
Is the money world at that threshold right now? One thing seems clear: nobody is able to turn back the plummeting currencies. They go where they will and their failures must be infectious as the greater engine of world trade seizes up. Who will write the letters of credit that make international commerce possible? Who will trust whom? When do people seriously start to starve and reach for the pitchforks? When does the action move from Kiev to London, New York, Frankfurt, and Paris?
10/05/13 By STEVEN R. HURST
– An unmistakable sense of unease has been growing in capitals around the world as the U.S. government from afar looks increasingly befuddled — shirking from a military confrontation in Syria, stymied at home by a gridlocked Congress and in danger of defaulting on sovereign debt, which could plunge the world’s financial system into chaos.
While each of the factors may be unrelated to the direct exercise of U.S. foreign policy, taken together they give some allies the sense that Washington is not as firm as it used to be in its resolve and its financial capacity, providing an opening for China or Russia to fill the void, an Asian foreign minister told a group of journalists in New York this week.
Concerns will only deepen now that President Barack Obama canceled travel this weekend to the Asia Pacific Economic Cooperation Forum in Bali and the East Asia Summit in Brunei. He pulled out of the gatherings to stay home to deal with the government shutdown and looming fears that Congress will block an increase in U.S. borrowing power, a move that could lead to a U.S. default.
The U.S. is still a pillar of defense for places in Asia like Taiwan and South Korea, providing a vital security umbrella against China. It also still has strong allies in the Middle East, including Israel and the Gulf Arab states arrayed against al-Qaida and Iran.
But in interviews with academics, government leaders and diplomats, faith that the U.S. will always be there is fraying more than a little.
“The paralysis of the American government, where a rump in Congress is holding the whole place to ransom, doesn’t really jibe with the notion of the United States as a global leader,” said Michael McKinley, an expert on global relations at the Australian National University.
The political turbulence in Washington and potential economic bombshells still to come over the U.S. government shutdown and a possible debt default this month have sent shivers through Europe. The head of the European Central Bank, Mario Draghi, worried about the continent’s rebound from the 2008 economic downturn.
“We view this recovery as weak, as fragile, as uneven,” Draghi said at a news conference.
Germany’s influential newspaper Sueddeutsche Zeitung bemoaned the U.S. political chaos.
“At the moment, Washington is fighting over the budget and nobody knows if the country will still be solvent in three weeks. What is clear, though, is that America is already politically bankrupt,” it said.
Obama finds himself at the nexus of a government in chaos at home and a wave of foreign policy challenges.
He has been battered by the upheaval in the Middle East from the Arab Spring revolts after managing to extricate the U.S. from its long, brutal and largely failed attempt to establish democracy in Iraq. He is also drawing down U.S. forces from a more than decade-long war in Afghanistan with no real victory in sight. He leads a country whose people have no interest in taking any more military action abroad.
As Europe worries about economics, Asian allies watch in some confusion about what the U.S. is up to with its promise to rebalance military forces and diplomacy in the face of an increasingly robust China.
Global concerns about U.S. policy came to a head with Obama’s handling of the civil war in Syria and the alleged use of chemical weapons by the regime of President Bashar Assad. But, in fact, the worries go far deeper.
“I think there are a lot of broader concerns about the United States. They aren’t triggered simply by Syria. The reaction the United States had from the start to events in Egypt created a great deal of concern among the Gulf and the Arab states,” said Anthony Cordesman, a military affairs specialist at the Center for International Studies.
Kings and princes throughout the Persian Gulf were deeply unsettled when Washington turned its back on Egypt’s long-time dictator and U.S. ally Hosni Mubarak during the 2011 uprising in the largest Arab country.
Now, Arab allies in the Gulf voice dismay over the rapid policy redirection from Obama over Syria, where rebel factions have critical money and weapons channels from Saudi Arabia, Qatar and other Gulf states. It has stirred a rare public dispute with Washington, whose differences with Gulf allies are often worked out behind closed doors. Last month, Saudi Foreign Minister Saud al-Faisal warned that the renewed emphasis on diplomacy with Assad would allow the Syrian president to “impose more killing.”
After saying Assad must be removed from power and then threatening military strikes over the regime’s alleged chemical weapons attack, the U.S. is now working with Russia and the U.N. to collect and destroy Damascus’ chemical weapons stockpile. That assures Assad will remain in power for now and perhaps the long term.
Danny Yatom, a former director of Israel’s Mossad intelligence service, said the U.S. handling of the Syrian crisis and its decision not to attack after declaring red lines on chemical weapons has hurt Washington’s credibility.
“I think in the eyes of the Syrians and the Iranians, and the rivals of the United States, it was a signal of weakness, and credibility was deteriorated,” he said.
The Syrian rebels, who were promised U.S. arms, say they feel deserted by the Americans, adding that they have lost faith and respect for Obama.
The White House contends that its threat of a military strike against Assad was what caused the regime to change course and agree to plan reached by Moscow and Washington to hand its chemical weapons over to international inspectors for destruction. That’s a far better outcome than resorting to military action, Obama administration officials insist.
Gulf rulers also have grown suddenly uneasy over the U.S. outreach to their regional rival Iran.
Bahrain Foreign Minister Sheik Khalid bin Ahmed Al Khalifa said Gulf states “must be in the picture” on any attempts by the U.S. and Iran to open sustained dialogue or reach settlement over Tehran’s nuclear program. He was quoted Tuesday by the London-based Al Hayat newspaper as saying Secretary of State John Kerry has promised to consult with his Gulf “friends” on any significant policy shifts over Iran — a message that suggested Gulf states are worried about being left on the sidelines in potentially history-shaping developments in their region.
In response to the new U.S. opening to Iran to deal with its suspected nuclear weapons program, Israeli Prime Minister Benjamin Netanyahu told the U.N. General Assembly that his country remained ready to act alone to prevent Tehran from building a bomb. He indicated a willingness to allow some time for further diplomacy but not much. And he excoriated new Iranian President Hassan Rouhani as a “wolf in sheep’s clothing.”
Kerry defended the engagement effort, saying the U.S. would not be played for “suckers” by Iran. Tehran insists its nuclear program is for peaceful energy production, while the U.S. and other countries suspect it is aimed at achieving atomic weapons capability.
McKinley, the Australian expert, said Syria and the U.S. budget crisis have shaken Australians’ faith in their alliance with Washington.
“It means that those who rely on the alliance as the cornerstone of all Australian foreign policy and particularly security policy are less certain — it’s created an element of uncertainty in their calculations,” he said.
Running against the tide of concern, leaders in the Philippines are banking on its most important ally to protect it from China’s assertive claims in the South China Sea. Defense Secretary Voltaire Gazmin said Manila still views the U.S. as a dependable ally despite the many challenges it is facing.
“We should understand that all nations face some kind of problems, but in terms of our relationship with the United States, she continues to be there when we need her,” Gazmin said.
“There’s no change in our feelings,” he said. “Our strategic relationship with the U.S. continues to be healthy. They remain a reliable ally.”
But as Cordesman said, “The rhetoric of diplomacy is just wonderful but it almost never describes the reality.”
That reality worldwide, he said, “is a real concern about where is the U.S. going. There is a question of trust. And I think there is an increasing feeling that the United States is pulling back, and its internal politics are more isolationist so that they can’t necessarily trust what U.S. officials say, even if the officials mean it.”
EDITOR’S NOTE — Steven R. Hurst, The Associated Press’ international political writer in Washington, has covered foreign affairs for 35 years, including extended assignments in Russia and the Middle East.
AP writers Brian Murphy in Dubai, United Arab Emirates, Robert H. Reid in Berlin, Hrvoje Hranjski in Manila, Gregory Katz in London, Josef Federman in Jerusalem, Rod McGuirk in Canberra, Australia, and Sarah DiLorenzo and David McHugh in Paris contributed to this report.