Steve Kass

Factcheck.org is wrong when they say Obama “mischaracterized” an aspect of McCain’s health care plan.

In last night’s debate, Obama said that under McCain’s proposal, “Your employer now has to pay taxes on the health care that you’re getting from your employer.”Factcheck says Obama got it wrong, and Factcheck says that employers would not “be taxed on the value of health benefits provided to workers.

“Factcheck is forgetting about FICA, a 15%+ payroll tax split between employers and their employees. The employer tax rate on wages and taxable benefits is around 7%. Absent a new loophole for employers in McCain’s plan, if health benefits become taxable, well, they become taxable, and they will be taxed.

Under McCain’s plan, employers that provide health care benefits will have these three choices, none of which is likely to help fix the health care problem:

1. Increase their health care budget by 7% to pay the new McCain tax (which is separate from any inflationary rise in health care costs)
2. Reduce health care benefits to employees by 7% in order to stay even
3. Stop providing health care benefits to employees, since those costs will rise even more rapidly than earlier predicted

Personally, I think payroll taxes are a good thing, but they should apply to benefits only when those benefits are surrogate wages (company cars, houses, stock, golf memberships, and so on). Until we have government health care, employer-provided health care benefits should remain untaxed, for both the employer and the employee.

If Obama got something wrong here, it wasn’t a fact. Obama missed the opportunity to point out that under the McCain proposal, both workers and employers will be taxed on the value of employer-provided health care benefits.

In a tour de force of apologetic paragraphs, New York Times columnist David Brooks denounces as “baloney” the idea that “the McCain on the campaign trail is the real McCain.” Believe the last “half-century of evidence,” not what you see today.

It’s all perfectly in character for the longtime McCain supporter until out of the blue, WHAM!, he delivers the knockout punch line. “[I]t seemed worth stepping back to recall the fundamentals — about McCain.”

McCain: his fundamentals are strong. I can’t believe Brooks missed the irony, and I hope in the days to come he decides not to be subtle.

From the Wall Street Journal’s “Washington Wire” today (notes added):

The two presidential campaigns have issued competing timelines of events today leading up to McCain’s call to cancel the debates. Here is Obama’s version:

“At 8:30 this morning, Senator Obama called Senator McCain to ask him if he would join in issuing a joint statement outlining their shared principles and conditions for the Treasury proposal and urging Congress and the White House to act in a bipartisan manner to pass such a proposal. At 2:30 this afternoon, Senator McCain returned Senator Obama’s call and agreed to join him in issuing such a statement. The two campaigns are currently working together on the details.”

Shortly after, the McCain campaign released their version:

“Senator Obama phoned Senator McCain at 8:30 am this morning but did not reach him. The topic of Senator Obama’s call to Senator McCain was never discussed [1]. Senator McCain was meeting with economic advisers and talking to leaders in Congress throughout the day prior to calling [2] Senator Obama. At 2:30 pm, Senator McCain phoned Senator Obama and expressed deep concern that the plan on the table would not pass as it currently stands. He asked Senator Obama to join him in returning to Washington to lead a bipartisan effort [4] to solve this problem.”

Translator’s notes:

[1]: “Never discussed”: If Obama did not reach McCain, nothing was discussed. Note that the following is equally true, though understandably the McCain camp chose not to include it in their press release: “A McCain plan to withdraw from the race and apologize for his repeated lies was not discussed.”
[2]: “prior to calling”: Before 2:30, but in all likelihood, not at 8:30, when Obama phoned with the joint statement idea, or the McCain statement would have been specific. Had the McCain camp been cleverer, they wouldn’t have mentioned the exact time of the call at all, because the single mention draws attention to the later non-mention.
[3]: “lead a bipartisan effort”: Here is the McCain camp’s best use of rhetoric in the release. (”Best”, of course, is relative, and does not imply lack of sleaze.) They have rhetorically taken Obama’s good idea (”issuing a joint statement”), kept the concept (”<verb> joint <good thing>”), and concocted a replacement readers might believe is theirs (”lead a bipartisan effort”). The indefinite article “a” emphasizes that there was no earlier mention of a bipartisan effort, and it may be true there wasn’t. But McCain surely knew at this point that Obama had suggested a joint statement, and I bet they talked about it. 

So this is the likely sequence of events:

• Obama called McCain at 8:30 am.
• McCain hears the phone ring, sees it’s Obama, and lets the call go to voice mail. There’s no conversation.
• McCain listens to the voice mail and knows that Obama came up with a good idea before him (McCain).
• Later on, McCain has a few meetings and phone calls.
• At 2:30pm, McCain called Obama, who answered.
• McCain and Obama discuss doing something together.
• Obama’s camp issues a press release about all this.
• McCain’s camp reads the Obama press release. They immediately realize how damaging it would be to ignore, since it hits them hard: Obama had a good idea, and first; McCain didn’t answer an 8:30 call, so where was he?; and regarding any bipartisanship between the candidates, Obama is in control and decisive.
• The McCain team scrambles its writers, and “shortly” afterwards, they issue their own press release crafted to address the strong points of the Obama release as fast as they can. They choose not to lie outright. (You can get in trouble when you make up lies in a hurry.)

The Journal, which is no way “in the tank” for Obama, is appropriately cynical.

In the news today: Governor Palin’s Yahoo! account was hacked. But could it be a hoax? Or could it be Act I of a staged stunt by Palin supporters? I won’t hazard a guess, but I will point out something strange: One of the eye-catching phrases in the message headers posted on wikileaks.org is “CONFIDENTIAL Ethics Matter.” That phrase is sure to get some attention, but for now (i.e., 15 minutes before this post) Google returns only five hits. Three were from today’s news, and the other two were from the .doc and .pdf versions of Alaska’s “Executive Branch Code of Ethics.” Crafty, or just plain weird?[Added at 19:42: The header data from one of the Palin family pictures on wikileaks.org says the photo was taken with a Blackberry Curve 8310. Blackberry...Blackberry... wasn't that in the news yesterday, too?]

With Software, Till Tampering Is Hard to Find
By Roy Furchgott
August 29, 2008
http://www.nytimes.com/2008/08/30/technology/30zapper.html

As hard as zapper software is to detect, it is easy to make, said Jeff Moss, organizer of the annual hacker convention Def Con. “If it runs on a Windows system and you are a competent Windows administrator, you can do it,” he said.

According to analysts at the consulting firm Frost & Sullivan, 85 percent of all point-of-sale systems, as cash registers are called, run on the Windows operating system, although other systems are also vulnerable.

Don’t blame the operating system; blame the hardware. Modern technology has replaced paper and indelible pen (a twentieth-century write-once, read-only data collection and storage system with physical properties that make forgery difficult; see http://www.flickr.com/photos/stevegarfield/616793140/) with the technological equivalent of a Magic Slate (a 1970’s toy; see http://www.landofthelost.com/slate.htm), which is child’s play to alter.

Do electronic systems that record transactions on write-once storage even exist? The technology exists, and it’s dirt cheap. Why can’t businesses be required to keep permanent, inalterable transaction records? Ultimately it may be impossible to prevent a crooked business owner from embezzling from his or her own business or committing tax fraud. But why make life easy for them by allowing Magic Slates for accountability?

Humans can’t perceive detail and blue at the same time. Our eyes aren’t engineered for it.

We perceive detail at the center of our visual field. The eye’s light- and color-sensitive cells, called cones, are packed most densely at the fovea, the center of the retina. (The retina has more pixels per inch at its center, if you like.) We distinguish shades of blue wherever we have “blue” cones, the one of our three types of cones most selective for blue colors.

To read blue, we need to perceive detail and shades of blue at once. Except we can’t. There are no blue cones in the fovea.

If you can’t read the words below, there’s nothing wrong with you. You’re just human. If only the software and web designers understood.

From “A Glut of One-Bedroom Apartments” in today’s New York Times:

Brokers say that many people who bought their apartments at or near the top of the market and now must sell are often simply trying to avoid losing money on the deal.

In May 2007, John and Wendy Penn bought a one-bedroom on West 72nd Street for $650,000. The couple, whose main residence is on Long Island, wanted an office and a pied-à-terre in Manhattan to expand their insurance business.

They bought the apartment as a long-term investment and quickly completed about $30,000 in renovations, including the restoration of the apartment’s prewar details. But when Mr. Penn became an independent insurance agent, he no longer needed space in Manhattan.

So in February, the couple put the apartment up for sale, pricing it at $769,000. Three price cuts later, the apartment is listed at $725,000 and still has not sold.

It doesn’t sound like the Penns are “simply trying to avoid losing money.” They tried to sell their apartment nine months after they bought it for $119,000 more than they paid. Now they’re only asking $75,000 more, which should cover their renovations, the sales agent’s commission, and the property taxes they paid. Does the Times think a pied-à-terre in Manhattan (or any housing anywhere) is supposed to be free?

Under the headline “Rise in TB Is Linked to Loans From I.M.F.”, Nicholas Bakalar writes for the New York Times today that “The rapid rise in tuberculosis cases in Eastern Europe and the former Soviet Union is strongly associated with the receipt of loans from the International Monetary Fund, a new study has found.”

The study, led by Cambridge University researcher David Stuckler, was published in PLoS Medicine and is online at (URL may wrap):

http://medicine.plosjournals.org/perlserv/?request=get-document&doi=10.1371/journal.pmed.0050143&ct=1.

Cambridge, Schmambridge. First clue: the Times quotes Stuckler: “When you have one correlation, you raise an eyebrow,” Mr. Stuckler said. “But when you have more than 20 correlations pointing in the same direction, you start building a strong case for causality.”

In twenty post-communist countries, the variable “participated in an IMF loan program in year Y” was significantly negatively associated with “TB rate per 100000 people,” whether using rate of cases, of deaths, or of new cases.

After reading the paper and looking at much of the source data, I agree with William Murray, an IMF spokesman also quoted in the article: “This is just phony science.”

Why do I agree with Murray?

Take the supporting table below, for example. It shows all the TB mortality data from “did not participate in an IMF loan program” years: year-to-year percentage changes in TB mortality rates (based on Logs) [sic]. Among the 45 values are 31 0.00s and nothing else close to zero. Almost half the nonzero values are from Poland and Hungary, but—oddly—the change is nonzero in odd-numbered years and zero in even-numbered years. There are four -22.31s, two -18.23s, a 15.42 and a -15.42, a 13.35 and a -13.35, and four stray values, one of which is -69.31. Now I know -0.6931 from calculus (the natural log of ½), and I googled 0.2231: it’s the natural log of 0.8. (There were about four times as many “did participate” country-years, for a total of 200+ data points.)

If you haven’t guessed, the data here, which mostly express stable or declining TB mortality, and which found the entire study, and which the authors attribute significantly to non-participation in IMF loan programs, are 4-significant-digit percentage changes between logs of adjacent very small positive integers. The small integers are from the Global Tuberculosis Database, queryable here: http://www.who.int/globalatlas/dataQuery/default.asp. This WHO data is rounded to whole numbers and for the countries and years studied, ranged between 1 and 20.

While this data is crude, I don’t doubt the study’s main finding: among post-communist countries, “participated in an IMF loan program in year Y” was significantly negatively associated with “TB rate per 100000 people.” What I doubt is that the relationship has anything to do with the IMF loan program.

The timeframe studied was 1989 to 2003, and a quick look at the data reveals a pattern to which are the “in an IMF loan program” years for the countries studied. Most countries began participating in 1991, 1992, or 1993, and most countries continued their participation through 2003, the end of the study timeframe. During this time, TB was on the rise, and there’s no question the mid nineties were not a typical period.

While the authors mention many correction strategies and tests to avoid one or another kind of bias, they didn’t mention the way in which “in program” years were distributed as one potential confounder. I can’t see how they ruled it out. There data isn’t there. From 1994 to 1997, there are only 10 “not participating” data points, mostly from Czech Republic, Slovenia, and Poland, which countries were anomolous in having shown no increase in TB during their IMF years. Some countries, Bosnia for example, seem to have been omitted from this part of the analysis, despite having participated in an IMF loan program and data being available from WHO.

The countries studied included Russia, with 140,000,000 people, as well as Estonia, Latvia, Macedonia, Slovenia, Albania, Armenia, Bosnia, Lithuania, counted together having less than 20% of Russia’s population. The authors acknowledge the possibility of ecological fallacy with little investigation. Summary statistics, such as the mean and standard deviation of TB rate among the countries, are unweighted by population, and fail to reflect the real situation. Over one time period quoted, the number resulting from taking the average of each countries TB rate, unweighted for population, went up 30%, but the TB rate among the population under study in fact doubled. Whether this changes any interpretation, I can’t say, but it does make a difference.

Not only am I not a statistician, I’m not an economist, and I have no idea whether the IMF did great things or not in mid-nineties eastern europe and former Soviet Union. But Stuckler and colleagues haven’t convinced me of anything.

Andrew Gelman dreams of the day when a journalist (like Ezra Klein) asks “Why?” the items on a list (like Rob Goodspeed’s) are in alphabetical order.

This drew my attention to the items on Barack Obama’s issues page, which as of today are not in alphabetical order (despite first appearance and various journalists’ reports that they are).

“Why?” is always a good question. So is “Why not?” If “Why not?” is the right question, something interesting might explain why [not]. Translation from another language, for example. A friend name Winternitz was listed as the first author of many joint papers, even after the citations were translated from Russian to English.

Why aren’t the items on Barack Obama’s issues page in alphabetical order? I don’t have an answer, but I wonder: Was the “Seniors & Social Security” issue once the “Social Security” issue?

This food-themed ad for an insurance company in the middle of an article about a fatal shark attack didn’t strike me as particularly tasteful.