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But today does mark an end. I've been at TAP for almost four years. I moved to Washington, DC in September of 2005 to take the writing fellowship. The next year, I became a staff writer. The year after that, an associate editor. I've seen three editors, two offices, and four writing fellows. I've shared a cubicle with Matt Yglesias and a hotel room with Mark Schmitt. I've spent long nights at The Black Rooster. I have stolen candy from Richard Boriskin's candy bowl and I have stolen candy from Ann Friedman's candy bowl. I've written dozens of features, around a hundred columns, and thousands of blog posts containing literally millions of words. And there's not been a day that I haven't been proud to work here.

That's true, of course, because of the magazine's politics. But also because of its approach. The Prospect is one of the few unrepentantly wonkish outfits in existence. It's one of the few magazines where I could've pitched a profile of Congressional Budget Director Peter Orszag -- this was before he became a star, mind you -- and been given the enthusiastic go-ahead. My editor's particular interest in the piece was the opportunity to explore the importance of the budget scoring process. In the editing process, we actually cut the glitzy stuff about Orszag's tilt towards behavioral economics.

Pause on that for a minute. The Prospect, to its credit, has always rejected the idea that readers wouldn't be interested in something even though it was important. To be fair, that's a product of our business model: A non-profit isn't dependent on advertising revenue, and so can take chances that a for-profit can't. But the Prospect's model has not been disproven. Quite the opposite, I think.

The Obama era has been a period of policy. Of substance. The drama is in the budget, the composition of the stimulus bill, the survival of the banking system, the inclusion of a public plan, the fight over climate change. It's not that we've put away childish things. Rush Limbaugh's name, for instance, is still in the news. But we've also learned to pay attention to adult things. The Prospect has been doing that for almost two decades now, and they provided me with a home to do the same. And the Prospect was right. Turns out that you can build an audience with charts and graphs and hearings and budget commentary. The words "reconciliation," "nationalization," and "community rating" do not scare readers away. Scatterplots do not harm your traffic. Indeed, the Washington Post is asking me to cover the same topics in the same way at their site. But I would never have had this opportunity, or been able to build this model, without TAP -- both the space it gave me and the guidance it provided me. I'll be forever grateful to it.

Which is why, even though I'm leaving, I urge you to stay. That's not to say you shouldn't immediately bookmark my new blog and check it obsessively every day. It'll have that same great Ezra taste, but with more resources around to make my charts look pretty. But make sure Tapped is on your blogroll, too. And make sure you're receiving the American Prospect magazine at home. And make sure you're checking out the homepage every morning. Keep an eye on the place for me.

This morning, some conservative groups expended a lot of energy hyping a document that seemed to show the Office of Management and Budget -- and hence the Obama administration -- opposes the Environmental Protection Agency's decision to classify carbon as a dangerous pollutant. That was a bad idea, because it's just given the OMB a high-profile opportunity to restate its support for the EPA's finding. Peter Orszag, the director of the OMB, explains. And he also links to this April 17th post where he calls the EPA's decision "important" and writes that "the proposed finding is carefully rooted in both law and science."

Either way, what actually happened today is that the OMB gave the EPA license to go forward with its reclassification of carbon. This would, in theory, give the EPA the ability to regulate carbon autonomously. If Congress fails to act on cap and trade, in other words, the EPA can do some of the job itself. And it may do it in ways that the energy industry finds less congenial. Orszag put this pretty explicitly back in April:

The President has made it clear that he wants to move the nation toward clean energy, and that part of that effort involves a legislative approach to reducing greenhouse gas emissions under a "cap and trade" program. Such a program would be more effective and efficient than most types of regulation. While such a program is being debated in the Congress, however, the Administration is following both the science and the law with regard to the Clean Air Act.

I've written often on the strategic mistake the unions made uniting behind the specific solution of card check rather than the general problem of unfair barriers to workers who want to organize. But I'm starting to wonder if the business community hasn't made the same mistake in reverse. They've done a damn good job burying card check. But they haven't convinced anyone that unfair elections aren't a problem.

Last week, a massive coalition of business groups sent a "Dear Senator" letter that stated, "let us be clear and frank on this matter; there can be no acceptable 'compromise' on any issue of labor law reform due to the very real threat posed by EFCA." Huh. "That hardly sounds like bargaining in good faith," sighed the Washington Post. And the increasing perception of employer stubbornness is lending life to compromise proposals. One such idea is being floated by Arlen Specter, who desperately wants SEIU's help in his next election. He's backing a set of fixes that would speed elections -- the vote would come no more than three weeks after a request is filed -- and guarantee organizers "equal time under identical circumstances" to make their pitch to employees. So if management holds a captive audience meeting, then they have to give organizers the same opportunity.

The corporate community opposes this, too. But having predicated their assault on a principled belief in "workplace democracy," it's extremely hard for them to credibly oppose reforms that would help bring democracy to the workplace. Just as the unions chose poor ground when they centered their fight around card check, the business community has made a bad decision centering their counterattack around workplace democracy.

But even so, both programs face challenges. What probably won't make it into many stories, however, is the relative severity of the problems. The crude fix for Social Security actually sounds quite manageable: "Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two."

Conversely, the crude fix for Medicare -- and this is only the hospital insurance side of Medicare -- is more brutal. "The Medicare Report shows that the HI Trust Fund could be brought into actuarial balance over the next 75 years by changes equivalent to an immediate 134 percent increase in the payroll tax (from a rate of 2.9 percent to 6.78 percent), or an immediate 53 percent reduction in program outlays, or some combination of the two." To put it simply, imagine how much health care your grandparents can access. Now cut it by a bit more than half. They're not allowed to be in the hospitals on every odd day, or on holidays. There you go.

The relative urgency of Medicare's problem is pretty simple to explain. As the Trustees Report says, "While both programs face demographic challenges, rapidly growing health care costs also affect Medicare." In other words, Social Security is only affected by demographics. Medicare is also being buffeted by rising health care prices. If we can't get those under control, we can't fix Medicare. And if we can't fix Medicare, then it's not just the Medicare program that will be insolvent. It's the federal government.

The White House released some new numbers on the stimulus today. The one that's getting the most attention is $92,000. That's how much it will cost to create or preserve each stimulus-related job. Do I even need to relay the snarky rejoinder to this?

But the number is more complicated than it seems. Building a bridge creates a certain number of jobs. But it also requires you to buy a lot of cement. Cutting taxes for small businesses helps preserve jobs. But it does that by helping them pay the rent. Pumping billions into Pell grants helps kids secure better jobs because they can graduate from college. But it really just replaces tuition that would otherwise be paid by richer families.

The stimulus was primarily, but not only, a job creation package. It also spread broadband and strengthened universities and built trains and helped schools. Much of the fear in a recession is that investments important to tomorrow's economy stop happening. Fewer students go to college and fewer roads get repaired. The stimulus spent quite a bit paying for the ongoing investments that mean tomorrow's economy will have jobs, and many of them will even be good jobs.

One of the reasons I like reading Patrick Ruffini is he has a tendency to grapple with, rather than downplay, troublesome evidence. Here he is, for instance, on Obama's personal popularity:

Obama's personal popularity stayed remarkably stable throughout the course of the campaign, and the average unfavorable rating barely ever cracked 35%. Obama the campaigner looks downright polarizing compared to Obama the President, who now sports a 65/25 fav/unfav in the Pollster.com average.

Why is this important? Republicans right now haven't the slightest idea of how to reduce the President's appeal because they've never actually done it before. It would be one thing if Obama had become a controversial figure during the campaign, like Bill Clinton did in 1992, providing fodder for a comeback once he did get into office, but that possibility scarcely exists today.

While personality may not be everything, and real-world policy outcomes provide opportunities for inflection points, it rarely ever works out that a President's policy agenda is unsuccessful while he remains personally popular. Yes, there are weird situations where a President might be personally loathed (Clinton post-Monica) but politically successful, but not (that I know of) the other way around.

This sort of thing is particularly important when passing complicated pieces of policy. In general, it's very hard for voters to evaluate health care legislation or a cap and trade plan. So they often evaluate the politicians associated with the legislation. If a politician they trust stands on a podium and tells them a particular bill is a good idea, and a politician they don't trust stands on the other podium and says the bill is a bad idea, they go with the politician they trust. That, obviously, is a stark hypothetical. But it's a pretty good description of the current situation. The American people trust Obama. There is no high-profile GOP spokesperson with similarly high approval ratings.

Put slightly differently, in 1994, the Republican Party had Bob Dole. Who do they have today? In 1994, the GOP used Whitewater to erode public trust in Bill and Hillary Clinton. What do they have today? The problem for the Republican Party is not simply that they lack popular leadership. It's that the Democratic Party doesn't share their dilemma.

There's some evidence that demand for Treasury debt might be waning. That makes sense on a number of levels: Deficits look bad and so the risk of default -- though quite small -- inevitably inches upwards. There are signals that other markets are stabilizing and their products may once again be worth investing in -- and may even be extremely good deals. International investors aren't quite so terrified and so aren't essentially trying to hide their money beneath the United States' mattress.

We're probably at the beginning of the period when it becomes more expensive for the government to borrow. Since the recession began, it's been uncommonly cheap. As the recession ends, it'll normalize. So if the government is planning to borrow a whole bunch of money in the near future, it might be a good idea to lock it in now, while 30-year rates are low, rather than later, when they rise again.

I don't really like writing defenses of "comparative effectiveness review." It makes me despair for our country. We're literally talking about the process of gathering evidence so we know how well various medical treatments work. It's worth saying, however, that there are two types of objections to gathering evidence, and they're being unfortunately conflated.

The first is the ideological objection. Some conservatives worry that the "the type of information collected by CER could eventually be used inappropriately if a 'Federal Health Board' was created to decide which types of treatment would be available to whom and when." It's worth parsing this for a moment: The apparent fear here is that the evidence from comparative effectiveness will be, well, used to make treatment decisions. But that can't be quite right. We use evidence all the time. Your insurer won't pay for a leg amputation when your symptom is a headache. Medicare doesn't cover a wheelchair if you're diagnosed with acute constipation. No one whines about that.

The fear, rather, is that the existence of more evidence will somehow qualitative change the way government uses evidence. The government will decree, in other words, that their testing shows back surgery ineffective, and back surgery is now illegal. Put slightly differently:

Step 1: Comparative effectiveness review.
Step 2: ????
Step 3: Authoritarian medical system

It's sort of what would happen if you applied The Road to Serfdom to the comparative effectiveness debate.

The industry's fear is quite different: This is the profit objection. Right now, most research on, say, drug effectiveness is funded by the pharmaceutical industry. That presents obvious advantages for them and problems for us. The concern here is that if they cease controlling the flow of evidence, then new studies will show that certain treatments don't work. For instance: Claritin goes off patent. Generic versions emerge. They're very cheap. Claritin's manufacturer changes the chemical composition slightly and comes up with Clarinex. They apply for a new patent. They sell it at a heavy mark-up. But it probably doesn't work much better. If there's credible evidence out there showing that it doesn't work much better, that's the end of that business strategy.

But this is the debate. Supporters of comparative effectiveness reform want information on whether medical treatments work. Some conservatives are worried that the government will take that evidence and use it to craft a totalitarian health care system. They are worried about anything that could further empower government. Some members of the medical device and pharmaceutical industry are worried that the existence of that evidence will reduce their profit margins. They are worried about anything that would hurt profits. But what's important about these objections is that they have nothing to do with comparative effectiveness review. Conservatives don't want to empower government. Industries don't want to sacrifice profits. This is an argument over principles that's simply taken the form of an argument over policy.

The Wall Street Journal has a very cool interactive graphic today allowing you to compare the stress test results for different banks. I'm not sure what you actually gain from the exercise -- all these banks seem certain to survive the downturn, and Feds insure individual deposits anyway -- but it's a good way to waste a few minutes.

The attached article sheds some more light on the negotiations between bank presidents and the government's stress testers. Particularly worrying is the government's decision to switch from measuring tangible common equity to Tier 1 common capital. Tangible common equity is the more traditional measurement, but if it had been used, the banks would have had to raise an additional $68 billion. Aside from that, there's not been an explanation offered for the change.

The article also suggests that some banks are rather more persuasive than others. Citigroup managed to knock the government's final judgment from $35 billion in needed capital to a paltry $5.5 billion in needed capital. Bank of America, conversely, could only get from $50 billion to $33.9 billion. Impressive, but nothing like Citigroup's all-star performance.

I know that Janet Napolitano is floating around on the White House's short list. I don't really understand why: She's neither very liberal nor a great legal thinker nor armed with radically different life experiences than most members of the governmental elite. Rather, she was an effective moderate politician and, before that, an apparently skilled attorney general. But nevertheless, she'd be an enormously controversial nominee on the Court itself. Her early rise to prominence came as the attorney for...Anita Hill. So I guess what you can say about her is that there's probably no nominee in the country who would do more to piss off Clarence Thomas.

I'm having an enjoyably wonky morning watching the Senate Finance Committee roundtable on options for funding health care reform. You can stream the meeting here. But for a clear and straightforward look at the ideas and issues involved, this bit of testimony from the Center for Budget and Policy Priorities is as good an introduction as you'll find. I'm expecting the final compromise to look a lot like what they've offered. Note in particular their emphasis on "health-related excise taxes." Those discussions are happening in Congress and the administration, too. It's really looking like tobacco, alcohol, and sugared sodas are likely to get a bit more expensive after health reform. Polling around these policies is proving them more popular than most wonks expected, and they have the secondary benefit of being dual-purpose: They raise money and make Americans healthier.

I've argued before that you can compare a perfect-world carbon tax to a perfect-world cap and trade proposal, or a realistic carbon tax to a realistic cap and trade proposal, but you can't compare a perfect-world carbon tax to a realistic cap and trade proposal. Today, Kevin Drum draws that argument out at length:

Cap-and-trade is a real-world program for reducing pollutants. We used it successfully with sulfur emissions in the 90s. Europe is already doing it with carbon. The northeastern states are doing it with RGGI. The Waxman-Markey bill is a real piece of legislation that's hundreds of pages long and festooned with a hundred different compromises that will (we hope) allow it to survive the legislative sausage grinder.

And all of these variations of cap-and-trade are complicated. When you read about them, you're immediately bombarded with jargon: auctions vs. allocations; caps, floors, offsets, and banking; upstream vs. downstream; how the exchange should be set up; how often permits should be sold; etc. etc. Those are all real-life questions, and in any real-life plan they have to be addressed. And they're confusing. And yes, they all provide potential toeholds for special interests to game the system — something we should fight like banshees to keep to a minimum.

Tax advocates have no such worries. They propose that we simply tax various fuels based on their carbon content, and voila! We're done. Simple and easy.

Ironically, though, the only reason they can get away with this is because of the very fact that a tax is a political nonstarter, which means there are no real-world taxes on the table. But if there were, they'd have all the same questions as a cap-and-trade plan, plus a whole bunch of new ones. Should it be levied upstream or downstream? Can it be tax sheltered offshore? Are you allowed to apply a tax-loss carryforward to your carbon tax levy? How do you harmonize the tax with other countries? Can I get a tax credit for reducing carbon emissions? How are the revenues going to be distributed? Should midwestern states that rely more on coal-fired plants get treated differently than, say, California? What would it take to make a carbon tax on foreign oil compatible with WTO rules?

Rhetorically, tax advocates can pretend that none of these questions exist. They're able to contrast the genuine messiness of a real-world cap-and-trade plan with a Platonic, whiteboard version of a tax plan.

But that's not how it would work. If cap-and-trade goes down, we're not going to get a tax instead. And if we do eventually get a tax instead, it's not going to be a clean and simple tax. It's going to be a thousand-page monster with every paragraph the subject of a slugfest between a dozen different special interests lobbying half a dozen different congressional committees. That's reality.

It will look, in other words, very much like our actual tax code. Which is not to say that there's no argument for a carbon tax. But you can't simply argue that a theoretical carbon tax is more elegant than existing cap and trade legislation. The difference there is not between an apple and an orange. It's the difference between something you dreamed last night and something you might actually do today.

It's good to be lucky in your friends, but it's better to be lucky in your enemies. And as Rachel Maddow argues, Obama seems increasingly lucky in his enemies:

The opponents of health reform are, at this juncture, entirely isolated. Industry is adopting an attitude of relentless positivity. Republicans are grudgingly attempting to appear cooperative. The only straight opposition is coming, as Maddow and Howard Dean say, from Rick Scott, a disgraced former hospital executive whose company was convicted of defrauding the federal government in the largest ever case of its kind.

You can say, of course, that the traditional opponents of reform will rapidly find their voice when the bill emerges. But they're lagging. The difference between this year and 1994 is that in 1994, it was the opponents of reform who spent the preceding year massing their forces and organizing their grassroots. This year, it's Health Care for America Now and SEIU and MoveOn.org and Obama for America who have spent the last 12 months building out their organizational capabilities. The campaign on behalf of reform, in other words, is significantly farther along than the campaign against reform. That's true even on the simplest level: Supporters of reform know who they are. Opponents of reform, as of yet, do not. And by the time they come to clarity on that, it may be too late.

This gets a bit wonky, but Dave Roberts has a good post explaining why cap and trade -- or a carbon tax -- may not be enough to really move us over to renewable energy. Simply slapping a price on carbon might be a sufficient answer if the only failure in the market was that carbon sat lonely and unpriced. But it's not. Roberts explains.

I'm not sure why official Washington is insisting on releasing so much health care news today, but here's the Finance Committee's paper on policy options to expand coverage. This is, in theory, the guidebook that the Committee will use when building its bill. The whole thing is worth reading, but for those interested, the public plan options begin on the 13th page.

Via Dave Weigel and Matt Yglesias comes the depressing news that the vast majority of the public doesn't know what cap and trade" is. And I don't mean in the sense that they don't understand the auctions. They have no idea what problem the policy actually refers to. "Given a choice of three options, just 24 percent of voters can correctly identify the cap-and-trade proposal as something that deals with environmental issues. A slightly higher number (29 percent) believe the proposal has something to do with regulating Wall Street while 17 percent think the term applies to health care reform. A plurality (30 percent) have no idea." Matt made a graph:

The struggle to define this policy, in other words, is ongoing. Republicans have been referring to it as the "energy tax." Al Gore's group has been trying out "the carbon pollution loophole." But the thing you can probably say is that it's not going to pass all that quickly. It's fairly hard for Congress to manage large action on issues that it actually knows a fair amount about. But though more than 24 percent of congressmen could tell you that "cap and trade" refers to environmental policy, I guarantee you that fewer than 24 percent of congressmen could give you a coherent explanation of how cap and trade works. There's a lot of background education -- both for elites and for the public -- that still needs to happen here.

The Peterson Institute's Adam S. Posen and Marc Hinterschweiger have a couple neat graphs making the case against financial innovation. They did not begin as skeptics. They liked the idea of financial innovation. They believed the promises "that expansion in the use of newer derivatives and the like would lead to an expansion in the country’s capital stock, and that these financial products would be useful to nonfinancial companies, not just to banks." But that didn't happen. Their first graph plots the growth of derivatives against the growth of capital stock. It basically shows a massive rise in fake money that's unconnected to any similar increase in real money.

The second graphic shows the counterparties for derivatives. Again, facts did not match theory:

The theory was that financial innovation was making the economy stronger. The fact was that we were inflating the financial sector so it looked bigger. Posen and Hinterschweiger end with an appropriate note of caution. "We are already hearing warnings from the financial industry that government should be careful not to overreach in its attempts at reform, for fear of harming financial innovation," they write. "While that is a worthy principle, our belief is that the record of recent financial innovations acts as a warning to be skeptical about excessive claims that all financial innovation is worthwhile. What was advertised as something to redistribute risk, and thereby increase productive investment, generated little capital formation; what was supposed to benefit nonfinancial businesses was mostly used in a speculative game between financial players."

This isn't really my beat, but Wanda Sykes' comedy routine at last weekend's White House Correspondent's Dinner was really shockingly offensive.

The administration's proposals to close some corporate tax loopholes didn't get much attention last week. In part, that's because the actual issues being addressed are extremely complicated. But that doesn't mean they're not important. This sort of thing, for instance, is really galling, and insofar as we need to raise $60 billion from somewhere, stopping corporations from playing a game of international tax arbitrage is probably a good idea.

But "this sort of thing" is endemic to a complicated tax code. The more intricate the statutes, the easier it will be for trained lawyers to find loopholes. But if the loopholes are very complicated, then the only people who know enough to argue over them will be the lobbyists dedicated to their preservation. It's hard to build a movement around the fact that a rule designed to simplify the classification of different kinds of subsidiaries has been misused by multinational companies who set up subsidiaries and then use high-interest loans to shield profits from taxation. I mean, you probably didn't even make it all the way through that sentence. A simpler tax coe isn't only important because it's more efficient. It's also important because it's more governable.

Lot of health reform posts on the blog today. That's because there's a lot of health reform policy news today. For instance, Arlen Specter, who recently gave a one word "no" when asked if he supported a public plan on Meet the Press, is now proclaiming himself open to a public plan:

In a letter to the progressive group Health Care for America Now, Specter said he looks forward to ``discussing and considering'' the issue. He said a starting point could be a proposal by Sen. Chuck Schumer, D-N.Y., that seeks to maintain a level playing field between the private and public sector.

Elsewhere, The Washington Post -- where I'll be starting next week -- just created a health care reform super site, including a blog from Ceci Connolly. Welcome to the 'sphere!

I just got off the phone with Andy Stern, head of SEIU. For the past few years, Stern has been manically building coalitions. This, it seems, was the payoff: The ultimate health care coalition. Every major industry group. And SEIU was at the table with them.

Stern acknowledged that the early release is light on specifics. But that, he argued, was a function of it being early. "We set a deadline of June 1st to try to provide real proposals that can be costed. It'll be complicated to decide what goes in the legislation. But we'll have competent people providing verifiable savings." That deadline is important. June is when the Finance Committee's first bill drops. So if these stakeholders want to see their proposals in that bill, then they need to move quickly.

Asked about the possible flashpoints in the discussions, Stern said that "there was more of a recognition that we weren't going to agree on certain things. People came to the table with an admission that there were lines -- like the public plan, for SEIU -- that weren't going to be crossed and so weren't going to be a part of this conversation. Instead, we focused on what we could agree on on."

"I thought there was a level of seriousness on both sides about really finding the right way to cut costs, to look at health care as a system, and not just a system for payments, but a system for actually keeping people healthy," he continued. "So far, everyone has exceeded expectations."

Obama just left the meeting with the stakeholders and gave some quick remarks. The key bit:

[N]one of these steps can be taken by our federal government or our health care community acting alone. They'll require all of us coming together, as we are today, around a common purpose -- workers, executives, hospitals, nurses, doctors, drug companies, insurance companies, members of Congress. It's the kind of broad coalition, everybody with a seat at the table that I talked about during the campaign, that is required to achieve meaningful health care reform and that is the kind of coalition which -- to which I am committed.

So the steps that are being announced today are significant. But the only way these steps will have an enduring impact is if they are taken not in isolation, but as part of a broader effort to reform our entire health care system. We've already begun making a down payment on that kind of comprehensive reform. We're extending quality health care to millions of children of working families who lack coverage, which means we're going to be preventing long-term problems that are even more expensive to treat down the road. We're providing a COBRA subsidy to make health care affordable for 7 million Americans who lose their jobs. And because much of every health care dollar is spent on billing, overhead, and administration, we are computerizing medical records in a way that will protect our privacy, and that's a step that will not only eliminate waste and reduce medical errors that cost lives, but also let doctors spend less time doing administrative work and more time caring for patients.

But there's so much more to do. In the coming weeks and months, Congress will be engaged in the difficult issue of how best to reform health care in America. I'm committed to building a transparent process where all views are welcome. But I'm also committed to ensuring that whatever plan we design upholds three basic principles: First, the rising cost of health care must be brought down; second, Americans must have the freedom to keep whatever doctor and health care plan they have, or to choose a new doctor or health care plan if they want it; and third, all Americans must have quality, affordable health care.

I'd note three things in particular there: First, the argument that the private sector can't solve this without the government, and the government can't solve this without the private sector.

Second, that the steps are connected to one another: Health IT doesn't mean much without comparative effectiveness review, and insurance market reforms can't happen in the absence of an individual mandate. Either everyone jumps together or no one will leave the ledge.

Third, that his principles still include the demand that "all Americans must have quality, affordable health care." Universality remains on the table. Obama's full remarks after the jump.

MORE...

There's an emergent argument that the real import of today's letter is that it serves as a club against the Congressional Budget Office. As Igor Volsky writes:

The signers — the Advanced Medical Technology Association (AdvaMed), America’s Health Insurance Plans (AHIP), the American Hospital Association (AHA), the American Medical Association (AMA) and Pharmaceutical Manufacturers of America (PhRMA), among others — hope to contain costs by implementing “aggressive efforts to prevent obesity, coordinate care, manage chronic illnesses and curtail unnecessary tests and procedures; by standardizing insurance claim forms; and by increasing the use of information technology, like electronic medical records.”

The industry is suggesting that these cost containment measures — which don’t score too well with the Congressional Budget Office — would in fact yield cost savings and help finance health reform. The letter blunts conservative critics who argue that health reform is unsustainable or too expensive, and it also takes on the CBO, whose models are likely under-scoring the savings from reforms.

It's true that legislators are very concerned that the Congressional Budget Office won't score likely savings. That will mean the bill's total price tag is higher and the legislation is harder to pay for. But this letter doesn't obviate that problem. It doesn't even change it. The issue isn't that a CBO price tag is credible, and so you need another credible price tag if you want to argue against it. It's that the CBO number is one used by the budget committees, and so if health care is going to pass under pay-go rules -- and my understanding is that it will -- then you have to find revenues that match whatever CBO says the cost is. The revenues can't just match what the industry says the cost is. For much more on the importance of CBO and the price tag it selects, read this piece.

The other option here is something called "directed scoring." Under this scenario, Congress would essentially order the CBO to score health reform in a certain way. I know that some quarters are discussing this possibility, but I don't think most people believe you can get very far with it. More on this later.

All this fuss over one little letter. I've got the full document for download here. And the early reports are true. It's signed by the presidents of Pharma, Advamed (device manufacturers), the American Medical Association (doctors), the American Hospital Association, America's Health Insurance Plans, and SEIU's Health Care project. It promises that "we will do our part to achieve your Administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate—saving $2 trillion or more." It says that "we are developing consensus proposals to reduce the rate of increase in future health and insurance costs through changes made in all sectors of the health care system." And it gives some general areas of agreement:

• Implementing proposals in all sectors of the health care system, focusing on administrative simplification, standardization, and transparency that supports effective markets;

• Reducing over-use and under-use of health care by aligning quality and efficiency incentives among providers across the continuum of care so that physicians, hospitals, and other health care providers are encouraged and enabled to work together towards the highest standards of quality and efficiency;

• Encouraging coordinated care, both in the public and private sectors, and adherence to evidence-based best practices and therapies that reduce hospitalization, manage chronic disease more efficiently and effectively, and implement proven clinical prevention strategies; and,

• Reducing the cost of doing business by addressing cost drivers in each sector and through common sense improvements in care delivery models, health information technology, workforce deployment and development, and regulatory reforms.

Devil, details, etc. I'm looking forward to reading those consensus proposals. And one more thing: A source who I generally trust and who has deep knowledge of these conversations says that she is more confident that a public plan will be included now than she was 48 hours ago. So take that for what it's worth.

Ryan Avent -- demonstrating once again that some enterprising publication should hire him immediately -- offers the smartest commentary you'll read on the stock market today:

Today’s conventional wisdom seems to be that the recent market rally has hit an apex. My assessment is that it has either hit an apex or hasn’t, in which case it will go up or down.

I've been thinking a lot about James Surowiecki's argument that the administration's critics have developed "a fetishization of boldness."

I'd put this a little differently: I think the administration's critics assume timidity. Government is a constrained institution. Geithner has to deal with pressure from critics, yes, but also a bitterly divided Congress, a filibuster-prone Senate, pressure from Wall Street, and resistance from captured regulators. The objective facts of his situation suggest that boldness won't necessarily be rewarded. And so when observers see informed critics like Krugman and Johnson arguing for a bolder strategy and charging that Geithner's approach deviates from the economic ideal, there's an assumption of credibility there: They, after all, don't have incentives colored by interest group pressure or congressional intransigence.

That said, they also don't have perspectives colored by, well, the intransigence of Congress and the limits of the federal agencies and the downside risks of large initiatives. So there's a sense in which both sides might be right: Geithner may be correct to be more cautious than the Treasury Secretary who serves at the pleasure of the Czar, but it might be that the Czar's Treasury Secretary would be able to fashion a better response.

To counterbalance the crankiness of the previous post, Peter Orszag's announcement that the administration is not only continuing to support is $635 billion health care fund, but actually adding pieces to it, is important news. The key issue in health care reform is, quite simply, financing. Right now, the policy exists. The money doesn't. In fact, when the Senate passed its version of the budget, the specific financing provisions in the administration's health care reserve fund were deleted entirely.

Eventually, that money will have to come back. And so it's good to see the administration sticking behind its proposals, even the ones that got a little beat-up in the previous round. They've kept, for instance, the idea to limit the itemized deductions of the richest Americans, even though that took some flack when it was initially announced.

This gets to the administration's larger theory on revenues: They have a habit of offering up financing ideas well in advance of the financing discussion. Their health care financing ideas, for instance, came long before anyone had seen a draft of the Finance Committee's health care policy. They came long before any legislators actually needed to make tough choices on how to pay for health care.

As such, the proposals just got beat up by the people who didn't want to see their taxes lift. But the administration didn't see that as a loss. They're not expecting their financing ideas to achieve a quick adoption. Rather, they're familiarizing the political system with these proposals. That's not a pleasant process. But if the ideas are good and the counterarguments tinny, then, when legislators actually need to figure out how to pay for things, the expectation is that they'll come back to some of these concepts. It's as the old saying goes: "First they ignore you, then they mock you, then they fight you, then you win."

Jon Cohn is enthused. Paul Krugman is excited. Maybe I'm just churlish. Maybe I'm getting cranky as I age. But I can't shake my skepticism about today's big health care announcement.

First, the announcement: At about 12:30 today, representatives from the insurance industry, the pharmaceutical industry, the American Hospital Association, the American Medical Association, Advamed, the California Hospital Association, the Greater New York Hospital Association, and SEIU will present Barack Obama with a letter promising to aid his health care reform effort by cutting health care spending by 1.5 percentage points over the next 10 years. That sounds minimal. But it actually amounts to $2 trillion in savings.

The politics of this should surely cheer supporters of reform. In essence, this is the entire medical industry stepping forward and declaring themselves partners in Obama's effort. It leaves Republicans isolated. It allows the administration to credibly claim that they are working with the stakeholders to cut costs. It puts the industry on record saying that reform will bring new efficiencies rather than increased spending. And it's simple evidence of the momentum building behind the administration's effort. These groups wouldn't be jockeying for a seat at the table if they didn't think everyone was eventually going to sit down.

But it's not just the administration that benefits from the optics. It's the medical industry. The fact that the White House is making a big deal of their support means it would be a big deal if they lost it. And so it's worth asking what, exactly, the health care industry has committed itself to.

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Minutes two through five of this skit sort of read like an old Celebrity Jeopardy script that they dusted off and applied to Tim Geithner and Citibank. But minute one is very good.

Lawrence O'Donnell was co-hosting, and O'Donnell wanted to talk about the problems with using budget reconciliation. And so we did. I think he's probably right about the problems of using reconciliation for health care policy, but he's underplaying its importance as a threat. It makes a bipartisan bill more, not less, likely. I make this point a bit fuzzily on the program, but think of it like this: A legislative process has two basic outcomes. Bill or no bill. The majority wants bill. The minority wants no bill. And the Senate, as an institution, is built to favor the no bill position.

Reconciliation introduces a third outcome. It's a quasi-bill. No one knows what the Senate parliamentarian will leave in it. This is an outcome that, fundamentally, no one wants. It's worse for the majority than a bill they've written and worse for the minority than a bill they've killed. But it closes off the normal exit: There's no longer hope of an outcome that's good for only one side. Either you get a bill that everyone likes or that no one is sure they'll like. The best outcome, for both sides, becomes a bipartisan piece of legislation.

My big takeaway from this segment, incidentally, is that it's hard to talk about budget process in four minutes. For a more coherent explanation of these issues, read my reconciliation primer.

• Does the world need defense spending (or at least this much of it)?

• Why technology doesn't make education cheaper.

• Noam Scheiber considers the stress tests.

• The 1994 scenario -- on cap and trade.

• This campaign is over before it began, I'd imagine.

And remember, I'll be on MSNBC's Ed Schultz program at 6:35 Eastern.

I'd been hearing that the Federal Reserve's estimates for how much capital the banking system would need were quite a bit lower than the IMF's. More evidence that the stress tests are optimistic and that Geithner is a Wall Street stooge! But James Surowiecki digs deeper into the numbers and finds that they're actually quite close. "Unless you think the I.M.F.’s estimates are unrealistic or softballed," he concludes, "it’s simply wrong to call these results a whitewash."

In response to yesterday's post suggesting that Washington do more to attract out-of-work finance types, a smart financy type who recently came to Washington e-mails:

I totally agree with you that the progressive community needs to be pushing ahead much more aggressively on reg reform. One thing you didn't mention is that the fin. services community has basically largely been dusting off their old "competitiveness"/deregulation proposals from 2004-7 and recasting them as "regulatory reform" proposals now. Paulson's original blueprint was totally cut from this cloth, and contained a number of wishlist items.

But while I agree that more resources ought to be directed towards getting top notch financial folks, I think you're glossing over a couple of real issues with taking folks from Wall Street.

His e-mail continues below the fold:

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I'll be on Ed Schultz's MSNBC show tonight around 6:30 Eastern. It will be a milestone in television history, and you don't want to miss it.