Jim Hamilton, truly one of the best macroeconomists of his generation, may not be smiling, but he’s getting closer. At all times, Hamilton keeps a cartoon face—smiling, frowning, or neutral—on his blog Econbrowser to represent his outlook for the economy. It’s like security threat levels for the business cycle. Yesterday, Hamilton replaced the longtime frowning face with a neutral one.   Read more…

• Subsidy Costs for Direct vs. Indirect Guaranteed Student Loans — Doug Elmendorf – This is legislation that’s long overdue. We’ll need all the savings we can get once this recession is over and it’s time to focus on the budget deficit.
• Injecting Special Protein Could Make Hearts Heal Themselves — 80beats – Encouraging news.
• Our Emotional Opinions — Ryan Sager – In other words, please think before you speak. Your opinion matters, so voice it responsibly. Together we can raise the level of public debate.
• Drug War’s Wrong Focus — Baltimore Sun (via truthout) – In the middle of this excellent column is devastatingly convincing evidence: “[For] every dollar invested in drug treatment, taxpayers save upward of $7 in crime-related reductions due to less incarceration and hospitalization.” Then, for goodness sake, let’s invest!
• Adverse Selection — Mark Thoma – Wow, people are outdoing me on adverse selection everywhere today (see Kwak and Krugman below). Thoma’s excellent post expands on my point that, whether or not you think adverse selection is as strong as textbooks say it is, private insurers expend considerable resources to overcome it.
• Does Medicare Contain Spending Growth Better than Private Insurance? — Healthcare Economist – Yes, according to this research.
• Pushing South Asia Toward the Brink — Zia Mian – Fantastic insight into the problems in India and Pakistan, including many recent developments that go unreported in the mainstream media. So long as we avert our eyes from the major problem, it will only continue to escalate.
• Time to Cut Back Boondoggle Embassy in Iraq — Doug Bandow – Agreed.
• Good Medicine: Why Not for Everyone? — Dean Baker – Baker explicitly points out an issue that I hinted at yesterday: IMAC’s recommendations should be extended to all insurers.
• CBO’s Latest Warning–and Whether We Should Listen — Jonathan Cohn – This is a brilliant summary of the issues at hand. Bravo to Cohn! Of the 3 options he lists at the end, the first would be excellent reform, the second would be disappointing but still a move in the right direction, and the third is just depressingly bad.
• An Incoherent Truth — Paul Krugman – Krugman is in his element once again, explaining very complex proposals in very simple terms. Two important points: (1) “[A] plan without a public option to hold down insurance premiums would cost taxpayers more than a plan with such an option.” When economists talk about rising health care premiums, they’re usually ignoring this critical point. (2) “[Without] an employer mandate, health care reform would be undermined as many companies dropped their existing insurance plans, forcing workers to seek federal aid — and causing the cost of subsidies to balloon.” When pundits worry about the public plan becoming too expense because too many consumers will opt for it, they are usually ignoring this critical point.
• The Right-Wing Assault on Abortion Reduction — William Saletan – Great bill, great article! This is a rare phenomenon: a bipartisan compromise for beneficial legislation. Bravo!
• Climate Change to Force 75 Million Pacific Islanders From Their Homes — The Telegraph/UK (via Common Dreams) – The moral dimension of climate change, as indicated in a quote by Matt Yglesias in my post on Waxman-Markey.
• Health Insurance “Innovation” — James Kwak – This is similar to Krugman’s gripe (below), once again explaining problems with adverse selection much more vividly than I did.
• DeMint Offers a Teachable Moment — Paul Krugman – Krugman explains adverse selection even better than I did in my post.