orszag

Can greed actually help the economy?

New York Magazine recently had a cover feature entitled “The Post-Crash: Wall Street Won” that perfectly captured the current mood on Wall Street.

One article of note detailed former budget director for the Obama administration Peter Orszag’s move to Vice Chairman of Global Banking at Citigroup. Notable economists criticized Orszag of cashing out and using his Washington connections for the money green pastures of investment banking–rather than trying to save the economy from the inside, he instead wanted to play the game and make the money. To those criticisms, Orszag refutes that helping to stabilize the economy requires support from politicians, academics, and bankers and can he do so with his knowledge of all three and his position with Citigroup.

After reading the article, it becomes difficult not to agree with Orszag. Of course, his reported $2 to $3 million paycheck does not hurt and likely led him to this job over, say, a position with an economic think tank. Yet, this form of greed–the desire for a large payday–may actually the economy. His extensive experience, including a doctorate in economics from the London School of Economics and a notable New York Times op-ed calling for a long-term awareness of lowering the deficit, reveals that Orszag wants to help the economy as effectively as possible. The same applies to his position with Citigroup. He may even have a greater hand in reshaping the risk-loving culture of banks as a part of the “banking elite.”

His move into investment banking reflects his opinion on incentives: that in order to achieve the best outcome for all parties, some incentives need to be offered. In his case, he found an incentive in a hefty paycheck but that same incentive may very well push him to the bolster our lagging economy.

For more information on Orszag’s opinion on a variety of economic issues, watch the video below.

Photo courtesy of The White House

Winds of Economic Change Blow Away College Degree: Peter Orszag

By Peter Orszag

Many parents in the U.S. are legitimately concerned about the prospects for their college-age children. After all, today’s students face three overlapping challenges: a long-term structural shift as the world’s effective labor supply expands; rising tuition and growing concerns about the quality of public higher education; and the misfortune of graduating into a weak labor market.

The first challenge arises from rapid shifting of the tectonic plates that underlie the world labor market. Over the past 25 years, the effective global labor supply has at least doubled and by some estimates has quadrupled. This has suppressed wage growth in the developed economies and reduced the share of national income accruing to labor. So far, people without a college degree have primarily borne the consequences. As a result, globalization has widened the inequality between workers at the 90th percentile of wages and those at the 50th percentile.

The effects of globalization are already moving up the wage scale, though, and that trend will likely continue. As Alan Blinder of Princeton University trenchantly noted in 2006, “Many people blithely assume that the critical labor-market distinction is, and will remain, between highly educated (or highly skilled) people and less-educated (or less-skilled) people – doctors versus call-center operators, for example.” Instead, the crucial distinction is between those tasks that are easily digitized (and thus subject to substantial competition from workers abroad) and those that are not.

Widening Wage Gap

As a result, in the future, a college degree by itself will be less likely to guarantee a high wage. Ongoing economic globalization may even reduce the gap between the 90th percentile and 50th percentile, but continue to widen it between the 99.9th percentile and the 90th percentile. As Blinder argues, “Since the distinction between personal services (likely to remain in rich countries) and impersonal services (likely to go) does not correspond to the traditional distinction between high-skilled and low-skilled work, simply providing more education cannot be the whole answer.”

The second challenge for college-age Americans involves falling state government support for public higher education. Almost three-quarters of all college students attend public schools, and state governments have provided primary support for these institutions. But revenue constraints, combined with rising Medicaid expenditures, push states to reduce spending on colleges and universities.

The experience of the past few years has been consistent with what the economist Tom Kane of Harvard University and I showed in a series of papers several years ago: Pressure from rising health costs causes states to cut back their relative support for higher education, especially during economic declines. And the education funding never returns to its pre- belt-tightening level.

In 1977, state appropriations for higher education averaged $8.50 per $1,000 in personal income. By 2002, after cutbacks during recessions, it had fallen to $7 for every $1,000 of personal income. And last year, after further reductions during the latest recession, it had declined to $6.

The most recent spending cuts have tended to be largest in those states with the sharpest increases in Medicaid spending, as Kane and I had found for previous business cycles. For example, from 2008 to 2010, for every percentage-point increase in the share of a state’s general-fund budget devoted to Medicaid, funding for higher education was reduced, on average, by 3 percent.

Rising Tuition

With less money from state coffers, public colleges and universities are under pressure to both raise tuition and reduce the quality of the education they provide. In general, despite significant tuition and student-debt increases, spending per student at public universities hasn’t kept pace with that at private universities. And this, in turn, manifests itself in various quality indicators.

Kane and I had documented, for example, a decline in assistant-professor salaries relative to those at private universities from 1980 to the early 2000s, driven by the cutbacks in state support. Data from the American Association of University Professors indicate this trend is continuing.

In 2000, an assistant professor at Stanford University earned an average of 9 percent more than an assistant professor at the University of California at Berkeley. By this year, that gap had widened to 17 percent. Eventually, these differentials will affect where top professors choose to teach.

Some admittedly imperfect indicators suggest the quality of public higher education is already fading. For example, in 1987, both UC Berkeley and the University of Michigan were included in U.S. News & World Report’s ranking of the top 10 universities. By this year, there were no public universities in the top 10 – and UC Berkeley, the top-ranked public school, had fallen from fifth to 21st. For students who can’t get into or afford private universities, this is a problem.

The final challenge for college graduates is to enter a labor market with a higher-than-usual unemployment rate. A recent study estimated that every percentage-point increase in the jobless rate depresses wages for new graduates by about 6 percent. Even 15 years post-graduation, this effect fades only a bit, to about 3 percent. Since the unemployment rate is currently roughly three percentage points higher than its long- run level, after 15 years today’s graduates can be expected to earn about 10 percent less than if they graduated into a normal employment situation. Weak labor markets knock young people off course for years.

Responding to Globalization

Our ability to address these three problems is inversely related to the order in which I have presented them: With very aggressive action to boost the economy today (including through ambitious policies on housing and by coupling additional stimulus with long-term deficit reduction), we could significantly strengthen the labor market today. By moving toward an emphasis on quality rather than quantity in health care, we could help slow the upward trajectory of health costs, which are crowding out state support for higher education.

The hardest problem of all, though, is the first one. Even assuming away the dysfunction of our political system, for most new college graduates, we have precious few serious strategies to offset the increasing digitization and globalization of the labor market.

One place to start would be to focus on raising productivity in public higher education, so that we could do a better job of delivering quality with constrained budgets. Would we be better off if research dollars were even more concentrated in fewer institutions, and a larger share of faculty specialized in teaching (which is often given short shrift at research universities)? Can more businesses partner with public colleges to create curriculums to teach specific job skills? Can remote learning and online coursework, especially for remedial subjects, finally realize their potential?

The present situation for college kids is so uninspiring, we should experiment aggressively to find the best ways to improve it.

(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)

To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com

To contact the editor responsible for this article: Mary Duenwald at mduenwald@bloomberg.net

Article source: Peter Orszag and Bloomberg View

U.S. Can Rent Its Way Toward a Housing Recovery: Peter Orszag

By Peter Orszag

After any financial collapse, housing plays a key role in the hard slog that typically follows: a weak housing market feeds into a weak economy, which then feeds back onto a weak housing market. So even if the European banking system somehow avoids a meltdown, economic recovery in the U.S. will continue to languish unless we act more aggressively on housing.

No matter what the government might try to do to break the housing-economy cycle, the deleveraging process will still be painful and take some time. But that’s not an argument against action; just because a headache can still hurt some even if you take aspirin doesn’t mean you should skip the aspirin. One thing the Obama administration could do now – probably with Republican support – would be to attack the oversupply of housing stock by allowing a tax write-off for investors who buy empty properties and rent them out.

To understand why this would help, consider that the problems in the residential real-estate sector have two dimensions. First, we have an excess supply of owner- occupied housing, which puts downward pressure on prices. Second, millions of American households now have negative equity in their homes. Dealing with excess inventory by shifting vacant properties into the rental market would help to stabilize prices and thereby mitigate, to some degree, the negative-equity issue – although additional action would also be warranted to attack such “underwater” situations. (A future column will discuss possible responses.)

It’s normal to have some vacant homes for sale as part of the market process that matches buyers with sellers. On average during the 1990s, for example, the home vacancy rate was about 1.5 percent, according to the Census Bureau. By 2008, the figure had risen to 2.9 percent. And by the second quarter of this year, the vacancy rate had come down only slightly, to about 2.5 percent. With this much supply still available, it’s no wonder that prices are still depressed.

Excess Empty Homes

The percentage-point difference between the latest vacancy rate (2.5 percent) and a more normal historical rate (1.5 percent) amounts to an excess inventory of almost 1 million vacant homes. (Estimates based on other methodologies are roughly in that range.) If the government does nothing, that extra inventory will be slowly worked off, as the economy gradually recovers and more households are formed. The question is whether the government can do anything to accelerate that process, to support home prices and, ultimately, to promote a stronger economic recovery.

One way to bolster demand would be to change our immigration laws to make it easier for foreigners to move here and buy homes. That might be a good idea, but it has no chance of being enacted soon. Former Federal Reserve Chairman Alan Greenspan once highlighted a different idea, focused on supply instead of demand: Get the government to buy the excess vacant houses and destroy them. He argued that could be the lowest-cost approach to mitigating a housing-driven decline – but also noted that it would be politically inconceivable.

A more realistic approach would be to try to get the vacant houses rented out, rather than sold to owner- occupants. And one way to do that – proposed by real- estate practitioners (such as Kyle Jividen of Alamo Appraisal Group in San Antonio) and economists (such as William Wheaton of the Massachusetts Institute of Technology and Gleb Nechayev of the research firm CBRE Econometric Advisors) – is to provide an immediate tax write-off to investors who buy vacant houses and rent them out.

Currently, people who purchase residential real estate depreciate the value of the property for tax purposes over 27.5 years. To encourage other forms of investment, policy makers have allowed businesses to immediately depreciate the full cost of most of their investments. But real estate hasn’t been eligible. So Congress could give investors the incentive to buy vacant houses now by allowing them to write off the value immediately, as long as they hold on to the properties for some number of years and rent them out.

Lower Investment Costs

My colleague Richard Wagreich of Citigroup’s Financial Strategy Group has estimated the effect of such a tax break. He calculates that annual costs on real-estate investments would be reduced by about a third, given reasonable assumptions about tax rates for investors and the interest they must pay to borrow. The policy would also make more rental units available and lower their price, thereby encouraging more people to move out of existing households and into their own rental units.

To avoid abuses, the allowance would have to apply only to houses that have been vacant for, say, six months. And there would need to be provisions to take back the benefit in cases where homes were quickly resold rather than kept on the rental market.

What about the cost to taxpayers? By giving the deduction in full now, rather than gradually, the government loses the time value of money over that period. But when government bond yields are exceptionally low, as they are now, that cost is relatively modest.

One might think that since the government’s cost is relatively low, the benefit to investors must be low, too. Real-estate buyers, however, say the shift would lead to a substantial number of new investments.

To get some sense of the numbers, assume the policy induces an extra 250,000 housing units to be purchased each year and rented out, in addition to 500,000 other ones that would be bought and rented even in the absence of the immediate tax expensing. If the average price of those houses is $250,000 (roughly the national average), the 10- year cost to the government for each year the policy is in place would be less than $50 billion. Most of that amount, though, would be recaptured in future years, because the full deductions would already have been claimed. The cost to the government in present value would thus be about $10 billion for each year the policy was in place.

Selling Inventory

Maintaining this policy for two years would, under these assumptions, work off half or more of the excess inventory at a present-value cost to the government of $20 billion. That seems like a pretty good deal – and at least worth trying.

To avoid letting the tax break outlive its purpose, it should be tied to the supply of vacant homes for sale. Once that number returns to a more normal level, the write-off should automatically end.

This kind of accelerated depreciation wouldn’t bring the housing market fully back to health. But since the economy is stuck in a rut and homes prices are a key reason, it is worth trying. Perhaps most importantly, in this era of political polarization, the idea of giving real-estate investors an immediate write-off for buying and then renting out vacant homes should appeal to Republicans. And that means if the administration proposes the idea, Congress could actually make it happen.

(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)

To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com.

To contact the editor responsible for this article: Mary Duenwald at mduenwald@bloomberg.net.

halk-ordibalas asked:

Kár hogy ilyen messze laksz😔 szo szerint az orszag masik feleben😔 pedig legszivesebben szemekyesen beszelgetnek veled

Jaj de edes vagy 🙈 amugy tenyleg jo lenne 😊😊 majd egyszer osszehozun egy talit ❤❤

anonymous asked:

mit csinaltal mikor megkaptad az smst ? hogy reagaltal?:)

A kocsiban ultunk Luluval, mentem epp edzesre. Teljes lemondassal vartam a nyolc orat, eselytelenek nyugalmaval, de tudtam, hogy az sms nem pontban nyolckor jon, hanem kesobb, szoval nezegettem a felvi.hu-t telefonrol, es nyolckor pontban kiraktak a ponthatarokat, de a fel orszag akkor nyitotta meg, es nem tudtam megnyitni. Hivtam uncsitesomat is es neveloaput, hogy ha tudjak nezzek meg, de senki nem volt gepnel, mar kezdtem panikolni. A baratnoim sorra irtak, hogy felvették oket, szoval megkertem oket is, hogy aki gepnel van, nezze mar meg nekem. Baratnom aki leghamarabb megtalalta, tudta hany pontom van, es irt rogton, hogy ‘NIKIII!! 319!!!’… Kaptam egy laza szivrohamot es elkezdtem bogni, percekig csak mondogattam, hogy ‘Istenem, nem hiszem el, nem hiszem el…’ Lulu lefagyott a volan mogott, nem tudott megszolalni, de tudtam, hogy egyszerre boldog es szomoru, hogy elmegyek… Telefonaltam gyorsan haza es Lillanak (a magantanaromnak) is, de igazabol csak akkor hittem el, hogy igaz, amikor megjott a sms… Ennyire meglepett es boldog szerintem nem voltam meg eletemben, nem tudom mennyire sikerult leirni a pillanatot. :)

Private Air-Traffic System Can Soar

By Peter Orszag

Sept. 21 (Bloomberg) – Without a doubt, GPS, the satellite-based navigation system that has revolutionized travel by car and truck, even by foot, could do the same for commercial air traffic.

President Barack Obama has proposed stepping up government investment in NextGen, a GPS-based air-traffic-control technology that will allow planes to fly closer to one another than they can with human and radar help alone and to follow more direct flight paths. The system is expected to reduce delays by more than a third, saving billions of dollars for airline companies and for the traveling public. This would mean consuming less jet fuel, so carbon emissions would be lower, too. The change would even improve safety by making us less dependent on sleep-deprived controllers.

So it’s a step in the right direction. Unfortunately, though, the NextGen system is being rolled out in stages, and it isn’t expected to be fully operational in U.S. airports and aircraft until 2020. Even that slow timetable assumes that the Federal Aviation Administration, the agency overseeing the project, receives the necessary funding from Congress and can meet all its deadlines.

Nonprofit Solution

We shouldn’t have to wait so long. There is a way to move faster, one that would probably also help the NextGen system work more smoothly once it’s in place: Take responsibility for implementing the new GPS system, and for air-traffic control altogether, away from the FAA and assign it to a private, nonprofit organization. (Disclosure: Aerospace clients I work with at Citigroup Inc. would benefit from faster implementation of NextGen.)

Almost two dozen other countries have already assigned air- traffic control to either government-owned corporations, nonprofits or other organizations outside of government, and the results have generally been encouraging. As the U.S. Government Accountability Office concluded in a 2005 review, these operators have maintained or even improved air safety, while they have lowered costs and boosted efficiency by investing in new technology.

NAV Canada, for example, is a nonprofit corporation that provides air-traffic control, along with weather reports, flight information and other services. Its revenue comes from fees charged to airlines for this work. Its safety record is excellent. And, compared with the FAA, it tends to be more responsive to innovation and better able to make improvements in technology, investing in the needs of its user airlines.

For example, NAV Canada has developed a touch-screen flight data and display system, called NAVCANstrips, which automates controllers’ work flow and reduces their need to communicate with one another verbally. It integrates tower flight data with information about departures, arrivals and planes en route, as well as radar, weather and the status of runways. This system was developed by controllers themselves, and NAV Canada has sold it to the U.K., Denmark and other countries. (It’s also being used at Sheppard Air Force Base in Texas.)

The public air-traffic-control system we have in the U.S. began as part of the federal government’s role in air mail, starting in the early 20th century, through the U.S. Postal Service (an agency that should also be moved out of the government, but that’s a different topic). By the 1920s, the government was licensing pilots and issuing certificates of airworthiness for planes.

FAA History

In the late 1930s, Congress explicitly assigned the Civil Aeronautics Authority (the predecessor of the FAA) the job of managing air-traffic control. That was more than 70 years ago, even before the use of radar in civil aviation. Today, air traffic increasingly relies on rapidly evolving technology, and the FAA has, for decades, struggled to keep up.

As late as the 1970s, U.S. air-traffic control was still using light beacons to guide planes at night. As a 2006 review of the agency, by Clinton Oster of Indiana University, concluded, “Concerns about being able to upgrade and expand the air traffic control system to accommodate anticipated growth in air traffic have been almost continual since the early 1960s.”

In 2004, an expert panel convened by the National Academy of Sciences likewise concluded that the FAA lacks the technical expertise needed to build and manage complex air-traffic systems.

An important reason the FAA has had trouble keeping up with technology is that its funding has been unstable and uncertain. Its money comes from two sources, an annual appropriation from Congress, and revenue from the passenger tax. The amount that comes from Congress is always at risk of being reduced, especially when money is tight. And the passenger tax, for its part, is misaligned with the costs of air-traffic control.

The tax is assessed on airlines’ total receipts from ticket sales, but what determines the amount of funding needed is not the number of passengers or the price paid per passenger (which combined determine ticket revenue), but rather the number of flights coming in and out of airports. And that is not directly reflected in the passenger count because it varies depending on size of aircraft and how full the flights are.

User Pays

A better approach would be for users to pay the whole bill, and for the fees to be imposed based on the number of takeoffs and landings. This would ensure that those who use the air- traffic-control system pay for it, and it would keep funding outside the political process.

To be sure, there are downsides to a user-based revenue model. For example, NAV Canada experienced financial difficulties after the Sept. 11 attacks, when travel declined, diminishing its revenue base. In response, the agency raised user rates, froze employee wages and took other steps to improve its financial health. By 2005, NAV Canada’s finances had stabilized.

Perhaps the biggest objection to shifting air-traffic responsibilities to a nonprofit comes from the National Air Traffic Controllers Association. It asserts that private management would create tension between safety and profits – even though the Canadian agency has an outstanding safety record. Other union concerns could be at least partially mitigated by including protections for controllers in the legislation that would move air-traffic control out of the FAA. For example, in NAV Canada, the unions nominate two members of the board of directors. The Canadian agency also extended pre- existing job security provisions and reached a new collective- bargaining agreement with employees.

This isn’t to say all government functions would be best turned over to private operators. There are some jobs that, over the past two decades, the U.S. has unwisely moved out of government control. In the 1990s, for example, despite some strong objections within the Clinton administration, the government turned over to private operators the U.S. Enrichment Corp., which has the job of enriching nuclear fuel.

The regulation of airline safety and operation should remain the business of the government, as it would pose too many conflicts of interest to have the airlines regulate themselves. But as other countries have shown, air-traffic control can be split off into a nongovernmental entity even while the government retains regulatory oversight of air travel. NAV Canada, especially, provides a model the U.S. would be smart to follow.

(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)

–Editors: Mary Duenwald, David Henry

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To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com.

To contact the editor responsible for this article: Mary Duenwald at mduenwald@bloomberg.net.

Four Ways Congress Can Upgrade Our Credit Rating: Peter Orszag

Now that Standard & Poor’s has downgraded the U.S.’s AAA credit rating, it is important to respond boldly and, at the same time, lower expectations.

The first step is for our political leaders to frankly acknowledge the problems at hand: The U.S. economy will face a hard slog for an extended period; the political system is polarized; and, under current policies, the budget deficit will remain intractably large.

To respond to these challenges timidly or not at all would lead to such gloomy outcomes, we might as well think big.

What bold actions are legislatively feasible? A good start toward addressing our fiscal problem over the next decade would be to end all the 2001/2003 tax cuts when they expire at the end of 2012. And to give the economy a more immediate boost, Congress should triple the existing 2 percent payroll tax holiday and extend it for as long as unemployment remains elevated.

Here’s a more specific four-point plan that could be carried out within the political system we have. To those who will scoff that even these proposals are politically impossible, I’d note that the scope for constructive legislation has now become so narrow and the costs of doing nothing so high, we need to make ambitious proposals and hope that the legislative constraints can be adjusted.

First, use this S&P moment to reduce the deficit much more. The changes should be enacted now but not take effect immediately, as the economy remains weak. But we must get it done over the next decade, and we won’t be able to without substantial revenue.

Tax Cuts Expire

As I have written before, the most straightforward way to raise the needed revenue is to allow all of the 2001/2003 tax cuts, not only those for high-earners, to expire at the end of next year. That would lower the 10- year deficit by more than $3 trillion. (Democrats who bemoan the role of the tax cuts in driving up the deficit but then favor extending the vast majority of them are suffering from cognitive dissonance.)

In particular, we shouldn’t extend any of the tax cuts past 2012 unless every cent is offset through other measures. On this, the Obama administration, if it chose this course, would have the legislative upper hand. Since under current law all of the tax cuts expire, inertia is on the side of raising revenue. In combination with spending reductions imposed by the supercommittee created in the recent deal to raise the debt limit (or if that group fails, through automatic reductions), ending the tax cuts would restore a stable debt trajectory for the next decade even if economic growth is weak, as is likely.

We must also deal with the deficit problem beyond the coming decade, and in this case revenue will be a much smaller part of the solution. The most important driver of our long-term deficit is the cost of health care. The Affordable Care Act provides tools that can help contain cost growth; they should be used aggressively. Congress should expand them, too, especially by enacting medical malpractice reform.

In addition, and although it may be difficult, Congress should try to reform Social Security now. The economist Peter Diamond and I have put forward one variant of a progressive reform plan, which would, among other things, index the program to increases in longevity.

Expect Slow Growth

Second, in the aftermath of the recent recession, we can expect sluggish economic activity for years, not quarters, and we face the risk of another recession. Those who in January were predicting growth of 4 percent or more for 2011 did not sufficiently appreciate the evidence from the economists Carmen Reinhart and Kenneth Rogoff that what most often comes after a systemic financial collapse is a decade of weak growth.

So, to avoid overly hasty fiscal contraction and to promote job growth, we should triple the current payroll- tax holiday of 2 percentage points. A 6 percent payroll-tax holiday would amount to about 2 percent of gross domestic product (and $3,000 for a family earning $50,000 a year), which could aid a stalling economy.

Rather than simply expand and extend the payroll-tax holiday, though, we should tie it to the unemployment rate. This would cause the break to automatically disappear as the labor market recovers and to reappear if the economy weakens again. By both canceling the tax cuts and revising the payroll-tax holiday, we would not only substantially improve the 10-year deficit outlook but also provide more support for the economy now and make the tax code more progressive.

Third, we must learn to live with structural gridlock and polarization by preventing legislative inertia from always leading to inaction. We need more mechanisms like the budget-balancing trigger that is pulled if the supercommittee fails, more entities like the Independent Payment Advisory Board whose recommendations for slowing Medicare costs take effect if Congress doesn’t act, and more automatic stabilizers (like the payroll-tax holiday proposed above) that adjust to macroeconomic weakness without the need for further legislation.

At the same time, the Senate should amend its rules to require only 50 votes for any deficit-reducing legislation (not just changes made through the so-called reconciliation process) and a threshold even higher than 60 votes (perhaps something more like 75) for any deficit-increasing legislation unless it is an emergency response to a recession. That kind of supermajority rule would be vastly preferable to a balanced-budget amendment, since it would apply only to what Congress itself does.

Government’s Role

Finally, we should take this opportunity to reconsider what government should properly do. We need to invest more in roads, bridges, railroads and the like, and the best way to do this would be to scrap the present pork-barrel system and create a new infrastructure bank. We should also expand tolling and variable-rate pricing for transportation and water. This would allow us to use the infrastructure we have more efficiently and also raise money to invest in new projects.

Other jobs the federal government currently does could be shifted out of the public sector. Many other nations, for example, have successfully sold their postal services and their air-traffic-control systems to private operators. (Airline regulation should remain a public function.) Shedding these operations would allow the government to better focus on key areas such as infrastructure and education.

Rahm Emanuel, the former White House chief of staff and now mayor of Chicago, once famously remarked that one should never let a serious crisis go to waste. We also shouldn’t let wasted opportunity lead to a serious crisis. Let’s double down on support for job creation now and, after an appropriate lag, reduce the deficit more.

(Peter Orszag is vice chairman of global banking at Citigroup and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)

To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com.

To contact the editor responsible for this article: Mary Duenwald at mduenwald@bloomberg.net.

Health Care Prognosis Improves With Digital Law: Peter Orszag

Even with the all-too- depressing illustrations of political paralysis we’ve seen recently, government can still act to improve our lives. A good case in point: The U.S. health sector is rapidly digitizing, and federal legislation from early 2009, passed well before the health-care reform act, is an important reason why.

Just five years ago, only 12 percent of doctors and 11 percent of hospitals had comprehensive information- technology systems in place. With no digital records to measure patient progress and guide doctors on best practices, it’s not surprising that cost and quality of care have varied wildly, not only across the U.S. but even within a single hospital.

The Health Information Technology for Economic and Clinical Health (HITECH) Act, a little-noticed component of the 2009 economic-stimulus bill, is helping to change all that. As a result, over the next five years we will experience a substantial expansion in health IT. That digital revolution, in turn, is central to improving value in health care.

Consider the experience of Partners HealthCare System Inc., an early adopter of health IT at Brigham and Women’s Hospital and Massachusetts General Hospital in Boston. In 2006, more than two-thirds of its doctors used electronic health records and, by 2009, all of them did. The system includes integrated clinical-decision support, which gives doctors computerized help in assessing the best tests and treatments for their patients. (Can you imagine how difficult it would be for a doctor to keep up with the increasing complexity of modern medicine without such tools?)

Partners HealthCare has used its health IT to be more selective about which patients should have diagnostic imaging tests, such as MRIs and CT scans. The cost to Medicare for imaging tests nationwide roughly doubled from 2001 to 2009. And such tests are not only expensive but potentially dangerous. Frequently imaged patients face an increased risk of cancer because of exposure to excessive radiation.

Doctors at Partners now order imaging scans through the computer system and are automatically queried about the patients’ characteristics. For each case, the software then provides an “appropriateness” score, reflecting evidence- based protocols for the image requested. And in some cases, the program suggests an alternative to imaging.

Comparing Doctors

The system is also used to compare doctors to one another, so they know if they use imaging tests more or less than their peers do.

From 2006 to 2009, imaging rates at Partners flattened, and in some specialties even started to decline, sometimes significantly. The number of outpatient images per patient, for example, fell 25 percent in that period, even after adjusting for patient characteristics such as age, ethnicity, gender, medical history and medications.

The Partners HealthCare data suggest that doctors who use imaging a lot in one year will tend to do the same in subsequent years. They also indicate that imaging rates vary by doctor. In 2006, a doctor at the 90th percentile (meaning he ordered more images per patient than 90 percent of doctors) ordered about 28 images for every 100 patients, almost four times as many as a doctor with rates at the 10th percentile. To make a meaningful dent in the use of imaging tests, the doctors who use them the most need to change their behavior.

The IT interventions appear to have been effective at reducing imaging rates across the board, including among the doctors who ordered the tests most. By 2009, that doctor at the 90th percentile ordered 20 images per 100 patients, a decline of almost 10. This one doctor’s net decrease in scans was larger than the total number of scans ordered by the doctor at the 10th percentile even in 2006. And the low-use doctor reduced his rate, too, by about two images per 100 patients.

The experience has likewise been encouraging at other health-care centers, even some that are much smaller than Partners HealthCare. Stellaris Health, for example, a four- hospital network based in Armonk, New York, has used its IT system to reduce instances of venous thromboembolism. This cardiovascular condition is a precursor to pulmonary embolism – a blockage of an artery in the lungs – which is the most common preventable cause of hospital deaths.

Stellaris coded into its electronic medical-record system the risk factors for venous thromboembolism, and taught its doctors evidence-based practices to minimize those risks. Today, 99 percent of Stellaris doctors follow the practices, up from about 80 percent in 2007.

Better Health Care

More broadly, health IT is a necessary but not by itself sufficient step toward improving value in health care. A review of the health IT studies by the Congressional Budget Office, published in 2008, while I was the director of that agency, concluded that it “has the potential to significantly increase the efficiency of the health sector by helping providers manage information.” The CBO also found, however, that health IT couldn’t realize this potential without a supportive health-care delivery system that uses it aggressively. The most auspicious examples of IT use were in relatively integrated systems, such as Veterans Affairs, Partners HealthCare, Kaiser Permanente and Group Health Cooperative in Seattle.

In places where the technology is used to compare doctors’ practices, bolster adherence to evidence-based medicine, examine what techniques are working best and reduce error rates, it can be quite beneficial.

So what has changed to increase the use of health IT? First, like all computer technology, health IT keeps advancing, so that it has become somewhat less intrusive to the practice of medicine. Many doctors find tablet computers, for example, more convenient than laptops or desktops in the examination room.

Just as important, and perhaps more so, under the first stage of the HITECH Act, doctors who adopt electronic health records can receive incentive payments of as much as $44,000 from Medicare or $63,750 from Medicaid; hospitals can qualify for payments of $2 million or more. As of early August, Medicare providers had received $400 million in incentive payments for health IT, and much more is in the pipeline. Surveys suggest that while the first-stage incentives are available, at least two-thirds of American hospitals will adopt new systems.

Starting in 2015, the Medicare subsidies for adopting health IT systems are to be replaced by penalties for not doing so.

To be sure, investments in information technology are only part of what’s needed to improve value in U.S. health care. Still, in this summer of despair over politics in Washington, the early success of the HITECH Act is a refreshing reminder of what sensible policy can accomplish.

(Peter Orszag is vice chairman of global banking at Citigroup and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)

To contact the writer of this article: Peter Orszag at orszagbloomberg@gmail.com

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Day number 2

Ciao moi! Ujabb nap telt el eme csodas orszag szIveben. Ma olyan tortenelmi helyeken jartam, hogy meg magam sem hiszem el. Oh a csodas Roma….na de kezdjuk az elejen. Ugy volt, higy koran kelunk, de hat kerlek, rolunk van szo, igy a koranbol nem keson lett. Vettunk Roma passot, ami arra jo, hogy ketto, vagy harom napig ezzel a kartyaval ingyen van a tomegkozlekedes, es par helyre a belepo. Eloszor buszra szalltunk, szokasos reggeli csete-patenk utan, majd onnan vonatra, amonnan meg metrora. Elvezetes vplt, foleg mert volt helyunk leulni, nem ugy mint visszafele. Ezenkivul még alafesto zene is volt, azaz harmonika, kar hogy csak egyetlen egy szamot tudott jatszani….legalabb azt jol. Elso uticelunk a Colosseum volt. Hihetetlen az egesz epulet, mind nagysagra, mind kidplgozottsagra. Emelett maga a tudat, hogy tobmint 2000 eve a romaik tapostak a Colosseum kopadlojat, szedito. Sajnos, annyi baj volt vele, higy rengetegen voltak. Ha nem lett volna roma passunk egesz nap allhattunk volna a sorba belepoert. Egy reszen, sorba ult egymas mellett egy csomo fiu, pontositva helyes fiu..mondom mi ez itt kirakodovasar?! Ha igen en szivesen kernem valamelyiket. Xdd Na a Colosseo utan meglatogattuk a Forum Pla..izet meg a Fprum romanumot. De annyiraaaa meleg volt, hogy majd megpusztultunk, de vegulis megerte, mert abszolute fantorpikus volt minden amit lattunk…ohh az okori Roma.❤️ E csodas idoutazast kovetoen ismet metrora,es buszra szalltunk, hogy ,,haza" terjunk szereny kis campingunkbe, de csak egy kis ebedidore. A kicsit sem nevezheto lakoma utan lementunk a mar mondhatni jol ismert partra. En szemelyszerint repestem az oromtol, mert mar hogutat kaptam a forrrosagtol. Szerencsetlensegemre, nem volt a tegnap latott panoeter haju legenyke, igy nyugodt szivvel fekudtem es aludtam a napon. Mire felkeltem, jobbra nezek, hat nem egy kis aranyos csaladocska telepedett le elenk?! Apuka, anyuka, ket fiuval akik mozul az egyik mint hofeherke kockas hassal, masik jo mediterran, gondor barna hajfurtok, kisse Szerdahelyi Boldis beutessel, olvasott. Na maga a teny , hiyg konyv volt a kezebe,de nem cska ott volt hanem izgatottan olvasta is. Tetszett na. Oldalrol raadasul irt helyes volt, jo mondjuk korba nem volt epp idosebb nalam. De persze o nem a tesoja annal inkabb eszrevett. Najo egyb kicsit talan o is. I hope😂 De aztan eleg hamar szedelodszkodtek es elmentek. Sad😔 Aztaaaaan… Josè visszatert ( ez altt a oanpeter haju szepseget kell erteni). Elnezek balra, es ott jott a szokasos neger haverja kisereteben, ugyanabban a rikito narancsszinu furdonadragjaban, ami csak ugy kereti magat letepni rola..hupsz kicsit eltertem a lenyegtol. Egybol bementek a vizbe, en meg csak bamultam utanuk, csodas kepekkel az edes totalnemolaszos Josèmrol, de ok bezzeg a legmesszibbi reszt valasztottak a hullamok meglovaglasara. Es nem, amugy nem szorfoztek. Ekkor kozulunk valaki ugy dontott, hogy akk Andiamo, azaz menjunk. De ekkor a luck ramvigyorgott, mert Josè es JP is epp jottek ki a vizbol, igy mi a wces reznel meg vartunk Matyira, addig ok odaertek. Csak annyi a bibi, hogy Josè meg mindig le sem tojt. Haverja megnezett, o meg csak ahh. Pedig en aztan megneztem ot xd☺️😔 Azt is lattam, hogy hova mentek kifele….es voila pomt a mi kempingunkbe. Ma este itt helyben vacsiztunk, vegig vartam, higy felbukkanjon, hat megint nem akkor jonnek amikor mi befejeztuk a kajalast?! Pedig Si Si! Most se vett eszre. De nopara,valahigy csak becserkeszem…..😜😘