Something Rotten? Obama Says Danes Receive 20% of Their Power Via Wind; New Study Tells the Real Story
Danish experts visit Washington this week to explain to American audiences what’s really happening in Denmark
IER, Sep 15, 2009
WASHINGTON – President Obama has frequently cited Denmark as an example to be followed in the field of wind power generation, stating on several occasions that the Danes satisfy “20 percent of their electricity through wind power.” The findings of a new study released this week cast serious doubt on the accuracy of that statement. The report finds that in 2006 scarcely five percent of the nation’s electricity demand was met by wind. And over the past five years, the average is less than 10 percent — despite Denmark having ‘carpeted’ its land with the machines.
“As climate officials descend upon Copenhagen later this year to continue their work to engineer a world in which energy is rendered less reliable, less affordable and increasingly scarce, the eyes of the world will naturally fall upon the host country as well,” said Thomas J. Pyle, president of the Institute for Energy Research (IER), which commissioned the report.
“In the case of Denmark,” added Pyle, “you have a nation of 5.4 million, occupying some of the most wind-intense real estate in the world, whose citizens are forced to pay the highest electricity rates in Europe — and it still doesn’t even come close to the 20 percent threshold envisioned by President Obama for the United States. This may indeed be the model for the future – but only if you believe that a combination of smoke, mirrors and prohibitively high utility rates are the key to our economic and environmental salvation.”
Prepared by the independent Danish think tank CEPOS and co-authored by economist Henrik Meyer and Hugh Sharman, a prominent Denmark-based international energy consultant, the report details the extent to which Denmark’s claim to wind superiority is essentially founded on a myth – the function of a complicated trading scheme in which the Danes off-load excess, value-subtracted wind generation to other nations for roughly free, asking only in return that these countries sell some of their baseload power back to Denmark on the frequent occasions in which the wind does not blow there
The upshot? The Danes retain the title of world’s most prolific wind producer, and President Obama cites their experience as a path to be followed. The cost? Danish ratepayers are forced to pay the highest utility rates in Europe. And the American people are led to believe that, though wind may only provide a little more than one percent of our electricity now, reaching a 20 percent platform – as the Danes have allegedly done – will come at no cost, with no jobs lost and no externalities to consider.
Speaking of jobs, the report also pulls back the curtain on the wind power industry’s near-complete dependence on taxpayer subsidies to support the fairly modest workforce it presently maintains. Just as in Spain, where per-job taxpayer subsidies for so-called “green jobs” exceeds $1,000,000 per worker in some cases, wind-related jobs in Denmark on average are subsidized at a rate of 175 to 250 percent above the average pay per worker. All told, each new wind job created by the government costs Danish taxpayers between 600,000-900,000 krone a year, roughly equivalent to $90,000-$140,000 USD.
“That the current political leadership in Washington is enamored of the European energy model has been made abundantly clear — from the president himself, all the way on down,” added Pyle. “Less clear is the extent to which these people actually know what’s taking place over there, and whether they’re willing to level with the American people about the serious costs associated with following this dubious path.”
On Tuesday, report co-author Hugh Sharman will join CEPOS chief executive officer Martin Agerup in Washington, D.C., part of a three-day tour (Tues-Thurs) aimed at explaining to a wider American audience the core conclusions of their report. Those interested in speaking with Messrs. Sharman and/or Agerup or setting up an interview should contact Patrick Creighton (202.621.2947) or Chris Tucker (202.346.8825).
Monday, September 14, 2009
Who's Too Big to Fail? - Regulators today won't define 'systemic risk,' unlike 25 years ago
Who's Too Big to Fail? WSJ Editorial
Regulators today won't define 'systemic risk,' unlike 25 years ago.
WSJ, Sep 14, 2009
With Congress back in session and the anniversary of the Lehman Brothers failure upon us, the Obama Administration is resuming its quest for greatly expanded authority to bail out American businesses. Under the Treasury reform blueprint, any financial company, whether a regulated bank or not, could be rescued or seized by the Federal Deposit Insurance Corporation if regulators believe it poses a systemic risk.
If recent history is any guide, when the feds stage their next intervention, they will not define "systemic risk" and they will refuse to release the data underlying their decision. To this day, taxpayers can only guess at the specific reasons behind the ad hoc rescues that began with Bear Stearns in March of 2008. Now Team Obama seeks to codify the bailout policies of the last 18 months.
Before receiving authority for new adventures across U.S. commerce, financial regulators should explain their current interventions. The basic questions: How exactly does the government measure systemic risk, and how do regulators know that the U.S. economy can't live without a particular firm? Americans still don't know why Bear, Citigroup and AIG were saved, but Lehman wasn't.
A recently-filed federal lawsuit seeks answers. Plaintiff Vern McKinley worked at the FDIC in the 1980s and is now suing his old employer, as well as the Federal Reserve. The two agencies have been stiff-arming his Freedom of Information Act requests on last year's bailouts.
Last December, Mr. McKinley sent a FOIA request to the Fed to find out what Fed governors meant when they said a Bear Stearns failure would cause a "contagion." This term was used in the publicly-released minutes of the Fed meeting at which the central bank discussed plans by the Federal Reserve Bank of New York to finance Bear's sale to J.P. Morgan Chase. The minutes contained only the vague warning of doom, without any detail on how exactly the fall of Bear would destroy America. Mr. McKinley's request sought the supporting documents for this conclusion.
He also requested minutes of the autumn FDIC board meeting at which regulators approved financing for a Citigroup takeover of Wachovia. To provide this assistance, the board had to invoke the "systemic risk" exception in the Federal Deposit Insurance Act, and therefore had to assert that such assistance was necessary for the health of the financial system. Yet days later, Wachovia cut a better deal to sell itself to Wells Fargo, instead of Citi. So how necessary was the FDIC's offer of assistance?
After Mr. McKinley sued the agency this summer, the FDIC coughed up a previously undisclosed staff memo to the FDIC board. Again, the agency redacted the substance, providing roughly two pages of text from the nine-page original. The section of the memo titled "Systemic Risk" was entirely erased. As for the Fed, it blew off Mr. McKinely's initial request and has since responded mainly with some highly uninformative letters from the Fed staff to Congress.
For rescues of institutions deemed "too big to fail," this lack of disclosure is striking. Twenty-five years ago this month, Congress began hearings on Continental Illinois National Bank and Trust, which had received a government rescue of creditors and uninsured depositors just four months earlier. Rather than vague warnings of "severe" consequences for "fragile" markets offered by Bush and Obama regulators, the public received detailed information on Continental Illinois and its relation to other institutions.
By early October, the alleged "systemic risk" was being defined—and debated—very precisely. The FDIC held that 179 smaller banks would have been at high risk of failure due to their Continental Illinois exposures if the bank had been allowed to collapse. Combing through the data, the staff of the House Banking Committee and the General Accounting Office countered that only 28 banks would have been at high risk.
In contrast, the counterparties that benefited from the AIG bailout last year were only formally disclosed in 2009 after months of public pressure and after the Journal's reporting had already revealed most of the details. A public debate on which banks really needed a bailout via the government's AIG conduit has hardly taken place. And did all of Bear Stearns' creditors, including hedge funds, need to be made whole to ensure the survival of American capitalism?
A year after the epic meltdown, this is the debate Congress needs to undertake before legislating any new federal authority. Regulators should not receive a blank check to prevent systemic risk without even defining what that term means.
Regulators today won't define 'systemic risk,' unlike 25 years ago.
WSJ, Sep 14, 2009
With Congress back in session and the anniversary of the Lehman Brothers failure upon us, the Obama Administration is resuming its quest for greatly expanded authority to bail out American businesses. Under the Treasury reform blueprint, any financial company, whether a regulated bank or not, could be rescued or seized by the Federal Deposit Insurance Corporation if regulators believe it poses a systemic risk.
If recent history is any guide, when the feds stage their next intervention, they will not define "systemic risk" and they will refuse to release the data underlying their decision. To this day, taxpayers can only guess at the specific reasons behind the ad hoc rescues that began with Bear Stearns in March of 2008. Now Team Obama seeks to codify the bailout policies of the last 18 months.
Before receiving authority for new adventures across U.S. commerce, financial regulators should explain their current interventions. The basic questions: How exactly does the government measure systemic risk, and how do regulators know that the U.S. economy can't live without a particular firm? Americans still don't know why Bear, Citigroup and AIG were saved, but Lehman wasn't.
A recently-filed federal lawsuit seeks answers. Plaintiff Vern McKinley worked at the FDIC in the 1980s and is now suing his old employer, as well as the Federal Reserve. The two agencies have been stiff-arming his Freedom of Information Act requests on last year's bailouts.
Last December, Mr. McKinley sent a FOIA request to the Fed to find out what Fed governors meant when they said a Bear Stearns failure would cause a "contagion." This term was used in the publicly-released minutes of the Fed meeting at which the central bank discussed plans by the Federal Reserve Bank of New York to finance Bear's sale to J.P. Morgan Chase. The minutes contained only the vague warning of doom, without any detail on how exactly the fall of Bear would destroy America. Mr. McKinley's request sought the supporting documents for this conclusion.
He also requested minutes of the autumn FDIC board meeting at which regulators approved financing for a Citigroup takeover of Wachovia. To provide this assistance, the board had to invoke the "systemic risk" exception in the Federal Deposit Insurance Act, and therefore had to assert that such assistance was necessary for the health of the financial system. Yet days later, Wachovia cut a better deal to sell itself to Wells Fargo, instead of Citi. So how necessary was the FDIC's offer of assistance?
After Mr. McKinley sued the agency this summer, the FDIC coughed up a previously undisclosed staff memo to the FDIC board. Again, the agency redacted the substance, providing roughly two pages of text from the nine-page original. The section of the memo titled "Systemic Risk" was entirely erased. As for the Fed, it blew off Mr. McKinely's initial request and has since responded mainly with some highly uninformative letters from the Fed staff to Congress.
For rescues of institutions deemed "too big to fail," this lack of disclosure is striking. Twenty-five years ago this month, Congress began hearings on Continental Illinois National Bank and Trust, which had received a government rescue of creditors and uninsured depositors just four months earlier. Rather than vague warnings of "severe" consequences for "fragile" markets offered by Bush and Obama regulators, the public received detailed information on Continental Illinois and its relation to other institutions.
By early October, the alleged "systemic risk" was being defined—and debated—very precisely. The FDIC held that 179 smaller banks would have been at high risk of failure due to their Continental Illinois exposures if the bank had been allowed to collapse. Combing through the data, the staff of the House Banking Committee and the General Accounting Office countered that only 28 banks would have been at high risk.
In contrast, the counterparties that benefited from the AIG bailout last year were only formally disclosed in 2009 after months of public pressure and after the Journal's reporting had already revealed most of the details. A public debate on which banks really needed a bailout via the government's AIG conduit has hardly taken place. And did all of Bear Stearns' creditors, including hedge funds, need to be made whole to ensure the survival of American capitalism?
A year after the epic meltdown, this is the debate Congress needs to undertake before legislating any new federal authority. Regulators should not receive a blank check to prevent systemic risk without even defining what that term means.
Japan concerned at weakening of U.S. nuclear umbrella
Japan concerned at weakening of U.S. nuclear umbrella
Japan Today, Monday 14th September, 07:01 AM JST
TOKYO — Japan has expressed its reluctance to accept a proposal that urges the United States to limit the role of nuclear weapons to deterring only nuclear attacks and that seeks a no first-strike commitment in a draft report compiled by an international panel on nuclear nonproliferation and disarmament, panel sources said Sunday.
Japan’s representative to the International Commission on Nuclear Nonproliferation and Disarmament expressed reservations about the proposal due to concerns over a weakening of the U.S. nuclear umbrella, the sources said.
The commission, established at the initiative of Australia and Japan, aims to reinvigorate international efforts on nuclear nonproliferation and disarmament. It is co-chaired by former Japanese and Australian foreign ministers—Yoriko Kawaguchi and Gareth Evans.
The draft document envisages U.S. President Barack Obama working out a new nuclear doctrine before the review conference of parties to the nuclear nonproliferation treaty which is scheduled to be held next May.
It says that the ‘‘sole purpose of U.S. nuclear weapons is to deter use of nuclear weapons against the United States and its allies.’’
Japan has agreed to the principle of reducing the role of nuclear weapons but has expressed reservations not just about the specific proposal but also the suggested timetable and sequence or weapons reduction, the sources said.
Japan is arguing for Washington to maintain its broad nuclear deterrence apparently due to concerns about possible biological and chemical attacks from North Korea, they added.
An adviser to the Japanese commission member said, ‘‘From a Japanese defense perspective, there are two concerns under current security circumstances in East Asia for the time being,’’ according to the sources.
‘‘First, limiting the role of nuclear deterrence in preventing nuclear attack may give the wrong signal to North Korea or other ‘rogue states’ which may have a different strategic (escalation) calculation. To deter such threats, the credibility of nuclear deterrence would remain important.
‘‘Second, a no-first-use declaration by the United States without a reduction in threat would undermine the security of Japan, or at least it would raise the sense of uncertainty and anxiety over security.
‘‘In light of the reality that China has been rapidly catching up in air and sea power balance...in addition to the rapid modernization of its nuclear capability, no-first-use should be come after or along with the commitment of a tangible nuclear threat reduction in the region,’’ the report quoted the adviser as saying.
Japan Today, Monday 14th September, 07:01 AM JST
TOKYO — Japan has expressed its reluctance to accept a proposal that urges the United States to limit the role of nuclear weapons to deterring only nuclear attacks and that seeks a no first-strike commitment in a draft report compiled by an international panel on nuclear nonproliferation and disarmament, panel sources said Sunday.
Japan’s representative to the International Commission on Nuclear Nonproliferation and Disarmament expressed reservations about the proposal due to concerns over a weakening of the U.S. nuclear umbrella, the sources said.
The commission, established at the initiative of Australia and Japan, aims to reinvigorate international efforts on nuclear nonproliferation and disarmament. It is co-chaired by former Japanese and Australian foreign ministers—Yoriko Kawaguchi and Gareth Evans.
The draft document envisages U.S. President Barack Obama working out a new nuclear doctrine before the review conference of parties to the nuclear nonproliferation treaty which is scheduled to be held next May.
It says that the ‘‘sole purpose of U.S. nuclear weapons is to deter use of nuclear weapons against the United States and its allies.’’
Japan has agreed to the principle of reducing the role of nuclear weapons but has expressed reservations not just about the specific proposal but also the suggested timetable and sequence or weapons reduction, the sources said.
Japan is arguing for Washington to maintain its broad nuclear deterrence apparently due to concerns about possible biological and chemical attacks from North Korea, they added.
An adviser to the Japanese commission member said, ‘‘From a Japanese defense perspective, there are two concerns under current security circumstances in East Asia for the time being,’’ according to the sources.
‘‘First, limiting the role of nuclear deterrence in preventing nuclear attack may give the wrong signal to North Korea or other ‘rogue states’ which may have a different strategic (escalation) calculation. To deter such threats, the credibility of nuclear deterrence would remain important.
‘‘Second, a no-first-use declaration by the United States without a reduction in threat would undermine the security of Japan, or at least it would raise the sense of uncertainty and anxiety over security.
‘‘In light of the reality that China has been rapidly catching up in air and sea power balance...in addition to the rapid modernization of its nuclear capability, no-first-use should be come after or along with the commitment of a tangible nuclear threat reduction in the region,’’ the report quoted the adviser as saying.
Fact-Checking the Federal President on Health Insurance
Fact-Checking the President on Health Insurance. By SCOTT HARRINGTON
His tales of abuse don't stand scrutiny
WSJ, Sep 14, 2009
In his speech to Congress last week, President Barack Obama attempted to sell a reform agenda by demonizing the private health-insurance industry, which many people love to hate. He opened the attack by asserting: "More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won't pay the full cost of care. It happens every day."
Clearly, this should never happen to anyone who is in good standing with his insurance company and has abided by the terms of the policy. But the president's examples of people "dropped" by their insurance companies involve the rescission of policies based on misrepresentation or concealment of information in applications for coverage. Private health insurance cannot function if people buy insurance only after they become seriously ill, or if they knowingly conceal health conditions that might affect their policy.
Traditional practice, governed by decades of common law, statute and regulation is for insurers to rely in underwriting and pricing on the truthfulness of the information provided by applicants about their health, without conducting a costly investigation of each applicant's health history. Instead, companies engage in a certain degree of ex post auditing—conducting more detailed and costly reviews of a subset of applications following policy issue—including when expensive treatment is sought soon after a policy is issued.
This practice offers substantial cost savings and lower premiums compared to trying to verify every application before issuing a policy, or simply paying all claims, regardless of the accuracy and completeness of the applicant's disclosure. Some states restrict insurer rescission rights to instances where the misrepresented or concealed information is directly related to the illness that produced the claim. Most states do not.
To highlight abusive practices, Mr. Obama referred to an Illinois man who "lost his coverage in the middle of chemotherapy because his insurer found he hadn't reported gallstones that he didn't even know about." The president continued: "They delayed his treatment, and he died because of it."
Although the president has used this example previously, his conclusion is contradicted by the transcript of a June 16 hearing on industry practices before the Subcommittee of Oversight and Investigation of the House Committee on Energy and Commerce. The deceased's sister testified that the insurer reinstated her brother's coverage following intervention by the Illinois Attorney General's Office. She testified that her brother received a prescribed stem-cell transplant within the desired three- to four-week "window of opportunity" from "one of the most renowned doctors in the whole world on the specific routine," that the procedure "was extremely successful," and that "it extended his life nearly three and a half years."
The president's second example was a Texas woman "about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne." He said that "By the time she had her insurance reinstated, her breast cancer more than doubled in size."
The woman's testimony at the June 16 hearing confirms that her surgery was delayed several months. It also suggests that the dermatologist's chart may have described her skin condition as precancerous, that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular heartbeat, and that she knowingly underreported her weight on the application.
These two cases are presumably among the most egregious identified by Congressional staffers' analysis of 116,000 pages of documents from three large health insurers, which identified a total of about 20,000 rescissions from millions of policies issued by the insurers over a five-year period. Company representatives testified that less than one half of one percent of policies were rescinded (less than 0.1% for one of the companies).
If existing laws and litigation governing rescission are inadequate, there clearly are a variety of ways that the states or federal government could target abuses without adopting the president's agenda for federal control of health insurance, or the creation of a government health insurer.
Later in his speech, the president used Alabama to buttress his call for a government insurer to enhance competition in health insurance. He asserted that 90% of the Alabama health-insurance market is controlled by one insurer, and that high market concentration "makes it easier for insurance companies to treat their customers badly—by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates."
In fact, the Birmingham News reported immediately following the speech that the state's largest health insurer, the nonprofit Blue Cross and Blue Shield of Alabama, has about a 75% market share. A representative of the company indicated that its "profit" averaged only 0.6% of premiums the past decade, and that its administrative expense ratio is 7% of premiums, the fourth lowest among 39 Blue Cross and Blue Shield plans nationwide.
Similarly, a Dec. 31, 2007, report by the Alabama Department of Insurance indicates that the insurer's ratio of medical-claim costs to premiums for the year was 92%, with an administrative expense ratio (including claims settlement expenses) of 7.5%. Its net income, including investment income, was equivalent to 2% of premiums in that year.
In addition to these consumer friendly numbers, a survey in Consumer Reports this month reported that Blue Cross and Blue Shield of Alabama ranked second nationally in customer satisfaction among 41 preferred provider organization health plans. The insurer's apparent efficiency may explain its dominance, as opposed to a lack of competition—especially since there are no obvious barriers to entry or expansion in Alabama faced by large national health insurers such as United Healthcare and Aetna.
Responsible reform requires careful analysis of the underlying causes of problems in health insurance and informed debate over the benefits and costs of targeted remedies. The president's continued demonization of private health insurance in pursuit of his broad agenda of government expansion is inconsistent with that objective.
Mr. Harrington is professor of health-care management and insurance and risk management at the University of Pennsylvania's Wharton School and an adjunct scholar at the American Enterprise Institute.
His tales of abuse don't stand scrutiny
WSJ, Sep 14, 2009
In his speech to Congress last week, President Barack Obama attempted to sell a reform agenda by demonizing the private health-insurance industry, which many people love to hate. He opened the attack by asserting: "More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won't pay the full cost of care. It happens every day."
Clearly, this should never happen to anyone who is in good standing with his insurance company and has abided by the terms of the policy. But the president's examples of people "dropped" by their insurance companies involve the rescission of policies based on misrepresentation or concealment of information in applications for coverage. Private health insurance cannot function if people buy insurance only after they become seriously ill, or if they knowingly conceal health conditions that might affect their policy.
Traditional practice, governed by decades of common law, statute and regulation is for insurers to rely in underwriting and pricing on the truthfulness of the information provided by applicants about their health, without conducting a costly investigation of each applicant's health history. Instead, companies engage in a certain degree of ex post auditing—conducting more detailed and costly reviews of a subset of applications following policy issue—including when expensive treatment is sought soon after a policy is issued.
This practice offers substantial cost savings and lower premiums compared to trying to verify every application before issuing a policy, or simply paying all claims, regardless of the accuracy and completeness of the applicant's disclosure. Some states restrict insurer rescission rights to instances where the misrepresented or concealed information is directly related to the illness that produced the claim. Most states do not.
To highlight abusive practices, Mr. Obama referred to an Illinois man who "lost his coverage in the middle of chemotherapy because his insurer found he hadn't reported gallstones that he didn't even know about." The president continued: "They delayed his treatment, and he died because of it."
Although the president has used this example previously, his conclusion is contradicted by the transcript of a June 16 hearing on industry practices before the Subcommittee of Oversight and Investigation of the House Committee on Energy and Commerce. The deceased's sister testified that the insurer reinstated her brother's coverage following intervention by the Illinois Attorney General's Office. She testified that her brother received a prescribed stem-cell transplant within the desired three- to four-week "window of opportunity" from "one of the most renowned doctors in the whole world on the specific routine," that the procedure "was extremely successful," and that "it extended his life nearly three and a half years."
The president's second example was a Texas woman "about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne." He said that "By the time she had her insurance reinstated, her breast cancer more than doubled in size."
The woman's testimony at the June 16 hearing confirms that her surgery was delayed several months. It also suggests that the dermatologist's chart may have described her skin condition as precancerous, that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular heartbeat, and that she knowingly underreported her weight on the application.
These two cases are presumably among the most egregious identified by Congressional staffers' analysis of 116,000 pages of documents from three large health insurers, which identified a total of about 20,000 rescissions from millions of policies issued by the insurers over a five-year period. Company representatives testified that less than one half of one percent of policies were rescinded (less than 0.1% for one of the companies).
If existing laws and litigation governing rescission are inadequate, there clearly are a variety of ways that the states or federal government could target abuses without adopting the president's agenda for federal control of health insurance, or the creation of a government health insurer.
Later in his speech, the president used Alabama to buttress his call for a government insurer to enhance competition in health insurance. He asserted that 90% of the Alabama health-insurance market is controlled by one insurer, and that high market concentration "makes it easier for insurance companies to treat their customers badly—by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates."
In fact, the Birmingham News reported immediately following the speech that the state's largest health insurer, the nonprofit Blue Cross and Blue Shield of Alabama, has about a 75% market share. A representative of the company indicated that its "profit" averaged only 0.6% of premiums the past decade, and that its administrative expense ratio is 7% of premiums, the fourth lowest among 39 Blue Cross and Blue Shield plans nationwide.
Similarly, a Dec. 31, 2007, report by the Alabama Department of Insurance indicates that the insurer's ratio of medical-claim costs to premiums for the year was 92%, with an administrative expense ratio (including claims settlement expenses) of 7.5%. Its net income, including investment income, was equivalent to 2% of premiums in that year.
In addition to these consumer friendly numbers, a survey in Consumer Reports this month reported that Blue Cross and Blue Shield of Alabama ranked second nationally in customer satisfaction among 41 preferred provider organization health plans. The insurer's apparent efficiency may explain its dominance, as opposed to a lack of competition—especially since there are no obvious barriers to entry or expansion in Alabama faced by large national health insurers such as United Healthcare and Aetna.
Responsible reform requires careful analysis of the underlying causes of problems in health insurance and informed debate over the benefits and costs of targeted remedies. The president's continued demonization of private health insurance in pursuit of his broad agenda of government expansion is inconsistent with that objective.
Mr. Harrington is professor of health-care management and insurance and risk management at the University of Pennsylvania's Wharton School and an adjunct scholar at the American Enterprise Institute.
Thursday, September 10, 2009
Remarks by the President to a joint session of Congress on health care
The White House, Office of the Press Secretary
Immediate Release September 9, 2009
REMARKS BY THE PRESIDENT TO A JOINT SESSION OF CONGRESS ON HEALTH CARE
U.S. Capitol Washington, D.C.
8:16 P.M. EDT
THE PRESIDENT: Madam Speaker, Vice President Biden, members of Congress, and the American people:
When I spoke here last winter, this nation was facing the worst economic crisis since the Great Depression. We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse.
As any American who is still looking for work or a way to pay their bills will tell you, we are by no means out of the woods. A full and vibrant recovery is still many months away. And I will not let up until those Americans who seek jobs can find them -- (applause) -- until those businesses that seek capital and credit can thrive; until all responsible homeowners can stay in their homes. That is our ultimate goal. But thanks to the bold and decisive action we've taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink. (Applause.)
I want to thank the members of this body for your efforts and your support in these last several months, and especially those who've taken the difficult votes that have put us on a path to recovery. I also want to thank the American people for their patience and resolve during this trying time for our nation.
But we did not come here just to clean up crises. We came here to build a future. (Applause.) So tonight, I return to speak to all of you about an issue that is central to that future -- and that is the issue of health care.
I am not the first President to take up this cause, but I am determined to be the last. (Applause.) It has now been nearly a century since Theodore Roosevelt first called for health care reform. And ever since, nearly every President and Congress, whether Democrat or Republican, has attempted to meet this challenge in some way. A bill for comprehensive health reform was first introduced by John Dingell Sr. in 1943. Sixty-five years later, his son continues to introduce that same bill at the beginning of each session. (Applause.)
Our collective failure to meet this challenge -- year after year, decade after decade -- has led us to the breaking point. Everyone understands the extraordinary hardships that are placed on the uninsured, who live every day just one accident or illness away from bankruptcy. These are not primarily people on welfare. These are middle-class Americans. Some can't get insurance on the job. Others are self-employed, and can't afford it, since buying insurance on your own costs you three times as much as the coverage you get from your employer. Many other Americans who are willing and able to pay are still denied insurance due to previous illnesses or conditions that insurance companies decide are too risky or too expensive to cover.
We are the only democracy -- the only advanced democracy on Earth -- the only wealthy nation -- that allows such hardship for millions of its people. There are now more than 30 million American citizens who cannot get coverage. In just a two-year period, one in every three Americans goes without health care coverage at some point. And every day, 14,000 Americans lose their coverage. In other words, it can happen to anyone.
But the problem that plagues the health care system is not just a problem for the uninsured. Those who do have insurance have never had less security and stability than they do today. More and more Americans worry that if you move, lose your job, or change your job, you'll lose your health insurance too. More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won't pay the full cost of care. It happens every day.
One man from Illinois lost his coverage in the middle of chemotherapy because his insurer found that he hadn't reported gallstones that he didn't even know about. They delayed his treatment, and he died because of it. Another woman from Texas was about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne. By the time she had her insurance reinstated, her breast cancer had more than doubled in size. That is heart-breaking, it is wrong, and no one should be treated that way in the United States of America. (Applause.)
Then there's the problem of rising cost. We spend one and a half times more per person on health care than any other country, but we aren't any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages. It's why so many employers -- especially small businesses -- are forcing their employees to pay more for insurance, or are dropping their coverage entirely. It's why so many aspiring entrepreneurs cannot afford to open a business in the first place, and why American businesses that compete internationally -- like our automakers -- are at a huge disadvantage. And it's why those of us with health insurance are also paying a hidden and growing tax for those without it -- about $1,000 per year that pays for somebody else's emergency room and charitable care.
Finally, our health care system is placing an unsustainable burden on taxpayers. When health care costs grow at the rate they have, it puts greater pressure on programs like Medicare and Medicaid. If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined. Put simply, our health care problem is our deficit problem. Nothing else even comes close. Nothing else. (Applause.)
Now, these are the facts. Nobody disputes them. We know we must reform this system. The question is how.
There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada's -- (applause) -- where we would severely restrict the private insurance market and have the government provide coverage for everybody. On the right, there are those who argue that we should end employer-based systems and leave individuals to buy health insurance on their own.
I've said -- I have to say that there are arguments to be made for both these approaches. But either one would represent a radical shift that would disrupt the health care most people currently have. Since health care represents one-sixth of our economy, I believe it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch. (Applause.) And that is precisely what those of you in Congress have tried to do over the past several months.
During that time, we've seen Washington at its best and at its worst.
We've seen many in this chamber work tirelessly for the better part of this year to offer thoughtful ideas about how to achieve reform. Of the five committees asked to develop bills, four have completed their work, and the Senate Finance Committee announced today that it will move forward next week. That has never happened before. Our overall efforts have been supported by an unprecedented coalition of doctors and nurses; hospitals, seniors' groups, and even drug companies -- many of whom opposed reform in the past. And there is agreement in this chamber on about 80 percent of what needs to be done, putting us closer to the goal of reform than we have ever been.
But what we've also seen in these last months is the same partisan spectacle that only hardens the disdain many Americans have towards their own government. Instead of honest debate, we've seen scare tactics. Some have dug into unyielding ideological camps that offer no hope of compromise. Too many have used this as an opportunity to score short-term political points, even if it robs the country of our opportunity to solve a long-term challenge. And out of this blizzard of charges and counter-charges, confusion has reigned.
Well, the time for bickering is over. The time for games has passed. (Applause.) Now is the season for action. Now is when we must bring the best ideas of both parties together, and show the American people that we can still do what we were sent here to do. Now is the time to deliver on health care. Now is the time to deliver on health care.
The plan I'm announcing tonight would meet three basic goals. It will provide more security and stability to those who have health insurance. It will provide insurance for those who don't. And it will slow the growth of health care costs for our families, our businesses, and our government. (Applause.) It's a plan that asks everyone to take responsibility for meeting this challenge -- not just government, not just insurance companies, but everybody including employers and individuals. And it's a plan that incorporates ideas from senators and congressmen, from Democrats and Republicans -- and yes, from some of my opponents in both the primary and general election.
Here are the details that every American needs to know about this plan. First, if you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. (Applause.) Let me repeat this: Nothing in our plan requires you to change what you have.
What this plan will do is make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a preexisting condition. (Applause.) As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it the most. (Applause.) They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or in a lifetime. (Applause.) We will place a limit on how much you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick. (Applause.) And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies -- (applause) -- because there's no reason we shouldn't be catching diseases like breast cancer and colon cancer before they get worse. That makes sense, it saves money, and it saves lives. (Applause.)
Now, that's what Americans who have health insurance can expect from this plan -- more security and more stability.
Now, if you're one of the tens of millions of Americans who don't currently have health insurance, the second part of this plan will finally offer you quality, affordable choices. (Applause.) If you lose your job or you change your job, you'll be able to get coverage. If you strike out on your own and start a small business, you'll be able to get coverage. We'll do this by creating a new insurance exchange -- a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices. Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers. As one big group, these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage. This is how large companies and government employees get affordable insurance. It's how everyone in this Congress gets affordable insurance. And it's time to give every American the same opportunity that we give ourselves. (Applause.)
Now, for those individuals and small businesses who still can't afford the lower-priced insurance available in the exchange, we'll provide tax credits, the size of which will be based on your need. And all insurance companies that want access to this new marketplace will have to abide by the consumer protections I already mentioned. This exchange will take effect in four years, which will give us time to do it right. In the meantime, for those Americans who can't get insurance today because they have preexisting medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill. (Applause.) This was a good idea when Senator John McCain proposed it in the campaign, it's a good idea now, and we should all embrace it. (Applause.)
Now, even if we provide these affordable options, there may be those -- especially the young and the healthy -- who still want to take the risk and go without coverage. There may still be companies that refuse to do right by their workers by giving them coverage. The problem is, such irresponsible behavior costs all the rest of us money. If there are affordable options and people still don't sign up for health insurance, it means we pay for these people's expensive emergency room visits. If some businesses don't provide workers health care, it forces the rest of us to pick up the tab when their workers get sick, and gives those businesses an unfair advantage over their competitors. And unless everybody does their part, many of the insurance reforms we seek -- especially requiring insurance companies to cover preexisting conditions -- just can't be achieved.
And that's why under my plan, individuals will be required to carry basic health insurance -- just as most states require you to carry auto insurance. (Applause.) Likewise -- likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers. There will be a hardship waiver for those individuals who still can't afford coverage, and 95 percent of all small businesses, because of their size and narrow profit margin, would be exempt from these requirements. (Applause.) But we can't have large businesses and individuals who can afford coverage game the system by avoiding responsibility to themselves or their employees. Improving our health care system only works if everybody does their part.
And while there remain some significant details to be ironed out, I believe -- (laughter) -- I believe a broad consensus exists for the aspects of the plan I just outlined: consumer protections for those with insurance, an exchange that allows individuals and small businesses to purchase affordable coverage, and a requirement that people who can afford insurance get insurance.
And I have no doubt that these reforms would greatly benefit Americans from all walks of life, as well as the economy as a whole. Still, given all the misinformation that's been spread over the past few months, I realize -- (applause) -- I realize that many Americans have grown nervous about reform. So tonight I want to address some of the key controversies that are still out there.
Some of people's concerns have grown out of bogus claims spread by those whose only agenda is to kill reform at any cost. The best example is the claim made not just by radio and cable talk show hosts, but by prominent politicians, that we plan to set up panels of bureaucrats with the power to kill off senior citizens. Now, such a charge would be laughable if it weren't so cynical and irresponsible. It is a lie, plain and simple. (Applause.)
There are also those who claim that our reform efforts would insure illegal immigrants. This, too, is false. The reforms -- the reforms I'm proposing would not apply to those who are here illegally.
AUDIENCE MEMBER: You lie! (Boos.)
THE PRESIDENT: It's not true. And one more misunderstanding I want to clear up -- under our plan, no federal dollars will be used to fund abortions, and federal conscience laws will remain in place. (Applause.)
Now, my health care proposal has also been attacked by some who oppose reform as a "government takeover" of the entire health care system. As proof, critics point to a provision in our plan that allows the uninsured and small businesses to choose a publicly sponsored insurance option, administered by the government just like Medicaid or Medicare. (Applause.)
So let me set the record straight here. My guiding principle is, and always has been, that consumers do better when there is choice and competition. That's how the market works. (Applause.) Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company. And without competition, the price of insurance goes up and quality goes down. And it makes it easier for insurance companies to treat their customers badly -- by cherry-picking the healthiest individuals and trying to drop the sickest, by overcharging small businesses who have no leverage, and by jacking up rates.
Insurance executives don't do this because they're bad people; they do it because it's profitable. As one former insurance executive testified before Congress, insurance companies are not only encouraged to find reasons to drop the seriously ill, they are rewarded for it. All of this is in service of meeting what this former executive called "Wall Street's relentless profit expectations."
Now, I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors. I just want to hold them accountable. (Applause.) And the insurance reforms that I've already mentioned would do just that. But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. (Applause.) Now, let me be clear. Let me be clear. It would only be an option for those who don't have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than 5 percent of Americans would sign up.
Despite all this, the insurance companies and their allies don't like this idea. They argue that these private companies can't fairly compete with the government. And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I've insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits and excessive administrative costs and executive salaries, it could provide a good deal for consumers, and would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities. (Applause.)
Now, it is -- it's worth noting that a strong majority of Americans still favor a public insurance option of the sort I've proposed tonight. But its impact shouldn't be exaggerated -- by the left or the right or the media. It is only one part of my plan, and shouldn't be used as a handy excuse for the usual Washington ideological battles. To my progressive friends, I would remind you that for decades, the driving idea behind reform has been to end insurance company abuses and make coverage available for those without it. (Applause.) The public option -- the public option is only a means to that end -- and we should remain open to other ideas that accomplish our ultimate goal. And to my Republican friends, I say that rather than making wild claims about a government takeover of health care, we should work together to address any legitimate concerns you may have. (Applause.)
For example -- for example, some have suggested that the public option go into effect only in those markets where insurance companies are not providing affordable policies. Others have proposed a co-op or another non-profit entity to administer the plan. These are all constructive ideas worth exploring. But I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice. (Applause.) And I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need. (Applause.)
Finally, let me discuss an issue that is a great concern to me, to members of this chamber, and to the public -- and that's how we pay for this plan.
And here's what you need to know. First, I will not sign a plan that adds one dime to our deficits -- either now or in the future. (Applause.) I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I'm serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don't materialize. (Applause.) Now, part of the reason I faced a trillion-dollar deficit when I walked in the door of the White House is because too many initiatives over the last decade were not paid for -- from the Iraq war to tax breaks for the wealthy. (Applause.) I will not make that same mistake with health care.
Second, we've estimated that most of this plan can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse. Right now, too much of the hard-earned savings and tax dollars we spend on health care don't make us any healthier. That's not my judgment -- it's the judgment of medical professionals across this country. And this is also true when it comes to Medicare and Medicaid.
In fact, I want to speak directly to seniors for a moment, because Medicare is another issue that's been subjected to demagoguery and distortion during the course of this debate.
More than four decades ago, this nation stood up for the principle that after a lifetime of hard work, our seniors should not be left to struggle with a pile of medical bills in their later years. That's how Medicare was born. And it remains a sacred trust that must be passed down from one generation to the next. (Applause.) And that is why not a dollar of the Medicare trust fund will be used to pay for this plan. (Applause.)
The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies -- subsidies that do everything to pad their profits but don't improve the care of seniors. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead. (Applause.)
Now, these steps will ensure that you -- America's seniors -- get the benefits you've been promised. They will ensure that Medicare is there for future generations. And we can use some of the savings to fill the gap in coverage that forces too many seniors to pay thousands of dollars a year out of their own pockets for prescription drugs. (Applause.) That's what this plan will do for you. So don't pay attention to those scary stories about how your benefits will be cut, especially since some of the same folks who are spreading these tall tales have fought against Medicare in the past and just this year supported a budget that would essentially have turned Medicare into a privatized voucher program. That will not happen on my watch. I will protect Medicare. (Applause.)
Now, because Medicare is such a big part of the health care system, making the program more efficient can help usher in changes in the way we deliver health care that can reduce costs for everybody. We have long known that some places -- like the Intermountain Healthcare in Utah or the Geisinger Health System in rural Pennsylvania -- offer high-quality care at costs below average. So the commission can help encourage the adoption of these common-sense best practices by doctors and medical professionals throughout the system -- everything from reducing hospital infection rates to encouraging better coordination between teams of doctors.
Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan. (Applause.) Now, much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers. And this reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money -- an idea which has the support of Democratic and Republican experts. And according to these same experts, this modest change could help hold down the cost of health care for all of us in the long run.
Now, finally, many in this chamber -- particularly on the Republican side of the aisle -- have long insisted that reforming our medical malpractice laws can help bring down the cost of health care. (Applause.) Now -- there you go. There you go. Now, I don't believe malpractice reform is a silver bullet, but I've talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs. (Applause.) So I'm proposing that we move forward on a range of ideas about how to put patient safety first and let doctors focus on practicing medicine. (Applause.) I know that the Bush administration considered authorizing demonstration projects in individual states to test these ideas. I think it's a good idea, and I'm directing my Secretary of Health and Human Services to move forward on this initiative today. (Applause.)
Now, add it all up, and the plan I'm proposing will cost around $900 billion over 10 years -- less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration. (Applause.) Now, most of these costs will be paid for with money already being spent -- but spent badly -- in the existing health care system. The plan will not add to our deficit. The middle class will realize greater security, not higher taxes. And if we are able to slow the growth of health care costs by just one-tenth of 1 percent each year -- one-tenth of 1 percent -- it will actually reduce the deficit by $4 trillion over the long term.
Now, this is the plan I'm proposing. It's a plan that incorporates ideas from many of the people in this room tonight -- Democrats and Republicans. And I will continue to seek common ground in the weeks ahead. If you come to me with a serious set of proposals, I will be there to listen. My door is always open.
But know this: I will not waste time with those who have made the calculation that it's better politics to kill this plan than to improve it. (Applause.) I won't stand by while the special interests use the same old tactics to keep things exactly the way they are. If you misrepresent what's in this plan, we will call you out. (Applause.) And I will not -- and I will not accept the status quo as a solution. Not this time. Not now.
Everyone in this room knows what will happen if we do nothing. Our deficit will grow. More families will go bankrupt. More businesses will close. More Americans will lose their coverage when they are sick and need it the most. And more will die as a result. We know these things to be true.
That is why we cannot fail. Because there are too many Americans counting on us to succeed -- the ones who suffer silently, and the ones who shared their stories with us at town halls, in e-mails, and in letters.
I received one of those letters a few days ago. It was from our beloved friend and colleague, Ted Kennedy. He had written it back in May, shortly after he was told that his illness was terminal. He asked that it be delivered upon his death.
In it, he spoke about what a happy time his last months were, thanks to the love and support of family and friends, his wife, Vicki, his amazing children, who are all here tonight. And he expressed confidence that this would be the year that health care reform -- "that great unfinished business of our society," he called it -- would finally pass. He repeated the truth that health care is decisive for our future prosperity, but he also reminded me that "it concerns more than material things." "What we face," he wrote, "is above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country."
I've thought about that phrase quite a bit in recent days -- the character of our country. One of the unique and wonderful things about America has always been our self-reliance, our rugged individualism, our fierce defense of freedom and our healthy skepticism of government. And figuring out the appropriate size and role of government has always been a source of rigorous and, yes, sometimes angry debate. That's our history.
For some of Ted Kennedy's critics, his brand of liberalism represented an affront to American liberty. In their minds, his passion for universal health care was nothing more than a passion for big government.
But those of us who knew Teddy and worked with him here -- people of both parties -- know that what drove him was something more. His friend Orrin Hatch -- he knows that. They worked together to provide children with health insurance. His friend John McCain knows that. They worked together on a Patient's Bill of Rights. His friend Chuck Grassley knows that. They worked together to provide health care to children with disabilities.
On issues like these, Ted Kennedy's passion was born not of some rigid ideology, but of his own experience. It was the experience of having two children stricken with cancer. He never forgot the sheer terror and helplessness that any parent feels when a child is badly sick. And he was able to imagine what it must be like for those without insurance, what it would be like to have to say to a wife or a child or an aging parent, there is something that could make you better, but I just can't afford it.
That large-heartedness -- that concern and regard for the plight of others -- is not a partisan feeling. It's not a Republican or a Democratic feeling. It, too, is part of the American character -- our ability to stand in other people's shoes; a recognition that we are all in this together, and when fortune turns against one of us, others are there to lend a helping hand; a belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise.
This has always been the history of our progress. In 1935, when over half of our seniors could not support themselves and millions had seen their savings wiped away, there were those who argued that Social Security would lead to socialism, but the men and women of Congress stood fast, and we are all the better for it. In 1965, when some argued that Medicare represented a government takeover of health care, members of Congress -- Democrats and Republicans -- did not back down. They joined together so that all of us could enter our golden years with some basic peace of mind.
You see, our predecessors understood that government could not, and should not, solve every problem. They understood that there are instances when the gains in security from government action are not worth the added constraints on our freedom. But they also understood that the danger of too much government is matched by the perils of too little; that without the leavening hand of wise policy, markets can crash, monopolies can stifle competition, the vulnerable can be exploited. And they knew that when any government measure, no matter how carefully crafted or beneficial, is subject to scorn; when any efforts to help people in need are attacked as un-American; when facts and reason are thrown overboard and only timidity passes for wisdom, and we can no longer even engage in a civil conversation with each other over the things that truly matter -- that at that point we don't merely lose our capacity to solve big challenges. We lose something essential about ourselves.
That was true then. It remains true today. I understand how difficult this health care debate has been. I know that many in this country are deeply skeptical that government is looking out for them. I understand that the politically safe move would be to kick the can further down the road -- to defer reform one more year, or one more election, or one more term.
But that is not what the moment calls for. That's not what we came here to do. We did not come to fear the future. We came here to shape it. I still believe we can act even when it's hard. (Applause.) I still believe -- I still believe that we can act when it's hard. I still believe we can replace acrimony with civility, and gridlock with progress. I still believe we can do great things, and that here and now we will meet history's test.
Because that's who we are. That is our calling. That is our character. Thank you, God bless you, and may God bless the United States of America. (Applause.)
END 9:03 P.M. EDT
Immediate Release September 9, 2009
REMARKS BY THE PRESIDENT TO A JOINT SESSION OF CONGRESS ON HEALTH CARE
U.S. Capitol Washington, D.C.
8:16 P.M. EDT
THE PRESIDENT: Madam Speaker, Vice President Biden, members of Congress, and the American people:
When I spoke here last winter, this nation was facing the worst economic crisis since the Great Depression. We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse.
As any American who is still looking for work or a way to pay their bills will tell you, we are by no means out of the woods. A full and vibrant recovery is still many months away. And I will not let up until those Americans who seek jobs can find them -- (applause) -- until those businesses that seek capital and credit can thrive; until all responsible homeowners can stay in their homes. That is our ultimate goal. But thanks to the bold and decisive action we've taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink. (Applause.)
I want to thank the members of this body for your efforts and your support in these last several months, and especially those who've taken the difficult votes that have put us on a path to recovery. I also want to thank the American people for their patience and resolve during this trying time for our nation.
But we did not come here just to clean up crises. We came here to build a future. (Applause.) So tonight, I return to speak to all of you about an issue that is central to that future -- and that is the issue of health care.
I am not the first President to take up this cause, but I am determined to be the last. (Applause.) It has now been nearly a century since Theodore Roosevelt first called for health care reform. And ever since, nearly every President and Congress, whether Democrat or Republican, has attempted to meet this challenge in some way. A bill for comprehensive health reform was first introduced by John Dingell Sr. in 1943. Sixty-five years later, his son continues to introduce that same bill at the beginning of each session. (Applause.)
Our collective failure to meet this challenge -- year after year, decade after decade -- has led us to the breaking point. Everyone understands the extraordinary hardships that are placed on the uninsured, who live every day just one accident or illness away from bankruptcy. These are not primarily people on welfare. These are middle-class Americans. Some can't get insurance on the job. Others are self-employed, and can't afford it, since buying insurance on your own costs you three times as much as the coverage you get from your employer. Many other Americans who are willing and able to pay are still denied insurance due to previous illnesses or conditions that insurance companies decide are too risky or too expensive to cover.
We are the only democracy -- the only advanced democracy on Earth -- the only wealthy nation -- that allows such hardship for millions of its people. There are now more than 30 million American citizens who cannot get coverage. In just a two-year period, one in every three Americans goes without health care coverage at some point. And every day, 14,000 Americans lose their coverage. In other words, it can happen to anyone.
But the problem that plagues the health care system is not just a problem for the uninsured. Those who do have insurance have never had less security and stability than they do today. More and more Americans worry that if you move, lose your job, or change your job, you'll lose your health insurance too. More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won't pay the full cost of care. It happens every day.
One man from Illinois lost his coverage in the middle of chemotherapy because his insurer found that he hadn't reported gallstones that he didn't even know about. They delayed his treatment, and he died because of it. Another woman from Texas was about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne. By the time she had her insurance reinstated, her breast cancer had more than doubled in size. That is heart-breaking, it is wrong, and no one should be treated that way in the United States of America. (Applause.)
Then there's the problem of rising cost. We spend one and a half times more per person on health care than any other country, but we aren't any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages. It's why so many employers -- especially small businesses -- are forcing their employees to pay more for insurance, or are dropping their coverage entirely. It's why so many aspiring entrepreneurs cannot afford to open a business in the first place, and why American businesses that compete internationally -- like our automakers -- are at a huge disadvantage. And it's why those of us with health insurance are also paying a hidden and growing tax for those without it -- about $1,000 per year that pays for somebody else's emergency room and charitable care.
Finally, our health care system is placing an unsustainable burden on taxpayers. When health care costs grow at the rate they have, it puts greater pressure on programs like Medicare and Medicaid. If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined. Put simply, our health care problem is our deficit problem. Nothing else even comes close. Nothing else. (Applause.)
Now, these are the facts. Nobody disputes them. We know we must reform this system. The question is how.
There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada's -- (applause) -- where we would severely restrict the private insurance market and have the government provide coverage for everybody. On the right, there are those who argue that we should end employer-based systems and leave individuals to buy health insurance on their own.
I've said -- I have to say that there are arguments to be made for both these approaches. But either one would represent a radical shift that would disrupt the health care most people currently have. Since health care represents one-sixth of our economy, I believe it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch. (Applause.) And that is precisely what those of you in Congress have tried to do over the past several months.
During that time, we've seen Washington at its best and at its worst.
We've seen many in this chamber work tirelessly for the better part of this year to offer thoughtful ideas about how to achieve reform. Of the five committees asked to develop bills, four have completed their work, and the Senate Finance Committee announced today that it will move forward next week. That has never happened before. Our overall efforts have been supported by an unprecedented coalition of doctors and nurses; hospitals, seniors' groups, and even drug companies -- many of whom opposed reform in the past. And there is agreement in this chamber on about 80 percent of what needs to be done, putting us closer to the goal of reform than we have ever been.
But what we've also seen in these last months is the same partisan spectacle that only hardens the disdain many Americans have towards their own government. Instead of honest debate, we've seen scare tactics. Some have dug into unyielding ideological camps that offer no hope of compromise. Too many have used this as an opportunity to score short-term political points, even if it robs the country of our opportunity to solve a long-term challenge. And out of this blizzard of charges and counter-charges, confusion has reigned.
Well, the time for bickering is over. The time for games has passed. (Applause.) Now is the season for action. Now is when we must bring the best ideas of both parties together, and show the American people that we can still do what we were sent here to do. Now is the time to deliver on health care. Now is the time to deliver on health care.
The plan I'm announcing tonight would meet three basic goals. It will provide more security and stability to those who have health insurance. It will provide insurance for those who don't. And it will slow the growth of health care costs for our families, our businesses, and our government. (Applause.) It's a plan that asks everyone to take responsibility for meeting this challenge -- not just government, not just insurance companies, but everybody including employers and individuals. And it's a plan that incorporates ideas from senators and congressmen, from Democrats and Republicans -- and yes, from some of my opponents in both the primary and general election.
Here are the details that every American needs to know about this plan. First, if you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. (Applause.) Let me repeat this: Nothing in our plan requires you to change what you have.
What this plan will do is make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a preexisting condition. (Applause.) As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it the most. (Applause.) They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or in a lifetime. (Applause.) We will place a limit on how much you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick. (Applause.) And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies -- (applause) -- because there's no reason we shouldn't be catching diseases like breast cancer and colon cancer before they get worse. That makes sense, it saves money, and it saves lives. (Applause.)
Now, that's what Americans who have health insurance can expect from this plan -- more security and more stability.
Now, if you're one of the tens of millions of Americans who don't currently have health insurance, the second part of this plan will finally offer you quality, affordable choices. (Applause.) If you lose your job or you change your job, you'll be able to get coverage. If you strike out on your own and start a small business, you'll be able to get coverage. We'll do this by creating a new insurance exchange -- a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices. Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers. As one big group, these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage. This is how large companies and government employees get affordable insurance. It's how everyone in this Congress gets affordable insurance. And it's time to give every American the same opportunity that we give ourselves. (Applause.)
Now, for those individuals and small businesses who still can't afford the lower-priced insurance available in the exchange, we'll provide tax credits, the size of which will be based on your need. And all insurance companies that want access to this new marketplace will have to abide by the consumer protections I already mentioned. This exchange will take effect in four years, which will give us time to do it right. In the meantime, for those Americans who can't get insurance today because they have preexisting medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill. (Applause.) This was a good idea when Senator John McCain proposed it in the campaign, it's a good idea now, and we should all embrace it. (Applause.)
Now, even if we provide these affordable options, there may be those -- especially the young and the healthy -- who still want to take the risk and go without coverage. There may still be companies that refuse to do right by their workers by giving them coverage. The problem is, such irresponsible behavior costs all the rest of us money. If there are affordable options and people still don't sign up for health insurance, it means we pay for these people's expensive emergency room visits. If some businesses don't provide workers health care, it forces the rest of us to pick up the tab when their workers get sick, and gives those businesses an unfair advantage over their competitors. And unless everybody does their part, many of the insurance reforms we seek -- especially requiring insurance companies to cover preexisting conditions -- just can't be achieved.
And that's why under my plan, individuals will be required to carry basic health insurance -- just as most states require you to carry auto insurance. (Applause.) Likewise -- likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers. There will be a hardship waiver for those individuals who still can't afford coverage, and 95 percent of all small businesses, because of their size and narrow profit margin, would be exempt from these requirements. (Applause.) But we can't have large businesses and individuals who can afford coverage game the system by avoiding responsibility to themselves or their employees. Improving our health care system only works if everybody does their part.
And while there remain some significant details to be ironed out, I believe -- (laughter) -- I believe a broad consensus exists for the aspects of the plan I just outlined: consumer protections for those with insurance, an exchange that allows individuals and small businesses to purchase affordable coverage, and a requirement that people who can afford insurance get insurance.
And I have no doubt that these reforms would greatly benefit Americans from all walks of life, as well as the economy as a whole. Still, given all the misinformation that's been spread over the past few months, I realize -- (applause) -- I realize that many Americans have grown nervous about reform. So tonight I want to address some of the key controversies that are still out there.
Some of people's concerns have grown out of bogus claims spread by those whose only agenda is to kill reform at any cost. The best example is the claim made not just by radio and cable talk show hosts, but by prominent politicians, that we plan to set up panels of bureaucrats with the power to kill off senior citizens. Now, such a charge would be laughable if it weren't so cynical and irresponsible. It is a lie, plain and simple. (Applause.)
There are also those who claim that our reform efforts would insure illegal immigrants. This, too, is false. The reforms -- the reforms I'm proposing would not apply to those who are here illegally.
AUDIENCE MEMBER: You lie! (Boos.)
THE PRESIDENT: It's not true. And one more misunderstanding I want to clear up -- under our plan, no federal dollars will be used to fund abortions, and federal conscience laws will remain in place. (Applause.)
Now, my health care proposal has also been attacked by some who oppose reform as a "government takeover" of the entire health care system. As proof, critics point to a provision in our plan that allows the uninsured and small businesses to choose a publicly sponsored insurance option, administered by the government just like Medicaid or Medicare. (Applause.)
So let me set the record straight here. My guiding principle is, and always has been, that consumers do better when there is choice and competition. That's how the market works. (Applause.) Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company. And without competition, the price of insurance goes up and quality goes down. And it makes it easier for insurance companies to treat their customers badly -- by cherry-picking the healthiest individuals and trying to drop the sickest, by overcharging small businesses who have no leverage, and by jacking up rates.
Insurance executives don't do this because they're bad people; they do it because it's profitable. As one former insurance executive testified before Congress, insurance companies are not only encouraged to find reasons to drop the seriously ill, they are rewarded for it. All of this is in service of meeting what this former executive called "Wall Street's relentless profit expectations."
Now, I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors. I just want to hold them accountable. (Applause.) And the insurance reforms that I've already mentioned would do just that. But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. (Applause.) Now, let me be clear. Let me be clear. It would only be an option for those who don't have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than 5 percent of Americans would sign up.
Despite all this, the insurance companies and their allies don't like this idea. They argue that these private companies can't fairly compete with the government. And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I've insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits and excessive administrative costs and executive salaries, it could provide a good deal for consumers, and would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities. (Applause.)
Now, it is -- it's worth noting that a strong majority of Americans still favor a public insurance option of the sort I've proposed tonight. But its impact shouldn't be exaggerated -- by the left or the right or the media. It is only one part of my plan, and shouldn't be used as a handy excuse for the usual Washington ideological battles. To my progressive friends, I would remind you that for decades, the driving idea behind reform has been to end insurance company abuses and make coverage available for those without it. (Applause.) The public option -- the public option is only a means to that end -- and we should remain open to other ideas that accomplish our ultimate goal. And to my Republican friends, I say that rather than making wild claims about a government takeover of health care, we should work together to address any legitimate concerns you may have. (Applause.)
For example -- for example, some have suggested that the public option go into effect only in those markets where insurance companies are not providing affordable policies. Others have proposed a co-op or another non-profit entity to administer the plan. These are all constructive ideas worth exploring. But I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice. (Applause.) And I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need. (Applause.)
Finally, let me discuss an issue that is a great concern to me, to members of this chamber, and to the public -- and that's how we pay for this plan.
And here's what you need to know. First, I will not sign a plan that adds one dime to our deficits -- either now or in the future. (Applause.) I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I'm serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don't materialize. (Applause.) Now, part of the reason I faced a trillion-dollar deficit when I walked in the door of the White House is because too many initiatives over the last decade were not paid for -- from the Iraq war to tax breaks for the wealthy. (Applause.) I will not make that same mistake with health care.
Second, we've estimated that most of this plan can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse. Right now, too much of the hard-earned savings and tax dollars we spend on health care don't make us any healthier. That's not my judgment -- it's the judgment of medical professionals across this country. And this is also true when it comes to Medicare and Medicaid.
In fact, I want to speak directly to seniors for a moment, because Medicare is another issue that's been subjected to demagoguery and distortion during the course of this debate.
More than four decades ago, this nation stood up for the principle that after a lifetime of hard work, our seniors should not be left to struggle with a pile of medical bills in their later years. That's how Medicare was born. And it remains a sacred trust that must be passed down from one generation to the next. (Applause.) And that is why not a dollar of the Medicare trust fund will be used to pay for this plan. (Applause.)
The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies -- subsidies that do everything to pad their profits but don't improve the care of seniors. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead. (Applause.)
Now, these steps will ensure that you -- America's seniors -- get the benefits you've been promised. They will ensure that Medicare is there for future generations. And we can use some of the savings to fill the gap in coverage that forces too many seniors to pay thousands of dollars a year out of their own pockets for prescription drugs. (Applause.) That's what this plan will do for you. So don't pay attention to those scary stories about how your benefits will be cut, especially since some of the same folks who are spreading these tall tales have fought against Medicare in the past and just this year supported a budget that would essentially have turned Medicare into a privatized voucher program. That will not happen on my watch. I will protect Medicare. (Applause.)
Now, because Medicare is such a big part of the health care system, making the program more efficient can help usher in changes in the way we deliver health care that can reduce costs for everybody. We have long known that some places -- like the Intermountain Healthcare in Utah or the Geisinger Health System in rural Pennsylvania -- offer high-quality care at costs below average. So the commission can help encourage the adoption of these common-sense best practices by doctors and medical professionals throughout the system -- everything from reducing hospital infection rates to encouraging better coordination between teams of doctors.
Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan. (Applause.) Now, much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers. And this reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money -- an idea which has the support of Democratic and Republican experts. And according to these same experts, this modest change could help hold down the cost of health care for all of us in the long run.
Now, finally, many in this chamber -- particularly on the Republican side of the aisle -- have long insisted that reforming our medical malpractice laws can help bring down the cost of health care. (Applause.) Now -- there you go. There you go. Now, I don't believe malpractice reform is a silver bullet, but I've talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs. (Applause.) So I'm proposing that we move forward on a range of ideas about how to put patient safety first and let doctors focus on practicing medicine. (Applause.) I know that the Bush administration considered authorizing demonstration projects in individual states to test these ideas. I think it's a good idea, and I'm directing my Secretary of Health and Human Services to move forward on this initiative today. (Applause.)
Now, add it all up, and the plan I'm proposing will cost around $900 billion over 10 years -- less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration. (Applause.) Now, most of these costs will be paid for with money already being spent -- but spent badly -- in the existing health care system. The plan will not add to our deficit. The middle class will realize greater security, not higher taxes. And if we are able to slow the growth of health care costs by just one-tenth of 1 percent each year -- one-tenth of 1 percent -- it will actually reduce the deficit by $4 trillion over the long term.
Now, this is the plan I'm proposing. It's a plan that incorporates ideas from many of the people in this room tonight -- Democrats and Republicans. And I will continue to seek common ground in the weeks ahead. If you come to me with a serious set of proposals, I will be there to listen. My door is always open.
But know this: I will not waste time with those who have made the calculation that it's better politics to kill this plan than to improve it. (Applause.) I won't stand by while the special interests use the same old tactics to keep things exactly the way they are. If you misrepresent what's in this plan, we will call you out. (Applause.) And I will not -- and I will not accept the status quo as a solution. Not this time. Not now.
Everyone in this room knows what will happen if we do nothing. Our deficit will grow. More families will go bankrupt. More businesses will close. More Americans will lose their coverage when they are sick and need it the most. And more will die as a result. We know these things to be true.
That is why we cannot fail. Because there are too many Americans counting on us to succeed -- the ones who suffer silently, and the ones who shared their stories with us at town halls, in e-mails, and in letters.
I received one of those letters a few days ago. It was from our beloved friend and colleague, Ted Kennedy. He had written it back in May, shortly after he was told that his illness was terminal. He asked that it be delivered upon his death.
In it, he spoke about what a happy time his last months were, thanks to the love and support of family and friends, his wife, Vicki, his amazing children, who are all here tonight. And he expressed confidence that this would be the year that health care reform -- "that great unfinished business of our society," he called it -- would finally pass. He repeated the truth that health care is decisive for our future prosperity, but he also reminded me that "it concerns more than material things." "What we face," he wrote, "is above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country."
I've thought about that phrase quite a bit in recent days -- the character of our country. One of the unique and wonderful things about America has always been our self-reliance, our rugged individualism, our fierce defense of freedom and our healthy skepticism of government. And figuring out the appropriate size and role of government has always been a source of rigorous and, yes, sometimes angry debate. That's our history.
For some of Ted Kennedy's critics, his brand of liberalism represented an affront to American liberty. In their minds, his passion for universal health care was nothing more than a passion for big government.
But those of us who knew Teddy and worked with him here -- people of both parties -- know that what drove him was something more. His friend Orrin Hatch -- he knows that. They worked together to provide children with health insurance. His friend John McCain knows that. They worked together on a Patient's Bill of Rights. His friend Chuck Grassley knows that. They worked together to provide health care to children with disabilities.
On issues like these, Ted Kennedy's passion was born not of some rigid ideology, but of his own experience. It was the experience of having two children stricken with cancer. He never forgot the sheer terror and helplessness that any parent feels when a child is badly sick. And he was able to imagine what it must be like for those without insurance, what it would be like to have to say to a wife or a child or an aging parent, there is something that could make you better, but I just can't afford it.
That large-heartedness -- that concern and regard for the plight of others -- is not a partisan feeling. It's not a Republican or a Democratic feeling. It, too, is part of the American character -- our ability to stand in other people's shoes; a recognition that we are all in this together, and when fortune turns against one of us, others are there to lend a helping hand; a belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise.
This has always been the history of our progress. In 1935, when over half of our seniors could not support themselves and millions had seen their savings wiped away, there were those who argued that Social Security would lead to socialism, but the men and women of Congress stood fast, and we are all the better for it. In 1965, when some argued that Medicare represented a government takeover of health care, members of Congress -- Democrats and Republicans -- did not back down. They joined together so that all of us could enter our golden years with some basic peace of mind.
You see, our predecessors understood that government could not, and should not, solve every problem. They understood that there are instances when the gains in security from government action are not worth the added constraints on our freedom. But they also understood that the danger of too much government is matched by the perils of too little; that without the leavening hand of wise policy, markets can crash, monopolies can stifle competition, the vulnerable can be exploited. And they knew that when any government measure, no matter how carefully crafted or beneficial, is subject to scorn; when any efforts to help people in need are attacked as un-American; when facts and reason are thrown overboard and only timidity passes for wisdom, and we can no longer even engage in a civil conversation with each other over the things that truly matter -- that at that point we don't merely lose our capacity to solve big challenges. We lose something essential about ourselves.
That was true then. It remains true today. I understand how difficult this health care debate has been. I know that many in this country are deeply skeptical that government is looking out for them. I understand that the politically safe move would be to kick the can further down the road -- to defer reform one more year, or one more election, or one more term.
But that is not what the moment calls for. That's not what we came here to do. We did not come to fear the future. We came here to shape it. I still believe we can act even when it's hard. (Applause.) I still believe -- I still believe that we can act when it's hard. I still believe we can replace acrimony with civility, and gridlock with progress. I still believe we can do great things, and that here and now we will meet history's test.
Because that's who we are. That is our calling. That is our character. Thank you, God bless you, and may God bless the United States of America. (Applause.)
END 9:03 P.M. EDT
Wednesday, September 9, 2009
The Organic Food Nutrition Wars
The Organic Food Nutrition Wars. By Joseph D. Rosen, Ph.D.
ACSH, Sep 08, 2009
A few weeks ago, the world of organic food proponents was rocked by new research that organic food was not any more nutritious than conventionally-grown food. Consumers have long been interested in knowing if the extra money they have been shelling out for organic food is justified and the subject, therefore, is of much interest.
A Little Bit of Background
Food nutrients include minerals (trace elements), vitamins and antioxidants. Up until about ten years ago, people interested in nutritional differences between organic and conventional food concentrated on nutrients such as minerals and vitamins. Nitrates were not thought of as a nutrient but were included in many studies. In recent years, emphasis has shifted to differences in antioxidant content.
Dating back to 1924, numerous studies dealing with the nutritive advantages, or lack thereof, of organic food have been published. These studies were reviewed by Katrin Woese and her colleagues in 1997 (Journal of the Science of Food and Agriculture Volume 74, pp. 281-293), Virginia Worthington in 2001 (Journal of Alternative and Complementary Medicine, Volume 7, pp. 161-173), Diane Bourn and John Prescott in 2002 (Critical Reviews in Food science and Nutrition, Volume 42, pp. 1-34) and Faidon Magkos and co-authors in 2003 (International Journal of Food Sciences and Nutrition, Volume 34, pp. 357-371). Except for higher nitrate content and lower vitamin C content in some conventionally-grown vegetables, Woese et al. concluded (after examining about 150 publications) that “with regard to all other desirable nutritional values...no major differences were observed” between organically- and conventionally-grown vegetables. Worthington’s review of forty-one publications noted increased vitamin C, magnesium, iron and phosphorus as well as lower nitrate content in organic vegetables. She found no differences between organic and conventional vegetables for any other minerals or vitamins.
Bourn and Prescott looked at forty-nine publications and found that “with the possible exception of nitrate content, there is no strong evidence that organic and conventional foods differ in concentrations of various nutrients.” (They also reported that organic food did not taste any better than conventional food in blind taste tests.) The Magkos review concluded that “a balanced diet rich in fruits and vegetables, and adequate in foods from the other groups, is unequivocally able to maintain and improve health, regardless of its organic or conventional origin.” A recent article in the Journal of the Science of Food and Agriculture concluded organic food did not contain any more trace elements than conventional food.
In recent years, the emphasis has shifted to antioxidants. It is widely believed that antioxidant chemicals may be important in the control of free radicals, chemical species that we produce as part of normal metabolic processes, which may be responsible for the initiation of certain cancers as well as contributing to hardening of the arteries. There are several types of antioxidants found in food: beta-carotene, lycopene, vitamin C; phenolic acids such as caffeic acid and flavonoids such as quercetin. Phenolic acids and flavonoids are many times measured together and the results are referred to as total phenols.
The Soil Association
The Soil Association is a British charity (roughly the same as a not for profit organization in the US) dedicated to the growth of the organic food industry. According to the latest available figures, the association derives its annual income, about $31M, from grants, certification of organic farms, membership dues, sales of agricultural reports and donations. More than one-third of its income is derived from certifying organic farms.
The association was founded in 1946 by Lady Eve Balfour who had become a convert to organic farming. She started a thirty-year experiment at her farm at Haughey in order to prove the nutritional superiority of organic food. Experimental results, however, failed to provide any evidence for this hypothesis. In spite of that setback, the association has, over the years, claimed that organic food is nutritionally superior to conventional food.
The current policy director of the association is Lord Peter Melchett . He is the owner of an 890-acre organic farm in the UK and served as Executive Director of Greenpeace UK between 1989 and 2000. He is the grandson of the founder of Imperial Chemicals Industry and the son of the founder of the British Steel Corporation. In 1999, Lord Melchett was arrested for trespassing and destroying crops on a farm where genetically modified crops were being experimentally grown. He beat the rap by convincing the jurors he feared that pollen from the GM crops would “contaminate” the crops on his own farm.
A Great Day for Lord Melchett
October 30, 2007 was a great day for Lord Melchett. For the past few days, the major London newspapers had carried stories about new discoveries proving the nutritional superiority of organic food. These results had been announced by Dr. Carlo Leifert, Professor of Ecological Agriculture at the University of Newcastle and the head of the Tesco Centre for Organic Agriculture which he set up in 2001 with an $870,000 investment from Tesco, the largest seller of organic food in the UK. Dr. Leifert also headed the Quality Low Input Food (QLIF) Project, a four-year, $25M project funded by the European Union that “aims to improve quality, ensure safety and reduce cost along the organic and low input food supply chains through research, dissemination and training activities.” The project included scientists from thirty-three research institutions, companies and universities throughout Europe
According to information supplied by Dr. Leifert, organic fruits and vegetables were grown alongside conventional produce on a 725-acre experimental farm near Newcastle University, and their nutritional qualities were compared. Professor Leifert said that the organic produce contained “up to 40% more beneficial compounds in vegetable crops and up to 90% more in milk.” High levels of minerals such as iron and zinc were also found in organic produce.
In addition, Leifert said that moving to organic food was like “eating an extra portion of fruit and vegetables every day” and implied that conventional produce was responsible for obesity and heart disease. He told the BBC that the study, whose results were “due to be published over the next twelve months,” showed “more of certain nutritionally desirable compounds and less of the baddies in organic foods,” but “the study showed some variations,” the nature of which he did not explain.The UK media were ecstatic. “Eat your words, all who scoff at organic food,” headlined The Times; “Organic food is healthier and safer, four-year EU investigation shows,” wrote The Independent; “Organic produce ‘better for you,’” said the BBC. The Telegraph chimed in with “Organic food better than ordinary produce,” while The Guardian used the more subdued headline “Organic food is healthier: study.” None of the media reporters asked Leifert for independent proof of these findings, which he claimed would be published within the next twelve months (i.e., by November 1, 2008).
The fact that Leifert had no data to back up his claims did not appear to bother the media reporters, who were much more interested in the running battle between the UK government and the Soil Association, intimating that the government would soon have to recognize that it was wrong. In an opinion piece that appeared in the The Guardian on October 30, Melchett chided the FSA and its chief scientist, Andrew Wadge to admit that organic food was better.
By this time, the FSA had commissioned an independent group of scientists to study and evaluate the relevant literature dealing with nutritional differences, a. study that was vitally needed to confirm or to counter assertions by the Soil Association and the media that organic food was nutritionally superior to conventional food.
A Press Release from the Soil Association -- October 30, 2007
Also on that day, the Soil Association weighed in with a demand that the FSA “publicly acknowledge the nutritional benefits of organic food,” a demand that was based on five points that essentially summarized the Soil Association’s case:
1-a 2001 report written by an “independent nutritionist” who “reviewed over 400 scientific papers” and found “indicative evidence” for higher levels of “vitamin C, minerals and trace elements”
2-three presentations by French and Polish scientists at a QLIF Symposium held at the University of Hohenheim in Germany March 20-23, 2007 (according to the UK press, higher concentrations of antioxidants were found in organic peaches, tomatoes and apples)
3-a peer-reviewed article written by University of California scientists suggesting that organic kiwis had more vitamin C and antioxidants than conventional kiwis
4-research at several UK farms that found higher levels of “beneficial” vitamins, antioxidants and omega-3 fatty acids in the milk of cows that were raised on grass and clover
5-the results from the QLIF study announced by Dr. Leifert just a day or two earlier that were going to be published in peer-reviewed journals during the next twelve months.
A Closer Look at the Soil Association October 30, 2007 Press Release
1. The 2001 Report
In 2000, Sir John Krebs, at that time Head of the UK Food Standards Agency (the FSA was set up to ensure food safety and to protect consumer interest) said that there was not enough scientific information available to be able to say that organic food is nutritionally different from non-organic food. In order to counter the damage done by the FSA pronouncement, the Soil Association commissioned a report titled “Organic Farming, Food Quality, and Human Health: a review of the Evidence.” The author, Shane Heaton, was described as a nutritionist, but there is no record of his ever graduating with a degree in nutrition or any other scientific discipline, for that matter.
An August 6th press release (no longer available on the Internet) accompanied the report and claimed that “over 400 published papers” were examined and that “on average” organic crops “are not only higher in vitamin C and essential minerals,” but also higher in chemicals that “are often beneficial in the treatment of cancer.” A second press release claimed that “alternative cancer therapies have achieved good results relying on the exclusive consumption of organic food.” One would think that the report would spend more than 105 words discussing a subject of such import. The major UK newspapers treated the report favorably, using only the Soil Association August 6th press release for information.
Had the reporters read the actual report instead of relying on the Soil Association for analysis of its own publication, they would have found that of the over 400 published papers only ninety-nine compared organic to conventional food and seventy of these were rejected by the author because they did not fit his self-imposed criteria for valid comparisons or for proper organic certification. Of the twenty-nine remaining studies, only sixteen had been published in peer-reviewed journals. Five publications dealing with antioxidant differences were found, but only two of them were published in scientific journals and the reported differences were not statistically significant.
Note: Pre-publication peer review is extremely important in science because it allows other scientists to examine the research methodology that was used and to determine if the manuscript’s conclusions are warranted based on the data submitted. Responsible scientists do not pay attention to published information that has not gone through the peer-review process. In addition, results must show statistical significance to be considered as meaningful.
So what had been touted as a thorough review of the literature turned out to be a review of only sixteen articles. And even in these precious few studies, the results were inconsistent. Combining all reports that fit the author’s criteria for consideration revealed that organic produce had higher levels of minerals in only seven out of fourteen studies and higher levels of vitamin C in only seven out of thirteen studies, hardly a reason to rush out to the store for over-priced organic food.
2. Reports from the QLIF Symposium
On March 28, 2007, The Daily Mail (“Proof at last that organic apples can be better for you”) said that studies in several countries had shown organic tomatoes, apples and peaches contained greater concentrations of nutrients “said to protect the body against heart attacks and cancer-causing chemicals.”
Later that week, The Independent (“It’s not just a fad -- organic food is better for you, say scientists”) reported new research that organically grown peaches and apples contained higher levels of chemicals that “protect against heart attacks and cancer” than conventional fruits. Both newspaper articles implied that UK government officials were wrong in not admitting how healthful organic food was, and both articles contained errors which indicated to me that neither newspaper reporter had ever attended the symposium at which these results were presented or had even spoken to the scientists who made the presentations.
Reading the summaries written by the scientists, however, provides more accurate accounts of the symposium. For example, one QLIF investigator wrote that organic peaches grown in 2004 had 46% higher total phenol content than conventional peaches, but there were “no significant differences in 2005.”
If you do a little simple algebra with the data provided by the investigators, you can calculate that conventional peaches contained 30% more total phenolics than the organic peaches in 2005. This information is available on the Internet but was not in any of the newspaper stories, Soil Association writings or the 2008 Organic Center report (which will be discussed later).
A second lecture compared organic and conventionally-grown tomatoes cultivated at different farms in Poland. But the distance (thirty-six miles) between the farms and the fact that the organic tomatoes were grown in a soil of a different type than the soil in which the conventional tomatoes were grown made meaningful interpretation of the results impossible. A graduate student involved with this research “found different levels of the nutritional compounds in every year of her studies” and “concluded that organic production methods did not guarantee a higher quality product”
A third presentation reported higher antioxidant capacity in three different varieties of varieties of organic apples, but no statistical data was given, making the data useless. Some of the data made no sense. For example, total polyphenol content, an important factor in antioxidant capacity, was not significantly higher in the organic than in the conventional apples.
More than two years have passed since these three presentations were made but none has ever been published in a peer-reviewed scientific journal.
3. Comparison Between Organic and Conventional Kiwis
The University of California investigators made two serious errors. First, the test they used measured not only antioxidants but also vitamin C. They did not subtract vitamin C content (which was 14% higher in the organic kiwis) from the antioxidant (17% higher in the organic kiwis) content, thus coming up with too high a value for organic kiwi antioxidant content. Second, antioxidant concentrations are usually higher in the peel of a fruit than in the flesh. In this experiment, the organic kiwi peels were 35% thicker than the peels from the conventional kiwis, suggesting that most, if not all, of the antioxidant increase observed in the organic kiwis were in the peel. Since kiwi peels are inedible, it would have been more meaningful to measure only the edible portions of the kiwi.
4. Omega-3 Fatty Acids
Research published between 2003 and 2006 reported increased (about 64-71%) amounts of an omega-3 fatty acid, alpha-linoleic acid (ALA), in the milk of cows that had grazed on red clover and grass as opposed to those cows that were fed corn and hay. Omega-3 fatty acids have gotten good press in recent years, and there is some evidence that two of these acids, eicosapentanoic acid (EPA) and docosahexaenoinoic acid (DHA), which are found in salmon and tuna fish, may be helpful in preventing cancer and heart disease. ALA is also an omega-3 fatty acid but is not the same as EPA or DHA. A publication authored by world-class epidemiologists has warned that while EPA and DHA may reduce the risk of advanced prostate cancer, ALA may increase the risk. True, ALA is converted to EPA and DHA in humans, but the conversion is very low (about 8%). The bottom line is that a huge ALA increase in cow milk is meaningless because ALA is found in very small amounts in milk to begin with and increasing that small amount by 71% will not result in any appreciable health benefit.
For example, nutritionists recommend that we eat two three-ounce portions of salmon per week. If we preferred instead to get our EPA and DHA from conventional milk, we would have to drink 185 quarts of conventional milk every week. Drinking organic milk would cut our weekly intake to 110 quarts.
But the pro-organic folks were undaunted. Sally Bagnal of the UK’s Organic Milk Suppliers Cooperative called on the FSA to “start recommending organic milk as part of a healthy diet.” Kathryn Ellis, a University of Glasgow scientist who was the lead author on one of the studies, published an open letter signed by thirteen other scientists requesting the FSA change its stance on organic milk and “recognize that there are differences that exist between organic and nonorganic milk.”
In the USA, the Whole Foods website proclaimed that the UK studies confirmed that “organic milk is a good source of omega-3”, neglecting to mention that the organic milk you would need to drink was also a good source of saturated fat and that ALA had been linked to advanced prostate cancer.
(Another article on this subject was published in 2008 in the Journal of the Science of Food and Agriculture by scientists from Newcastle University and the Danish Institute for Agricultural Science (DIAS). Large increases in contents of vitamin E (33%), beta-carotene (30%), lutein (67%), zeaxantin (45%) conjugated linoleic acid (60%), and the omega-3 fatty acid, ALA (39%) were found in milk from cows that had been raised on pasture grass and clover as compared to cows fed standard grain. Again, the UK media sprang into action. “Drinking organic milk may cut the risk of heart disease and cancer” headlined the Daily Mail. Similar reports were also published in the other major UK newspapers except for The Guardian, which apparently had caught on to the scam. An article published by the UK National Health Service explaining that it had “not been demonstrated that any type of milk protects against cancer or heart disease” was totally ignored by the media. And, as I pointed out in The Guardian, a person would have to drink between 3 and 170 quarts of organic milk every day in order to get the currently recommended quantities for these nutrients. What’s more, the consumer would have to drink milk that contained a full complement of saturated fats. There is nothing magical about the organic milk produced at the Newcastle University farm -- when you remove the artery-clogging saturated fats you also remove all the “beneficial” constituents.)
5. The QLIF Four-Year European Union Project “Results”
By the end of this August, it will have been twenty-two months since Dr. Leifert told reporters that peer-reviewed publications detailing the nutritional superiority of organic produce would be published within a year. If any of these reporters had bothered to ask just a few questions, they would have discovered, as had Dr. Todd Carroll of the Skeptik’s Dictionary, that there was no new data for produce! (Note: you will have to scroll down to the section headed by “update Nov. 2, 2007” in the Skeptik’s Dictionary for this information). About a year later, Leifert confirmed this when he told the Montreal Gazette that “the data are quite clear on livestock products,” but there was less evidence for the nutritional benefits of organic produce. “It’s not as clear a story on the cropping side,” Leifert said. And if there is still any doubt, the QLIF Workshop 1 Report of June 2008 stated, “while there is a trend for more of the nutritionally desirable secondary metabolites (i.e., antioxidants) to be found at higher levels...some compounds were unaffected and some were increased when conventional fertilization and/or crop protection schemes were applied.” In other words, when ALL the data are examined, conventional crops are just as high in beneficial nutrients, if not higher, than organic crops.
A Summary of the Soil Association’s Five Points
The five points picked by the Soil Association to advance its argument that organic food is nutritionally superior fall apart upon examination. The 2001 report turned out to be eighty-eight pages of nothing; the milk studies demonstrated that organic production methods give much higher quantities of chemicals that some consider good for us, but not high enough to make us healthier; the kiwi study had two serious flaws that made its conclusions questionable; there was a wide gulf between the Soil Association interpretations of the QLIF peach, tomato and apple studies and what the scientists actually reported; and the Leifert study was actually a classic study of media manipulation.
The Empire Strikes Back
The conclusions of the scientific review commissioned by the FSA to respond to the Soil Association attacks were made public on July 29, 2009. According to Dr. Alan Dangour, a senior lecturer in nutrition at the London School of Hygiene and Tropical Medicine, after a thorough review of all the available literature, he and his research group found “no evidence of a difference in nutrient quality between organically and conventionally produced foodstuffs.” Unlike Dr. Leifert and some of the QLIF investigators, Dr. Dangour laid out his results in a respected, peer-reviewed publication, The American Journal of Clinical Nutrition for comment and criticism.
Criticism was not long in coming. Leading the charge, of course was the Soil Association. Their major complaint was that the study “failed to include the results” of the QLIF project and the “publication, so far, of more than 100 scientific papers.”
Never mind that these publications are not concerned with nutritional differences between organic and conventional produce. Writing in The Guardian on August 1, Dr. Ben Goldacre found that almost all of these publications were “irrelevant” and the overwhelming majority of them were “unpublished conference reports.” But this had no effect whatsoever on Melchett who wrote that “The full results of the five years of EU research, presented at a conference in April, and including a positive review of nutritional differences, will be peer-reviewed and published next spring.”
The Soil Association also complained that the Dangour study failed to consider pesticides, but Dangour was asked to look only at Soil Association claims about nutritional superiority. In fact, it was the Soil Association’s unfounded claims about nutritional superiority that led to this study in the first place. Lord Melchett had the chutzpah to tell the BBC that the Dangour review “rejected almost all of the existing studies of comparisons between organic and non-organic nutritional differences,” ignoring that many of those studies were of poor scientific quality, omitted important information or found large increases of constituents that would be of no benefit to human health. Leifert, for his part, thought the “conclusions of the study were selective” -- apparently because his non-existent data was not included.
The Organic Center is Heard From
On this side of the Atlantic, the Organic Center (OC) has also been trying to convince us of the nutritional superiority of organic food. The OC is a “not for profit” organization supported mainly by the organic food industry which is now controlled by the same large food companies we were previously told were poisoning us. These relationships may be found here.
The Organic Center is an entity set up by the Organic Trade Association (OTA) for the promotion and the sale of organic food. According to the Organic Center’s website, donors of $50,000 or more include Aurora Organic Dairy, Horizon Organic, Organic Valley Cooperative, Silk Soy, Stonyfield Farm, White Wave and Whole Foods Market, the leading organic food retailer in the world. Individual donors of $50,000 and above include Walter Robb, co-president of Whole Foods; Eugene Kahn, a General Mills vice president and founder of their subsidiary, Cascadian Farm; Mark Retzloff, founder of Horizon Dairies; and Steve Demos, president of combined operations for White Wave, Horizon Organics and Dean Foods.
In a 2008 report, the OC claimed organic food was 25% more nutritious than conventional food, a finding at odds with the Dangour study. That finding is also at odds with my own evaluation of the OC’s report, in which I pointed out how they erroneously arrived at conclusions based on results from publications that had not been peer-reviewed and contained data that was not statistically significant. And, just like the Soil Association, the OC report ignored results not to their liking. A detailed version of my criticisms was published in July 2008 by the American Council on Science and Health. The OC rebuttal is here and my reply to their rebuttal is here.
The OC had several complaints about the Dangour report. One complaint was that an important nutrient quality, total antioxidant capacity, was not addressed by the British scientists. However, the OC listed only eight publications in this category in their own report. One was favorable to conventional food; five were not peer-reviewed; one contained data favorable to both organic and conventional pac choi, but the OC did not include the latter; one was the questionable kiwi study that I discussed earlier.
A second complaint was that the Dangour study found no differences in the phenolic content of the “twenty-five” matched crops that the OC had studied. But according to the OC report, they had identified only twenty-one such studies. There were no statistically significant data for thirteen of the matched crops. Of the remaining eight studies, two were not peer-reviewed; one was the kiwi study; another was a study of organic flea- beetle infested pac choi, which may have contained more phenolics but was inedible.
Dietary Nitrate Is Not Only Safe...
A third complaint was that Dangour and his group did not consider lower nitrate concentrations in organic crops, supposedly a nutritional advantage. The problem with nitrate, according to the OC is that “most scientists” (was there an election I missed?) regard nitrate “as a public health hazard because of the potential for cancer-causing chemicals to be formed in the human GI tract.”
Several months ago I called the OC’s attention to the fact that nitrate in conventional food was not as bad as they were making it out to be, but they chose to ignore my arguments. Several months later they still maintain this fiction, so I’ll try again. Perhaps some of the references I’ve added will cause them to change their minds.
There is no epidemiological evidence for a connection between nitrate in food and human cancer. Current scientific belief is that people who eat lots of fruits and vegetables (even with nitrates) have lower cancer rates than those who do not. The European Food Safety Authority has declared that “the estimated exposures to nitrate from vegetables are unlikely to result in appreciable health risks.”
Carlo Leifert, when he was still publishing results in peer-reviewed scientific journals was a key member of a team that found no epidemiological evidence for an increased risk of gastric and intestinal cancer in population groups with high nitrate intake.
...It’s Good for You!!
He and his co-workers also discovered that nitrate fueled an important mammalian resistance mechanism against infectious disease. A study published in the New England Journal of Medicine reported a statistically significant drop in systolic blood pressure after ingestion of sodium nitrate. Drinking a glass or two of beet juice substantially lowered blood pressure. Scientists writing in the Proceedings of the National Academy of Sciences reported that mice fed a high nitrate/nitrite diet were more likely to survive an induced heart attack.
Nitrate has also been shown to protect against stomach ulcers and the gastric side effects of aspirin and other non-steroidal anti-inflammatory drugs. A comprehensive review in The American Journal of Clinical Nutrition concludes that “the data on nitrate and nitrite contents of vegetables and fruit bolster the strength of existing evidence to recommend their consumption for health benefits” and that plant origin nitrates and nitrites “play essential physiologic roles supporting cardiovascular health and gastrointestinal immune function.” An on-line article published recently in _Medical Hypotheses_ suggested that ingestion of high nitrate-containing fruits and vegetables such as pomegranates, lettuce, spinach and beets might be useful in lowering obesity, diabetes, hypertension, and coronary artery disease.
If any group has reason to complain to Professor Dangour, it’s the conventional farmers who use fertilizers that deliver high nitrate doses to soil. It turns out that high dietary nitrate is not only safe, but provides a health benefit that the Dangour team was apparently unaware of.
Conclusions
Table 1 gives a concise summary of the numerical claims for the nutritional superiority of organic produce, claims that have no basis in fact. Organic food proponents have learned that they do not need to provide evidence for their assertions. All they have to do is publish any plausible evidence, keep on repeating it ad infinitum and it will be magnified by news organizations and their self-serving commercial organic and environmental allies on the Internet.
Table1. Numerical Estimates for Nutritional Superiority of Organic Produce
AUTHOR: Brandt, 2001
CLAIM: 10-50% more nutrients
COMMENT: No data, just a “guess”
AUTHOR: The Organic Center, 2005CLAIM: 30% more nutrientsCOMMENT: Only 5 studies: 2 did not meet standards for inclusion in 2008 OC report; 1 not peer-reviewed; 1 comparison invalid
AUTHOR: Leifert, 2007
CLAIM: “up to 40%” more nutrients
COMMENT: No data to support claim and it appears that there never will be
AUTHOR: The Organic Center, 2008
CLAIM: 25% more nutrients; a good part of this number depends on mistaken claim that nitrate is harmful
COMMENT: Included key publications that were not peer reviewed; many results were not statistically significant; included several invalid comparisons; ignored some unfavorable data; entire report not peer-reviewed
AUTHOR: Rosen, 2008
CLAIM: Essentially no difference
COMMENT: Not peer-reviewed either
AUTHOR: Dangour, 2009
CLAIM: No difference
COMMENT: Methods and results peer-reviewed
Organic food proponents such as the Soil Association and the Organic Center are organizations with missions to promote and sell organic food and they have done an incredible job, as borne out by the large year to year increases in organic food sales.
But in their zeal to fulfill their missions they many times stretch the truth. In my opinion, any reporters who rely on organizations such as the Soil Association or the Organic Center for information without checking the facts are complicit in defrauding their readers.
Organic food proponents do more than act as unreliable sources of information. They may actually cause harm. For example, in order to obtain the supposed nutritional benefits of organic milk, you must drink copious quantities of high-fat milk. And then there is the alarm sounded by the epidemiological study that too much ALA may increase the risk of advanced prostate cancer. Those who are so concerned with human health should stop promoting the sale of organic milk until that question is resolved.
Organic food proponents are so concerned with distinguishing their products from conventional food that they have campaigned against useful practices such as food irradiation and genetic engineering. In addition, organic food proponents cause unnecessary guilt and angst in parents who cannot afford to buy overpriced (and completely useless) organic food for their children.
In the United States, some food activists have demanded that because organic food is “more nutritious,” it should be provided to mothers and children in the government–funded WIC Program. WIC stands for “Women, Infants and Children” and its mission is to support low-income women who are at nutritional risk by providing food to supplement diets. Government funding is a zero-sum game, and if money is provided for more expensive (and unneeded) organic food there will be less food to go around. Although it is a federally-funded program, WIC is administered separately in each state. Washington State was assailed earlier this year for not giving organic food to the program participants. Their replies provide a perfect way to end this article:
1-The American Academy of Pediatrics and the American Medical Association have not supported the need for organic food.
2-The Mayo Clinic and the American Dietetic Association state that there are no benefits from organic food.
3-The US Department of Agriculture states there is no conclusion about the need for or benefit from organic food.
4-After a thorough study of WIC foods, the National Academy of Sciences, Institute of Medicine made no reference to the need for organic food.
Joseph D. Rosen, Ph.D., is Emeritus Professor of Food Toxicology at Rutgers University School of Environmental and Biological Sciences and an ACSH Advisor.
ACSH, Sep 08, 2009
A few weeks ago, the world of organic food proponents was rocked by new research that organic food was not any more nutritious than conventionally-grown food. Consumers have long been interested in knowing if the extra money they have been shelling out for organic food is justified and the subject, therefore, is of much interest.
A Little Bit of Background
Food nutrients include minerals (trace elements), vitamins and antioxidants. Up until about ten years ago, people interested in nutritional differences between organic and conventional food concentrated on nutrients such as minerals and vitamins. Nitrates were not thought of as a nutrient but were included in many studies. In recent years, emphasis has shifted to differences in antioxidant content.
Dating back to 1924, numerous studies dealing with the nutritive advantages, or lack thereof, of organic food have been published. These studies were reviewed by Katrin Woese and her colleagues in 1997 (Journal of the Science of Food and Agriculture Volume 74, pp. 281-293), Virginia Worthington in 2001 (Journal of Alternative and Complementary Medicine, Volume 7, pp. 161-173), Diane Bourn and John Prescott in 2002 (Critical Reviews in Food science and Nutrition, Volume 42, pp. 1-34) and Faidon Magkos and co-authors in 2003 (International Journal of Food Sciences and Nutrition, Volume 34, pp. 357-371). Except for higher nitrate content and lower vitamin C content in some conventionally-grown vegetables, Woese et al. concluded (after examining about 150 publications) that “with regard to all other desirable nutritional values...no major differences were observed” between organically- and conventionally-grown vegetables. Worthington’s review of forty-one publications noted increased vitamin C, magnesium, iron and phosphorus as well as lower nitrate content in organic vegetables. She found no differences between organic and conventional vegetables for any other minerals or vitamins.
Bourn and Prescott looked at forty-nine publications and found that “with the possible exception of nitrate content, there is no strong evidence that organic and conventional foods differ in concentrations of various nutrients.” (They also reported that organic food did not taste any better than conventional food in blind taste tests.) The Magkos review concluded that “a balanced diet rich in fruits and vegetables, and adequate in foods from the other groups, is unequivocally able to maintain and improve health, regardless of its organic or conventional origin.” A recent article in the Journal of the Science of Food and Agriculture concluded organic food did not contain any more trace elements than conventional food.
In recent years, the emphasis has shifted to antioxidants. It is widely believed that antioxidant chemicals may be important in the control of free radicals, chemical species that we produce as part of normal metabolic processes, which may be responsible for the initiation of certain cancers as well as contributing to hardening of the arteries. There are several types of antioxidants found in food: beta-carotene, lycopene, vitamin C; phenolic acids such as caffeic acid and flavonoids such as quercetin. Phenolic acids and flavonoids are many times measured together and the results are referred to as total phenols.
The Soil Association
The Soil Association is a British charity (roughly the same as a not for profit organization in the US) dedicated to the growth of the organic food industry. According to the latest available figures, the association derives its annual income, about $31M, from grants, certification of organic farms, membership dues, sales of agricultural reports and donations. More than one-third of its income is derived from certifying organic farms.
The association was founded in 1946 by Lady Eve Balfour who had become a convert to organic farming. She started a thirty-year experiment at her farm at Haughey in order to prove the nutritional superiority of organic food. Experimental results, however, failed to provide any evidence for this hypothesis. In spite of that setback, the association has, over the years, claimed that organic food is nutritionally superior to conventional food.
The current policy director of the association is Lord Peter Melchett . He is the owner of an 890-acre organic farm in the UK and served as Executive Director of Greenpeace UK between 1989 and 2000. He is the grandson of the founder of Imperial Chemicals Industry and the son of the founder of the British Steel Corporation. In 1999, Lord Melchett was arrested for trespassing and destroying crops on a farm where genetically modified crops were being experimentally grown. He beat the rap by convincing the jurors he feared that pollen from the GM crops would “contaminate” the crops on his own farm.
A Great Day for Lord Melchett
October 30, 2007 was a great day for Lord Melchett. For the past few days, the major London newspapers had carried stories about new discoveries proving the nutritional superiority of organic food. These results had been announced by Dr. Carlo Leifert, Professor of Ecological Agriculture at the University of Newcastle and the head of the Tesco Centre for Organic Agriculture which he set up in 2001 with an $870,000 investment from Tesco, the largest seller of organic food in the UK. Dr. Leifert also headed the Quality Low Input Food (QLIF) Project, a four-year, $25M project funded by the European Union that “aims to improve quality, ensure safety and reduce cost along the organic and low input food supply chains through research, dissemination and training activities.” The project included scientists from thirty-three research institutions, companies and universities throughout Europe
According to information supplied by Dr. Leifert, organic fruits and vegetables were grown alongside conventional produce on a 725-acre experimental farm near Newcastle University, and their nutritional qualities were compared. Professor Leifert said that the organic produce contained “up to 40% more beneficial compounds in vegetable crops and up to 90% more in milk.” High levels of minerals such as iron and zinc were also found in organic produce.
In addition, Leifert said that moving to organic food was like “eating an extra portion of fruit and vegetables every day” and implied that conventional produce was responsible for obesity and heart disease. He told the BBC that the study, whose results were “due to be published over the next twelve months,” showed “more of certain nutritionally desirable compounds and less of the baddies in organic foods,” but “the study showed some variations,” the nature of which he did not explain.The UK media were ecstatic. “Eat your words, all who scoff at organic food,” headlined The Times; “Organic food is healthier and safer, four-year EU investigation shows,” wrote The Independent; “Organic produce ‘better for you,’” said the BBC. The Telegraph chimed in with “Organic food better than ordinary produce,” while The Guardian used the more subdued headline “Organic food is healthier: study.” None of the media reporters asked Leifert for independent proof of these findings, which he claimed would be published within the next twelve months (i.e., by November 1, 2008).
The fact that Leifert had no data to back up his claims did not appear to bother the media reporters, who were much more interested in the running battle between the UK government and the Soil Association, intimating that the government would soon have to recognize that it was wrong. In an opinion piece that appeared in the The Guardian on October 30, Melchett chided the FSA and its chief scientist, Andrew Wadge to admit that organic food was better.
By this time, the FSA had commissioned an independent group of scientists to study and evaluate the relevant literature dealing with nutritional differences, a. study that was vitally needed to confirm or to counter assertions by the Soil Association and the media that organic food was nutritionally superior to conventional food.
A Press Release from the Soil Association -- October 30, 2007
Also on that day, the Soil Association weighed in with a demand that the FSA “publicly acknowledge the nutritional benefits of organic food,” a demand that was based on five points that essentially summarized the Soil Association’s case:
1-a 2001 report written by an “independent nutritionist” who “reviewed over 400 scientific papers” and found “indicative evidence” for higher levels of “vitamin C, minerals and trace elements”
2-three presentations by French and Polish scientists at a QLIF Symposium held at the University of Hohenheim in Germany March 20-23, 2007 (according to the UK press, higher concentrations of antioxidants were found in organic peaches, tomatoes and apples)
3-a peer-reviewed article written by University of California scientists suggesting that organic kiwis had more vitamin C and antioxidants than conventional kiwis
4-research at several UK farms that found higher levels of “beneficial” vitamins, antioxidants and omega-3 fatty acids in the milk of cows that were raised on grass and clover
5-the results from the QLIF study announced by Dr. Leifert just a day or two earlier that were going to be published in peer-reviewed journals during the next twelve months.
A Closer Look at the Soil Association October 30, 2007 Press Release
1. The 2001 Report
In 2000, Sir John Krebs, at that time Head of the UK Food Standards Agency (the FSA was set up to ensure food safety and to protect consumer interest) said that there was not enough scientific information available to be able to say that organic food is nutritionally different from non-organic food. In order to counter the damage done by the FSA pronouncement, the Soil Association commissioned a report titled “Organic Farming, Food Quality, and Human Health: a review of the Evidence.” The author, Shane Heaton, was described as a nutritionist, but there is no record of his ever graduating with a degree in nutrition or any other scientific discipline, for that matter.
An August 6th press release (no longer available on the Internet) accompanied the report and claimed that “over 400 published papers” were examined and that “on average” organic crops “are not only higher in vitamin C and essential minerals,” but also higher in chemicals that “are often beneficial in the treatment of cancer.” A second press release claimed that “alternative cancer therapies have achieved good results relying on the exclusive consumption of organic food.” One would think that the report would spend more than 105 words discussing a subject of such import. The major UK newspapers treated the report favorably, using only the Soil Association August 6th press release for information.
Had the reporters read the actual report instead of relying on the Soil Association for analysis of its own publication, they would have found that of the over 400 published papers only ninety-nine compared organic to conventional food and seventy of these were rejected by the author because they did not fit his self-imposed criteria for valid comparisons or for proper organic certification. Of the twenty-nine remaining studies, only sixteen had been published in peer-reviewed journals. Five publications dealing with antioxidant differences were found, but only two of them were published in scientific journals and the reported differences were not statistically significant.
Note: Pre-publication peer review is extremely important in science because it allows other scientists to examine the research methodology that was used and to determine if the manuscript’s conclusions are warranted based on the data submitted. Responsible scientists do not pay attention to published information that has not gone through the peer-review process. In addition, results must show statistical significance to be considered as meaningful.
So what had been touted as a thorough review of the literature turned out to be a review of only sixteen articles. And even in these precious few studies, the results were inconsistent. Combining all reports that fit the author’s criteria for consideration revealed that organic produce had higher levels of minerals in only seven out of fourteen studies and higher levels of vitamin C in only seven out of thirteen studies, hardly a reason to rush out to the store for over-priced organic food.
2. Reports from the QLIF Symposium
On March 28, 2007, The Daily Mail (“Proof at last that organic apples can be better for you”) said that studies in several countries had shown organic tomatoes, apples and peaches contained greater concentrations of nutrients “said to protect the body against heart attacks and cancer-causing chemicals.”
Later that week, The Independent (“It’s not just a fad -- organic food is better for you, say scientists”) reported new research that organically grown peaches and apples contained higher levels of chemicals that “protect against heart attacks and cancer” than conventional fruits. Both newspaper articles implied that UK government officials were wrong in not admitting how healthful organic food was, and both articles contained errors which indicated to me that neither newspaper reporter had ever attended the symposium at which these results were presented or had even spoken to the scientists who made the presentations.
Reading the summaries written by the scientists, however, provides more accurate accounts of the symposium. For example, one QLIF investigator wrote that organic peaches grown in 2004 had 46% higher total phenol content than conventional peaches, but there were “no significant differences in 2005.”
If you do a little simple algebra with the data provided by the investigators, you can calculate that conventional peaches contained 30% more total phenolics than the organic peaches in 2005. This information is available on the Internet but was not in any of the newspaper stories, Soil Association writings or the 2008 Organic Center report (which will be discussed later).
A second lecture compared organic and conventionally-grown tomatoes cultivated at different farms in Poland. But the distance (thirty-six miles) between the farms and the fact that the organic tomatoes were grown in a soil of a different type than the soil in which the conventional tomatoes were grown made meaningful interpretation of the results impossible. A graduate student involved with this research “found different levels of the nutritional compounds in every year of her studies” and “concluded that organic production methods did not guarantee a higher quality product”
A third presentation reported higher antioxidant capacity in three different varieties of varieties of organic apples, but no statistical data was given, making the data useless. Some of the data made no sense. For example, total polyphenol content, an important factor in antioxidant capacity, was not significantly higher in the organic than in the conventional apples.
More than two years have passed since these three presentations were made but none has ever been published in a peer-reviewed scientific journal.
3. Comparison Between Organic and Conventional Kiwis
The University of California investigators made two serious errors. First, the test they used measured not only antioxidants but also vitamin C. They did not subtract vitamin C content (which was 14% higher in the organic kiwis) from the antioxidant (17% higher in the organic kiwis) content, thus coming up with too high a value for organic kiwi antioxidant content. Second, antioxidant concentrations are usually higher in the peel of a fruit than in the flesh. In this experiment, the organic kiwi peels were 35% thicker than the peels from the conventional kiwis, suggesting that most, if not all, of the antioxidant increase observed in the organic kiwis were in the peel. Since kiwi peels are inedible, it would have been more meaningful to measure only the edible portions of the kiwi.
4. Omega-3 Fatty Acids
Research published between 2003 and 2006 reported increased (about 64-71%) amounts of an omega-3 fatty acid, alpha-linoleic acid (ALA), in the milk of cows that had grazed on red clover and grass as opposed to those cows that were fed corn and hay. Omega-3 fatty acids have gotten good press in recent years, and there is some evidence that two of these acids, eicosapentanoic acid (EPA) and docosahexaenoinoic acid (DHA), which are found in salmon and tuna fish, may be helpful in preventing cancer and heart disease. ALA is also an omega-3 fatty acid but is not the same as EPA or DHA. A publication authored by world-class epidemiologists has warned that while EPA and DHA may reduce the risk of advanced prostate cancer, ALA may increase the risk. True, ALA is converted to EPA and DHA in humans, but the conversion is very low (about 8%). The bottom line is that a huge ALA increase in cow milk is meaningless because ALA is found in very small amounts in milk to begin with and increasing that small amount by 71% will not result in any appreciable health benefit.
For example, nutritionists recommend that we eat two three-ounce portions of salmon per week. If we preferred instead to get our EPA and DHA from conventional milk, we would have to drink 185 quarts of conventional milk every week. Drinking organic milk would cut our weekly intake to 110 quarts.
But the pro-organic folks were undaunted. Sally Bagnal of the UK’s Organic Milk Suppliers Cooperative called on the FSA to “start recommending organic milk as part of a healthy diet.” Kathryn Ellis, a University of Glasgow scientist who was the lead author on one of the studies, published an open letter signed by thirteen other scientists requesting the FSA change its stance on organic milk and “recognize that there are differences that exist between organic and nonorganic milk.”
In the USA, the Whole Foods website proclaimed that the UK studies confirmed that “organic milk is a good source of omega-3”, neglecting to mention that the organic milk you would need to drink was also a good source of saturated fat and that ALA had been linked to advanced prostate cancer.
(Another article on this subject was published in 2008 in the Journal of the Science of Food and Agriculture by scientists from Newcastle University and the Danish Institute for Agricultural Science (DIAS). Large increases in contents of vitamin E (33%), beta-carotene (30%), lutein (67%), zeaxantin (45%) conjugated linoleic acid (60%), and the omega-3 fatty acid, ALA (39%) were found in milk from cows that had been raised on pasture grass and clover as compared to cows fed standard grain. Again, the UK media sprang into action. “Drinking organic milk may cut the risk of heart disease and cancer” headlined the Daily Mail. Similar reports were also published in the other major UK newspapers except for The Guardian, which apparently had caught on to the scam. An article published by the UK National Health Service explaining that it had “not been demonstrated that any type of milk protects against cancer or heart disease” was totally ignored by the media. And, as I pointed out in The Guardian, a person would have to drink between 3 and 170 quarts of organic milk every day in order to get the currently recommended quantities for these nutrients. What’s more, the consumer would have to drink milk that contained a full complement of saturated fats. There is nothing magical about the organic milk produced at the Newcastle University farm -- when you remove the artery-clogging saturated fats you also remove all the “beneficial” constituents.)
5. The QLIF Four-Year European Union Project “Results”
By the end of this August, it will have been twenty-two months since Dr. Leifert told reporters that peer-reviewed publications detailing the nutritional superiority of organic produce would be published within a year. If any of these reporters had bothered to ask just a few questions, they would have discovered, as had Dr. Todd Carroll of the Skeptik’s Dictionary, that there was no new data for produce! (Note: you will have to scroll down to the section headed by “update Nov. 2, 2007” in the Skeptik’s Dictionary for this information). About a year later, Leifert confirmed this when he told the Montreal Gazette that “the data are quite clear on livestock products,” but there was less evidence for the nutritional benefits of organic produce. “It’s not as clear a story on the cropping side,” Leifert said. And if there is still any doubt, the QLIF Workshop 1 Report of June 2008 stated, “while there is a trend for more of the nutritionally desirable secondary metabolites (i.e., antioxidants) to be found at higher levels...some compounds were unaffected and some were increased when conventional fertilization and/or crop protection schemes were applied.” In other words, when ALL the data are examined, conventional crops are just as high in beneficial nutrients, if not higher, than organic crops.
A Summary of the Soil Association’s Five Points
The five points picked by the Soil Association to advance its argument that organic food is nutritionally superior fall apart upon examination. The 2001 report turned out to be eighty-eight pages of nothing; the milk studies demonstrated that organic production methods give much higher quantities of chemicals that some consider good for us, but not high enough to make us healthier; the kiwi study had two serious flaws that made its conclusions questionable; there was a wide gulf between the Soil Association interpretations of the QLIF peach, tomato and apple studies and what the scientists actually reported; and the Leifert study was actually a classic study of media manipulation.
The Empire Strikes Back
The conclusions of the scientific review commissioned by the FSA to respond to the Soil Association attacks were made public on July 29, 2009. According to Dr. Alan Dangour, a senior lecturer in nutrition at the London School of Hygiene and Tropical Medicine, after a thorough review of all the available literature, he and his research group found “no evidence of a difference in nutrient quality between organically and conventionally produced foodstuffs.” Unlike Dr. Leifert and some of the QLIF investigators, Dr. Dangour laid out his results in a respected, peer-reviewed publication, The American Journal of Clinical Nutrition for comment and criticism.
Criticism was not long in coming. Leading the charge, of course was the Soil Association. Their major complaint was that the study “failed to include the results” of the QLIF project and the “publication, so far, of more than 100 scientific papers.”
Never mind that these publications are not concerned with nutritional differences between organic and conventional produce. Writing in The Guardian on August 1, Dr. Ben Goldacre found that almost all of these publications were “irrelevant” and the overwhelming majority of them were “unpublished conference reports.” But this had no effect whatsoever on Melchett who wrote that “The full results of the five years of EU research, presented at a conference in April, and including a positive review of nutritional differences, will be peer-reviewed and published next spring.”
The Soil Association also complained that the Dangour study failed to consider pesticides, but Dangour was asked to look only at Soil Association claims about nutritional superiority. In fact, it was the Soil Association’s unfounded claims about nutritional superiority that led to this study in the first place. Lord Melchett had the chutzpah to tell the BBC that the Dangour review “rejected almost all of the existing studies of comparisons between organic and non-organic nutritional differences,” ignoring that many of those studies were of poor scientific quality, omitted important information or found large increases of constituents that would be of no benefit to human health. Leifert, for his part, thought the “conclusions of the study were selective” -- apparently because his non-existent data was not included.
The Organic Center is Heard From
On this side of the Atlantic, the Organic Center (OC) has also been trying to convince us of the nutritional superiority of organic food. The OC is a “not for profit” organization supported mainly by the organic food industry which is now controlled by the same large food companies we were previously told were poisoning us. These relationships may be found here.
The Organic Center is an entity set up by the Organic Trade Association (OTA) for the promotion and the sale of organic food. According to the Organic Center’s website, donors of $50,000 or more include Aurora Organic Dairy, Horizon Organic, Organic Valley Cooperative, Silk Soy, Stonyfield Farm, White Wave and Whole Foods Market, the leading organic food retailer in the world. Individual donors of $50,000 and above include Walter Robb, co-president of Whole Foods; Eugene Kahn, a General Mills vice president and founder of their subsidiary, Cascadian Farm; Mark Retzloff, founder of Horizon Dairies; and Steve Demos, president of combined operations for White Wave, Horizon Organics and Dean Foods.
In a 2008 report, the OC claimed organic food was 25% more nutritious than conventional food, a finding at odds with the Dangour study. That finding is also at odds with my own evaluation of the OC’s report, in which I pointed out how they erroneously arrived at conclusions based on results from publications that had not been peer-reviewed and contained data that was not statistically significant. And, just like the Soil Association, the OC report ignored results not to their liking. A detailed version of my criticisms was published in July 2008 by the American Council on Science and Health. The OC rebuttal is here and my reply to their rebuttal is here.
The OC had several complaints about the Dangour report. One complaint was that an important nutrient quality, total antioxidant capacity, was not addressed by the British scientists. However, the OC listed only eight publications in this category in their own report. One was favorable to conventional food; five were not peer-reviewed; one contained data favorable to both organic and conventional pac choi, but the OC did not include the latter; one was the questionable kiwi study that I discussed earlier.
A second complaint was that the Dangour study found no differences in the phenolic content of the “twenty-five” matched crops that the OC had studied. But according to the OC report, they had identified only twenty-one such studies. There were no statistically significant data for thirteen of the matched crops. Of the remaining eight studies, two were not peer-reviewed; one was the kiwi study; another was a study of organic flea- beetle infested pac choi, which may have contained more phenolics but was inedible.
Dietary Nitrate Is Not Only Safe...
A third complaint was that Dangour and his group did not consider lower nitrate concentrations in organic crops, supposedly a nutritional advantage. The problem with nitrate, according to the OC is that “most scientists” (was there an election I missed?) regard nitrate “as a public health hazard because of the potential for cancer-causing chemicals to be formed in the human GI tract.”
Several months ago I called the OC’s attention to the fact that nitrate in conventional food was not as bad as they were making it out to be, but they chose to ignore my arguments. Several months later they still maintain this fiction, so I’ll try again. Perhaps some of the references I’ve added will cause them to change their minds.
There is no epidemiological evidence for a connection between nitrate in food and human cancer. Current scientific belief is that people who eat lots of fruits and vegetables (even with nitrates) have lower cancer rates than those who do not. The European Food Safety Authority has declared that “the estimated exposures to nitrate from vegetables are unlikely to result in appreciable health risks.”
Carlo Leifert, when he was still publishing results in peer-reviewed scientific journals was a key member of a team that found no epidemiological evidence for an increased risk of gastric and intestinal cancer in population groups with high nitrate intake.
...It’s Good for You!!
He and his co-workers also discovered that nitrate fueled an important mammalian resistance mechanism against infectious disease. A study published in the New England Journal of Medicine reported a statistically significant drop in systolic blood pressure after ingestion of sodium nitrate. Drinking a glass or two of beet juice substantially lowered blood pressure. Scientists writing in the Proceedings of the National Academy of Sciences reported that mice fed a high nitrate/nitrite diet were more likely to survive an induced heart attack.
Nitrate has also been shown to protect against stomach ulcers and the gastric side effects of aspirin and other non-steroidal anti-inflammatory drugs. A comprehensive review in The American Journal of Clinical Nutrition concludes that “the data on nitrate and nitrite contents of vegetables and fruit bolster the strength of existing evidence to recommend their consumption for health benefits” and that plant origin nitrates and nitrites “play essential physiologic roles supporting cardiovascular health and gastrointestinal immune function.” An on-line article published recently in _Medical Hypotheses_ suggested that ingestion of high nitrate-containing fruits and vegetables such as pomegranates, lettuce, spinach and beets might be useful in lowering obesity, diabetes, hypertension, and coronary artery disease.
If any group has reason to complain to Professor Dangour, it’s the conventional farmers who use fertilizers that deliver high nitrate doses to soil. It turns out that high dietary nitrate is not only safe, but provides a health benefit that the Dangour team was apparently unaware of.
Conclusions
Table 1 gives a concise summary of the numerical claims for the nutritional superiority of organic produce, claims that have no basis in fact. Organic food proponents have learned that they do not need to provide evidence for their assertions. All they have to do is publish any plausible evidence, keep on repeating it ad infinitum and it will be magnified by news organizations and their self-serving commercial organic and environmental allies on the Internet.
Table1. Numerical Estimates for Nutritional Superiority of Organic Produce
AUTHOR: Brandt, 2001
CLAIM: 10-50% more nutrients
COMMENT: No data, just a “guess”
AUTHOR: The Organic Center, 2005CLAIM: 30% more nutrientsCOMMENT: Only 5 studies: 2 did not meet standards for inclusion in 2008 OC report; 1 not peer-reviewed; 1 comparison invalid
AUTHOR: Leifert, 2007
CLAIM: “up to 40%” more nutrients
COMMENT: No data to support claim and it appears that there never will be
AUTHOR: The Organic Center, 2008
CLAIM: 25% more nutrients; a good part of this number depends on mistaken claim that nitrate is harmful
COMMENT: Included key publications that were not peer reviewed; many results were not statistically significant; included several invalid comparisons; ignored some unfavorable data; entire report not peer-reviewed
AUTHOR: Rosen, 2008
CLAIM: Essentially no difference
COMMENT: Not peer-reviewed either
AUTHOR: Dangour, 2009
CLAIM: No difference
COMMENT: Methods and results peer-reviewed
Organic food proponents such as the Soil Association and the Organic Center are organizations with missions to promote and sell organic food and they have done an incredible job, as borne out by the large year to year increases in organic food sales.
But in their zeal to fulfill their missions they many times stretch the truth. In my opinion, any reporters who rely on organizations such as the Soil Association or the Organic Center for information without checking the facts are complicit in defrauding their readers.
Organic food proponents do more than act as unreliable sources of information. They may actually cause harm. For example, in order to obtain the supposed nutritional benefits of organic milk, you must drink copious quantities of high-fat milk. And then there is the alarm sounded by the epidemiological study that too much ALA may increase the risk of advanced prostate cancer. Those who are so concerned with human health should stop promoting the sale of organic milk until that question is resolved.
Organic food proponents are so concerned with distinguishing their products from conventional food that they have campaigned against useful practices such as food irradiation and genetic engineering. In addition, organic food proponents cause unnecessary guilt and angst in parents who cannot afford to buy overpriced (and completely useless) organic food for their children.
In the United States, some food activists have demanded that because organic food is “more nutritious,” it should be provided to mothers and children in the government–funded WIC Program. WIC stands for “Women, Infants and Children” and its mission is to support low-income women who are at nutritional risk by providing food to supplement diets. Government funding is a zero-sum game, and if money is provided for more expensive (and unneeded) organic food there will be less food to go around. Although it is a federally-funded program, WIC is administered separately in each state. Washington State was assailed earlier this year for not giving organic food to the program participants. Their replies provide a perfect way to end this article:
1-The American Academy of Pediatrics and the American Medical Association have not supported the need for organic food.
2-The Mayo Clinic and the American Dietetic Association state that there are no benefits from organic food.
3-The US Department of Agriculture states there is no conclusion about the need for or benefit from organic food.
4-After a thorough study of WIC foods, the National Academy of Sciences, Institute of Medicine made no reference to the need for organic food.
Joseph D. Rosen, Ph.D., is Emeritus Professor of Food Toxicology at Rutgers University School of Environmental and Biological Sciences and an ACSH Advisor.
Tuesday, September 8, 2009
The Fed Can't Monitor 'Systemic Risk'
The Fed Can't Monitor 'Systemic Risk'. By PETER J. WALLISON
That's like asking a thief to police himself.
WSJ, Sep 09, 2009
Using the financial crisis as a pretext, the Obama administration is determined to enact massive financial regulatory reforms this year. But the centerpiece of its proposal—putting the Fed in charge of regulating or monitoring systemic risk—is a serious error.
The problem is the Fed itself can create systemic risk. Many scholars, for example, have argued that by keeping interest rates too low for too long the Fed created the housing bubble that gave us the current mortgage meltdown, financial crisis and recession.
Regardless of whether one believes this analysis, it is not difficult to see that a Fed focused on preventing deflation in the wake of the dot-com bubble's collapse in the early 2000s might ignore the sharp rise in housing prices that later gave us a bubble.
There is also the so-called Greenspan put. That's a term that refers to investors taking greater risks than they otherwise would because they believed the Fed would protect them by flooding the financial system with liquidity in the event of a downturn. If there really was a Greenspan put, it has now been supplanted by a "Bernanke put."
These puts may or may not be real, but there is no doubt that the Fed has the power to create incentives for greater risk taking. In other words, simply by doing its job to stabilize the economy, the Fed can create the risk-taking mindset that many blame for the current crisis.
And finally, there are those—including some at the Fed itself—who argue that the Fed does not have, and will never have, sufficient information to recognize a real bubble. As a result, the Fed is just as likely to stifle economic growth as it is to sit idly by while a serious asset bubble develops.
All of this means just one thing: If we are to have a mechanism to prevent systemic risk it should be independent of the Fed. That is probably one reason why creating a systemic-risk council made up of all of the federal government's financial regulatory agencies, including the Fed, has the support of Senate Banking Committee Chairman Christ Dodd (D., Conn.) and others on the committee.
The current administration isn't the only one that has been willing to hand too much power to the Fed. The idea that the Fed should have some responsibility to detect systemic risk originated with the Bush Treasury Department's "Blueprint for a Modern Financial Regulatory Structure," issued in March 2008. In that plan, the regulation of bank holding companies would be transferred from the Fed to the comptroller of the currency and the Federal Deposit Insurance Corporation. The Fed would be charged with detecting the development of systemic risk in the economy.
The idea was that the Fed's authority would be pared back in those areas where it is actually supervising specific financial institutions but expanded where its responsibilities dealt with the economy as a whole. This is a plausible idea. There is every reason to remove from the Fed's plate the supervision of specific financial institutions as well as the regulation of businesses such as mortgage brokers. As a matter of government organization, it makes a tidy package for the Fed to handle issues that affect the economy as a whole.
But piling yet more responsibilities on the Fed raises the question of whether we are serious about discovering incipient systemic risk. If we are, then an agency outside of the Fed should be tasked with that responsibility. Tasking the Fed with that responsibility would bury it among many other inconsistent roles and give the agency incentives to ignore warning signals that an independent body would be likely to spot.
Unlike balancing its current competing assignments—price stability and promoting full employment—detecting systemic risk would require the Fed to see the subtle flaws in its own policies. Errors that are small at first could grow into major problems. It is simply too much to expect any human institution to step outside of itself and see the error of its ways when it can plausibly ignore those errors in the short run. If we are going to have a systemic-risk monitor, it should be an independent council of regulators.
It is one thing to set a thief to catch a thief—as President Franklin Delano Roosevelt is said to have done when he put Joe Kennedy in charge of the newly created Securities and Exchange Commission in the 1930s. But to set a thief to catch himself is quite a different matter.
Mr. Wallison is a senior fellow at the American Enterprise Institute.
That's like asking a thief to police himself.
WSJ, Sep 09, 2009
Using the financial crisis as a pretext, the Obama administration is determined to enact massive financial regulatory reforms this year. But the centerpiece of its proposal—putting the Fed in charge of regulating or monitoring systemic risk—is a serious error.
The problem is the Fed itself can create systemic risk. Many scholars, for example, have argued that by keeping interest rates too low for too long the Fed created the housing bubble that gave us the current mortgage meltdown, financial crisis and recession.
Regardless of whether one believes this analysis, it is not difficult to see that a Fed focused on preventing deflation in the wake of the dot-com bubble's collapse in the early 2000s might ignore the sharp rise in housing prices that later gave us a bubble.
There is also the so-called Greenspan put. That's a term that refers to investors taking greater risks than they otherwise would because they believed the Fed would protect them by flooding the financial system with liquidity in the event of a downturn. If there really was a Greenspan put, it has now been supplanted by a "Bernanke put."
These puts may or may not be real, but there is no doubt that the Fed has the power to create incentives for greater risk taking. In other words, simply by doing its job to stabilize the economy, the Fed can create the risk-taking mindset that many blame for the current crisis.
And finally, there are those—including some at the Fed itself—who argue that the Fed does not have, and will never have, sufficient information to recognize a real bubble. As a result, the Fed is just as likely to stifle economic growth as it is to sit idly by while a serious asset bubble develops.
All of this means just one thing: If we are to have a mechanism to prevent systemic risk it should be independent of the Fed. That is probably one reason why creating a systemic-risk council made up of all of the federal government's financial regulatory agencies, including the Fed, has the support of Senate Banking Committee Chairman Christ Dodd (D., Conn.) and others on the committee.
The current administration isn't the only one that has been willing to hand too much power to the Fed. The idea that the Fed should have some responsibility to detect systemic risk originated with the Bush Treasury Department's "Blueprint for a Modern Financial Regulatory Structure," issued in March 2008. In that plan, the regulation of bank holding companies would be transferred from the Fed to the comptroller of the currency and the Federal Deposit Insurance Corporation. The Fed would be charged with detecting the development of systemic risk in the economy.
The idea was that the Fed's authority would be pared back in those areas where it is actually supervising specific financial institutions but expanded where its responsibilities dealt with the economy as a whole. This is a plausible idea. There is every reason to remove from the Fed's plate the supervision of specific financial institutions as well as the regulation of businesses such as mortgage brokers. As a matter of government organization, it makes a tidy package for the Fed to handle issues that affect the economy as a whole.
But piling yet more responsibilities on the Fed raises the question of whether we are serious about discovering incipient systemic risk. If we are, then an agency outside of the Fed should be tasked with that responsibility. Tasking the Fed with that responsibility would bury it among many other inconsistent roles and give the agency incentives to ignore warning signals that an independent body would be likely to spot.
Unlike balancing its current competing assignments—price stability and promoting full employment—detecting systemic risk would require the Fed to see the subtle flaws in its own policies. Errors that are small at first could grow into major problems. It is simply too much to expect any human institution to step outside of itself and see the error of its ways when it can plausibly ignore those errors in the short run. If we are going to have a systemic-risk monitor, it should be an independent council of regulators.
It is one thing to set a thief to catch a thief—as President Franklin Delano Roosevelt is said to have done when he put Joe Kennedy in charge of the newly created Securities and Exchange Commission in the 1930s. But to set a thief to catch himself is quite a different matter.
Mr. Wallison is a senior fellow at the American Enterprise Institute.
Beijing Plays Hedge Ball - A contract should be a contract
Beijing Plays Hedge Ball. WSJ Editorial
A contract should be a contract.
WSJ, Sep 09, 2009
Beijing needs to clarify whether a contract is a contract, and fast. Recent suggestions that the government might allow or even encourage companies to challenge derivatives contracts that went against them send a bad signal to foreign companies and countries doing business with China.
The controversy stems from commodities hedges gone wrong. When fuel prices were high, airlines like China Eastern, Air China and Shanghai Airlines and shippers like China Ocean Shipping crafted derivatives contracts with foreign banks to protect the companies from even higher fuel prices. Instead the price of oil has fallen, leaving the companies on the hook for the downside risk of their hedge—a total of about $2 billion for the airlines alone, by some counts.
The companies are crying foul, and several reportedly sent a letter to the banks that sold them the derivatives suggesting they may be "void, invalid or unenforceable." Worse, the government is getting into the act. The state-owned Assets Supervision and Administration Commission, which oversees these companies, on Monday posted a statement on its Web site suggesting that Beijing might countenance efforts to sue to nullify the contracts.
China has been down this road before, pushing foreign counterparties several times over the past decade to back down from derivatives contracts that had turned against a Chinese company. In those cases, the companies or the government variously argued that the firms had been illegally speculating or had not understood the risks they were taking—or even that the people signing the papers on behalf of the Chinese companies hadn't been authorized to do so. It's hard to see how such arguments could apply to the kind of bread-and-butter fuel hedging at issue here.
Policy makers might think the government holds a lot of cards in this case, and in some respects it does. While the derivatives contracts would be tough to wriggle out of legally since they're enforceable through courts in Hong Kong, Singapore or Britain, it would be hard for the banks to collect on any judgment unless they're willing to seize planes at Heathrow or Changi airports.
The banks would have strong incentives not to try, too. Regulators in Beijing decide whether the foreign banks receive various business licenses, for instance, and state-owned enterprises constitute some of the biggest bank clients. Especially since the goal could only be to renegotiate the contracts instead of canceling them, policy makers and executives might think the banks will be willing to pay that price to continue doing business in China.
But this kind of bullying is not free. Most immediately, hedging is a risk-management tool that many Chinese companies can't afford to live without. It works on trust between counterparties that each side will hold up its end of the bargain. Already banks reportedly are demanding higher collateral for derivatives contracts like those at issue here to compensate for the loss of trust. That's an added cost of doing business not faced by other airlines that take their lumps when hedges go wrong. like Hong Kong's Cathay Pacific or America's United.
This incident will leave foreign investors wondering where China stands on its road to commercial rule of law. Following the arrests of Rio Tinto executives in a dispute over ore prices, foreign businesses already have to wonder about their physical safety if they run afoul of Chinese companies in contract negotiations. Now it appears foreign companies can be in financial danger simply for ending up on the "wrong" side of a standard off-the-shelf derivatives transaction.
Beijing officials may not realize the potential effects of this controversy on Chinese companies investing abroad. Chinese mergers and acquisitions in countries like America or Australia have been controversial in large part because politicians in those countries have worried about a lack of transparency within Chinese companies, and whether those companies would play by the rules once they hit foreign shores. Politicians already predisposed to oppose Chinese investment—and perhaps some who'd otherwise support allowing such investments—will hardly take comfort from a sign that Chinese companies won't play by the rules if it doesn't suit them. If Beijing is actively trying to dissuade foreign investment, it's on the right track.
Beijing might be responding to a political storm over the notion Chinese companies have been exploited by Western banks (one wag has called derivatives "financial opium," a charged phrase in China). Or it could be trying to bail out a few companies that made bad fuel-price bets. Or some other political motivation could be at work. Whatever the cause, though, Beijing's only smart way forward is to state clearly that a contract is a contract and that Chinese companies must abide by theirs.
A contract should be a contract.
WSJ, Sep 09, 2009
Beijing needs to clarify whether a contract is a contract, and fast. Recent suggestions that the government might allow or even encourage companies to challenge derivatives contracts that went against them send a bad signal to foreign companies and countries doing business with China.
The controversy stems from commodities hedges gone wrong. When fuel prices were high, airlines like China Eastern, Air China and Shanghai Airlines and shippers like China Ocean Shipping crafted derivatives contracts with foreign banks to protect the companies from even higher fuel prices. Instead the price of oil has fallen, leaving the companies on the hook for the downside risk of their hedge—a total of about $2 billion for the airlines alone, by some counts.
The companies are crying foul, and several reportedly sent a letter to the banks that sold them the derivatives suggesting they may be "void, invalid or unenforceable." Worse, the government is getting into the act. The state-owned Assets Supervision and Administration Commission, which oversees these companies, on Monday posted a statement on its Web site suggesting that Beijing might countenance efforts to sue to nullify the contracts.
China has been down this road before, pushing foreign counterparties several times over the past decade to back down from derivatives contracts that had turned against a Chinese company. In those cases, the companies or the government variously argued that the firms had been illegally speculating or had not understood the risks they were taking—or even that the people signing the papers on behalf of the Chinese companies hadn't been authorized to do so. It's hard to see how such arguments could apply to the kind of bread-and-butter fuel hedging at issue here.
Policy makers might think the government holds a lot of cards in this case, and in some respects it does. While the derivatives contracts would be tough to wriggle out of legally since they're enforceable through courts in Hong Kong, Singapore or Britain, it would be hard for the banks to collect on any judgment unless they're willing to seize planes at Heathrow or Changi airports.
The banks would have strong incentives not to try, too. Regulators in Beijing decide whether the foreign banks receive various business licenses, for instance, and state-owned enterprises constitute some of the biggest bank clients. Especially since the goal could only be to renegotiate the contracts instead of canceling them, policy makers and executives might think the banks will be willing to pay that price to continue doing business in China.
But this kind of bullying is not free. Most immediately, hedging is a risk-management tool that many Chinese companies can't afford to live without. It works on trust between counterparties that each side will hold up its end of the bargain. Already banks reportedly are demanding higher collateral for derivatives contracts like those at issue here to compensate for the loss of trust. That's an added cost of doing business not faced by other airlines that take their lumps when hedges go wrong. like Hong Kong's Cathay Pacific or America's United.
This incident will leave foreign investors wondering where China stands on its road to commercial rule of law. Following the arrests of Rio Tinto executives in a dispute over ore prices, foreign businesses already have to wonder about their physical safety if they run afoul of Chinese companies in contract negotiations. Now it appears foreign companies can be in financial danger simply for ending up on the "wrong" side of a standard off-the-shelf derivatives transaction.
Beijing officials may not realize the potential effects of this controversy on Chinese companies investing abroad. Chinese mergers and acquisitions in countries like America or Australia have been controversial in large part because politicians in those countries have worried about a lack of transparency within Chinese companies, and whether those companies would play by the rules once they hit foreign shores. Politicians already predisposed to oppose Chinese investment—and perhaps some who'd otherwise support allowing such investments—will hardly take comfort from a sign that Chinese companies won't play by the rules if it doesn't suit them. If Beijing is actively trying to dissuade foreign investment, it's on the right track.
Beijing might be responding to a political storm over the notion Chinese companies have been exploited by Western banks (one wag has called derivatives "financial opium," a charged phrase in China). Or it could be trying to bail out a few companies that made bad fuel-price bets. Or some other political motivation could be at work. Whatever the cause, though, Beijing's only smart way forward is to state clearly that a contract is a contract and that Chinese companies must abide by theirs.
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