The new prostate-cancer vaccine Provenge (manufacturer: Dendreon) appears to extend life by an average of four months at the relatively high cost of $93,000 per patient. This week, Medicare bureaucrats will conduct a national coverage analysis before deciding whether Medicare will cover the vaccine. This “unusual” step has sparked charges that government bureaucrats are rationing medical care to save money.

Today’s Washington Post includes letters from two cancer survivors that neatly illustrate why the government should not be in the business of providing health insurance or purchasing medical care at all. Cancer Survivor #1 argues that Medicare should cover Provenge:

“Expensive” treatments have given me many extra years with my family. I witnessed my older daughters graduate from high school, start college and celebrate events doctors told me I would never see…Time is precious, life is priceless and every breath is a gift.

Cancer Survivor #2 says no way:

As a 63-year-old cancer survivor, would I forgo just four more months of life if it would cost $93,000? Yes, in a heartbeat…Let’s quit trying to live forever and put those millions of dollars into educating the next generation.

If the government stayed out of health care, or just subsidized Medicare enrollees with a voucher, then both cancer survivors would get their wish. Cancer Survivor #1 could purchase coverage for expensive cancer treatments. Cancer Survivor #2, and millions like her, could buy lower-cost insurance and donate the savings to scholarships.

Yet politicians and government bureaucrats dictate what type of insurance Medicare enrollees get, which means they also decide what enrollees will not get. And no matter where they draw the line, someone loses. Either Cancer Survivor #1 won’t get her expensive medical treatment, or Cancer Survivor #2 won’t be able to fund scholarships for kids.

The only way out is Medicare vouchers. In addition to being the most plausible way to reduce Medicare spending, vouchers are the only way to protect Medicare enrollees from government rationing.

The Obama fiscal commission’s draft report suggested that federal spending be reduced from 25.1% of GDP today to 22% by 2020, and lower after that. That’s a reasonable goal for a centrist kind of commission, but let’s remember that spending was just 18.2% in President Clinton’s last two fiscal years, 2000 and 2001.

For the final report, the commission’s staff might look to Clinton’s budgets for guidance. The chart shows federal spending as a share of GDP in fiscal 2001 and fiscal 2012. Fiscal 2001 was Clinton’s last year, and it was before all of President Bush and Obama’s spending increases. I choose 2012 as the end year because most of the “stimulus” spending will be finished by then, defense is supposed be down a bit as foreign troops are partly withdrawn, and the economy will have hopefully recovered. Based on President Obama’s Mid-Session Review, spending in fiscal 2012 will be 23.0% of GDP.

Total federal spending is expected to increase 4.8 percentage points of GDP between 2001 and 2012. The chart shows that increases have occurred in every part of the budget–entitlements, defense, and domestic spending. Thus, the Obama fiscal commission is on the right track to propose cuts across all areas of the budget. However, it needs to be about 4 percentage points of GDP more aggressive in downsizing the government to get us down to Clinton-level spending.

Today POLITICO Arena asks:

Would Obama be more effective if he were to limit himself to one term?

My response:

It’s possible that Obama is self-absorbed enough to believe that he could unite the nation by announcing that he intends to be a one-term president and then, as Schoen and Caddell suggest, devoting all of his energy to solving the nation’s problems. After all, his speeches abroad early last year suggested that he and many of his devotees, including members of the Nobel Peace Prize Committee, believed that he possessed similar powers over international problems.

But as both domestic and international reality has set in, as it has a way of doing, we’ve seen how it afflicts those whose grasp of it is less than sure. They long, disingenuously or not, for some mythical age of domestic comity, forgetting that the nation has ever been divided, even under George Washington, no less. Today, however, the issues that divide us are fundamental. Indeed, electoral majorities in California and New York have just reminded us of something the ancients understood, that democracy at bottom is a struggle between those who imagine the state to be their spiritual and material benefactor, including the perpetrators of that view who stand to profit from it, and those who have a more limited, arms-length understanding of the state.

As between those two camps, there’s not much in common. A wise politician will grasp that reality and pitch his tent accordingly. Thus far, Obama has grasped that, but he’s pitched his tent in the wrong camp.

The movie “Mao’s Last Dancer” is a sleeper hit, says the Los Angeles Times:

It features no big-name stars, drew mediocre reviews and traffics in the esoterica of Chinese ballet.

And yet “Mao’s Last Dancer,” the true story of a ballet performer who defected to the United States in 1981, has become one of the season’s biggest art-house hits.

Bruce Beresford’s Australian-produced film tells of Li Cunxin, an 11-year-old Chinese boy plucked from his rural village in 1972 under the reign of Mao Zedong to dance for the Beijing Ballet. While in residence at the Houston Ballet a decade later, he defected to the United States after a politically charged standoff that involved the FBI and diplomats from China and the U.S.

It’s been in theaters for three months, and I finally saw it this weekend. You can’t usually wait that long to see an indie film, but this one’s been hanging on under the radar. It’s a great story about Chinese communism, politically controlled art, and one individual who chooses freedom. In a climactic scene, the Chinese consul tells Li “the Party knows what’s best for you” and Li responds, “I know what’s best for me.” (The language is a little different in Li’s autobiography.)

The New York Times dismisses the movie as “nothing more than an old-fashioned tear-jerker,” complaining that it is

stuck in an earlier era of heavy-handed clichés about Chinese innocence and American experience. The juxtaposition of wide-eyed villagers and labored aphorisms with shopping malls and casual sex may accurately reflect Mr. Li’s book, but on screen it feels absurdly outdated.

Um, yes. The movie is set between 1972 and 1981. That was Mao’s China, even the China of the Cultural Revolution and the Gang of Four, and then the very earliest days of the liberalization under Deng Xiao-ping. Today it looks dated, as do most movies set 30 or more years in the past. Anyone who has visited China recently might not realize just how stunning the Houston skyline would have looked to Li in 1981. But I saw the Shanghai skyline seven years later, in 1988, and I know that Houston would have seemed a different world to Li at that time.

No doubt the Times reviewer also disliked the scenes in Chinese schools where students are told that China has the highest standard of living in the world, while the “capitalist and imperialist nations” live in unimaginable horror. And maybe the scene of Madame Mao visiting the Beijing ballet academy and demanding that the students perform only revolutionary ballet. But that was the reality of Maoist China.

I’ve written before about the remarkable dearth of anti-communist movies in Hollywood, especially when you consider that communism lasted far longer and killed far more people than national socialism, about which there have been many movies. Of course, this movie wasn’t produced in Hollywood; it was produced in Australia by the Australian director Bruce Beresford (“Breaker Morant,” “Tender Mercies,” “Driving Miss Daisy”). And “Mao’s Last Dancer” is as much a story of individualism and breaking out of a world that would hold you down (not unlike “Billy Elliott” or “October Sky”) as it is a political movie.

The fact that Li was allowed to visit the Houston Ballet temporarily in 1981 was a sign of the changes that were happening in China, and the country has made much more progress since then. But China is still not comfortable with this story, and the producers were forced to shoot some scenes in secret after being denied permission to film in China.

With Christmas movies coming, “Mao’s Last Dancer” won’t be in theaters much longer. See it now.

Tuesday the Senate Banking Committee meets for the second time to consider the nomination of Peter Diamond to a seat on the Federal Reserve’s Board of Governors. Since Professor Diamond was first nominated, he has been awarded the Nobel prize in economics.

Putting aside his academic qualifications, and his misguided views on Social Security, Professor Diamond is not qualified to be a Fed governor for one very simple reason: he is from a Federal Reserve district that already has representation on the Fed. Paragraph 10–1 of the Federal Reserve Act requires that:

In selecting the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district, the President shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.

Mr. Diamond’s Senate paperwork states he is from Massachusetts, which is also the case for sitting Fed governor Dan Tarullo. In fairness this provision of the law has been ignored and violated in the past. In fact, both current Fed Governors Duke and Raskin are both from the Richmond district. As Duke was there first, it would seem clear from a reading of the law and Raskin’s bio that Raskin is serving in violation of the statute. But then given the actions of the Fed over the last few years, the Fed has certainly shown that it doesn’t feel constrained by statutes.

Bloomberg reports that despite what Diamond’s paperwork says, the White House claims he’s from Chicago. Not that he’s ever lived there, but because he once gave a lecture at Northwestern. Next I suspect the White House will claim an extended lay-over at O’Hare is sufficient for residency.

For perhaps the first time in history, all the Federal Reserve governors are from coastal states. Also every single Fed governor is from a state that Obama won. Only one governor is from west of the Mississippi river. How anyone can believe the current make-up of the Board is a “fair representation” is beyond me. Perhaps this is one explanation for the currently low public opinion of the Fed; it has become more a Cambridge-Wall Street-Washington echo chamber than anything else.

Much of the media discussion of the massive tax increase that looms on January 1 uses terms like “extending the Bush tax cuts” or “tax breaks for the wealthy.” In fact, American taxpayers have faced a particular range of personal income tax rates for the past eight years. If the 2001 and 2003 tax laws are allowed to expire, then Americans will see increased tax rates on income, dividends, capital gains, and estates. So the issue is not “tax cuts” or “tax breaks,” it’s whether we should increase taxes in 2011.

It’s good to see that President Obama understands this. At a news conference at the end of the G‑20 Summit on Friday, he said:

I want to make sure that taxes don’t go up for middle class families starting on January 1st.

That’s the right way to understand it. Taxes are about to go up. Of course, the problem is that President Obama does want taxes to go up for business owners, corporate executives, and investors on January 1, the very people whose decisions have the most immediate impact on economic growth and job creation.

And that’s the issue we should be debating: Is it a good idea, especially in a time of continuing high unemployment and slow growth, to raise taxes on investors and entrepreneurs?

In Douglas County, CO, a jurisdiction with 240,000 residents south of Denver, there is strong public interest in the possible implementation of a sweeping school choice program. Here’s a blurb from the Denver Post: