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A Picture is Worth a Thousand Words

Kevin Drum — Mon, 22 Mar 2010 02:56:20 +0000

Stupak Switches

Kevin Drum — Sun, 21 Mar 2010 17:07:15 +0000

MSNBC and others are reporting that dead-end abortion holdout Bart Stupak (D–Mich.) has agreed to vote yes on healthcare reform. Apparently President Obama has agreed to issue an executive order reaffirming longstanding policy not to allow federal funds to be used to pay for abortions.

There are, however, still some dead-end lefties refusing to vote for the bill because it's not pure enough. They should take a long look at themselves in the mirror. If Stupak can come around, so can they.

But: the bottom line is that this probably cements the bill's passage. By tonight healthcare reform will be a reality.

UPDATE: Dave Dayen says I'm wrong about lefty congressmen refusing to vote for the bill. He's right. I was thinking of Stephen Lynch (because I happened to be emailing with a friend in Massachusetts last night) and Loretta Sanchez (because she represents the district I grew up in). But Lynch is anti-abortion and Sanchez is a Blue Dog, so they hardly count as hardcore lefties. I spoke in haste on this. Sorry.

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Quote of the Day: Newt Gingrich is a Moron

Kevin Drum — Sun, 21 Mar 2010 16:45:28 +0000

From the inner id of the conservative movement:

Former Republican House speaker Newt Gingrich said Obama and the Democrats will regret their decision to push for comprehensive reform. Calling the bill "the most radical social experiment . . . in modern times," Gingrich said: "They will have destroyed their party much as Lyndon Johnson shattered the Democratic Party for 40 years" with the enactment of civil rights legislation in the 1960s.

This comes via Mike Lillis, who headlines his post, "Gingrich: Civil Rights Laws Weren’t Worth the Political Price." But the problem here isn't that Gingrich is some kind of stone racist (though he's certainly racially tone deaf), it's that Gingrich is an idiot. The old Democratic Party got torn apart in the 60s when racist southern congressmen abandoned it in favor of a Republican Party that was more tolerant of their views. But who exactly does Gingrich think is going to leave the party today over healthcare? Bart Stupak? Aside from abortion, Stupak would be a pariah in the Republican Party. Ditto for virtually everyone else in the Democratic caucus. If Dems lose even two members over healthcare, I'll personally buy Gingrich a beer and let him write my blog for a day. As for the public at large, passing healthcare will make the party more popular in the fairly near future. Gingrich knows this perfectly well, which is why healthcare reform terrifies him so.

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Threading the Healthcare Needle

Kevin Drum — Sat, 20 Mar 2010 18:19:50 +0000

Ezra Klein surveys the political landscape behind healthcare reform and concludes that big business doesn't really have that much power after all:

This year, the Obama administration succeeded at neutralizing every single industry. Pharma supports the bill. Insurers are incoherent on it, but there's not a ferocious and united campaign to kill the proposal. The American Medical Association has endorsed the Senate bill. The hospitals have endorsed the bill....[But] it's been almost meaningless when it's come to Republican support. For all that liberals think the GOP is owned by insurers and pharmaceutical companies, this battle has been proof positive that they are owned by their base and they represent industry only when convenient. Imagine the concessions Pharma or the hospitals could have gotten by bringing three Republican senators onto the bill. They could've written the thing. But no such luck. Partisan incentives proved far stronger than industry interests.

Matt Yglesias takes the opposite lesson from the events of the past year:

What happened in the health care debate is that interest groups were able to get their way on most key points without needing to seriously attempt to deliver votes in exchange. The AMA is supporting the bill, but it’s not running ads against opponents. Pharmaceutical companies and insurers haven’t dropped out of the ferociously anti-reform Chamber of Commerce. No interest group that I’m aware of is cutting off the flow of funds to Chuck Grassley to punish him for his role in sabotaging health reform. Nobody is hitting Olympia Snowe for her bait-and-switch. I haven’t read a single story about a single Republican being “in trouble” with supporters for his or her opposition to reform.

I think I'd interpret this a bit differently. Obama had three basic choices when it came to dealing with the big industry groups:

1993 Redux: Push for the best possible bill and plan on a knock-down-drag-out fight with every interest group out there.
Total Cave-In: Give the interest groups everything they could dream of in an effort buy their active and enthusiastic support.
Centrist Wankerism: Buy off the big interest groups just enough to ensure that they wouldn't actively sabotage reform — at least, not sabotage it too hard, anyway — but nothing more.

Option #1 was obviously impossible. Option #2 was probably never in the cards, and in any case would have been so horrific that public revulsion would have killed it. So Obama chose Option #3. But what that means is that industry groups were pretty much indifferent. They didn't spend a lot of time and energy fighting the bill, but neither did they spend a lot of time and energy trying to persuade their favorite Republican senators to support it. This doesn't mean that industry groups have lost their influence over Republicans (or Democrats) or that their power is so awesome that they get everything they want with barely an effort.

Obviously you can question whether Obama and Senate Dems made the right deal. Could they have pushed a little harder and still kept the big industry groups neutral? Could they have given in on a few small things and earned enough support to have passed the bill months ago with a few Republican votes? Beats me. But from where I sit three thousand miles away, it looks to me like Obama played the game pretty well. There wasn't a lot of wiggle room on either side.

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Spring Has Sprung

Kevin Drum — Sat, 20 Mar 2010 17:32:00 +0000

Hooray!

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Friday Cat Blogging - 19 March 2010

Kevin Drum — Fri, 19 Mar 2010 18:55:02 +0000

I asked Inkblot to do something interesting this morning so I could take a picture of him, but he just yawned at me. And then fell back asleep. Meanwhile, Domino headed out to the backyard to snooze among the spring flowers.

Speaking of which, spring starts tomorrow. And then on Sunday, the first full day of spring, we should get ourselves a shiny new healthcare reform bill. Nice symbolism, I think.

And now I'm off to lunch, followed by another session of Windows 7 troubleshooting. The upgrade basically went OK, and I'm now working through the list of annoying things that don't work quite right. Like the color balance on my monitor and the fact that I can't get VNC to work. (This is highly detrimental to my maternal tech support duties.) Top of the list, however, is my printer. It doesn't work. Plug it in and nothing happens. Just the little USB thunk sound effect and that's it. No error message, no searching for drivers, no nothing. My computer just sits there, providing no clue about what's wrong. And yet, the USB port works fine with other devices, the printer works fine on a different computer, and I don't think there are any conflicts since everything I own worked fine together on the old computer. Very strange.

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Sprawl Revisited

Kevin Drum — Fri, 19 Mar 2010 18:45:02 +0000

Matt Yglesias responds to yesterday's post about sprawl:

It’s true that the problem of overly restrictive land-use rules is in large part a problem of voter-preference. But it’s not a problem of voter-preference for sprawl per se. It’s a general problem of homeowner eagerness to exclude outsiders.

I know it's wildly unfair to do this, but I didn't get much sleep last night and my brain isn't working. So I'll just say that I think he's wrong. Or, to be a little more precise, I think he's mostly wrong. Sure, exclusion is part of the dynamic here, but by far the bigger part of it is that lots and lots of people actively like living in non-dense developments. Seriously: they really do. It's not a trick. So they vote with their feet and move to the suburbs and then vote with their ballots to keep big-city living at bay. Given an ideal world, of course, they'd love to have a nice 3,000 square foot house with a big yard right in the middle of Manhattan, but one way or another, they want that house.

Obviously not everyone likes living this way, but an awful lot of people do. You can say they like a big house with a big yard, or you can say they like sprawl. It's pretty much the same thing.

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Weekend Festivities Roundup

Kevin Drum — Fri, 19 Mar 2010 18:29:53 +0000

Hey, have I mentioned that the House will be voting on healthcare reform this weekend? I have? Well, courtesy of Taegan Goddard, here's a summary of the gruesome details:

The House Rules Committee will likely meet on Saturday morning to draft a special rule that allows the House to pass a bill by approving the rule and not necessarily the bill itself. By all indications, this rule will be the now famous "self-executing" rule which "deems" the Senate health care bill passed upon adoption of the rule.

While Republicans on the Rules Committee may try to amend the rule, they're dramatically outnumbered by Democrats 9 to 4.

The House will likely debate the rule for about an hour and hold a vote on whether to end debate. Assuming that passes, the House holds another vote on adopting the rule. If the rule is approved with 216 votes, the House may begin debate on the reconciliation bill that makes fixes to the Senate version of the health care bill.

The House then debates the reconciliation according to guidelines set forth by the rule. Once debate is finished, the House will finally hold an up-or-down vote on the reconciliation bill. If it passes with 216 votes, the original Senate bill goes to the President for his signature.

In other words, to summarize even more, if Nancy Pelosi can round up 216 votes, it passes. If not, not. So if your congress critter is one of the fence sitters, give 'em a call. Today would be good.

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The Real Sarah Palin

Kevin Drum — Fri, 19 Mar 2010 16:46:47 +0000

Via Dave Weigel, Variety has your Sarah Palin news of the day. She's coming to basic cable!

A&E and Discovery appear to be the front-runners to land the untitled Alaska-themed series, to be produced by Mark Burnett Prods.

....As first reported by Entertainment Weekly, the Palin project will center on interesting characters, traditions and attractions in the 49th state — with the ex-VP candidate as a guide. Burnett and Palin pitched the show to all four major networks — but given the travelogue nature of the series, it ultimately made more sense for a cable network, insiders said.

...What's fueling the interest? Even though the show promises to be completely devoid of politics, Palin has a loyal following -- and even folks who detest her politics may be curious enough to tune in and see what she's up to.

Jon Stewart must be licking his chops over this. And anyone who believes Palin's show will be "completely devoid of politics" is either delusional or lying. What's the over/under on how many episodes it takes before we have one set smack in the blasted hellscape that is ANWR?

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Can Resolution Authority Work?

Kevin Drum — Fri, 19 Mar 2010 16:05:36 +0000

I've been trying to decide what I really think of Chris Dodd's financial reform bill, and so far the answer is: not much. Yesterday, for example, Mike Konczal took a look at how it handles the problem of winding up big failed banks. Basically, the bill mandates that large banks write their own "living will," with fines proposed for those who do a lousy job. Here's Mike:

Notice how this strategy would look for FDA if we were creating the FDA now: “Drug companies will be required to submit the effects of their drugs that they market from internal studies that they’ve carried out. That is all.”

There’s an obvious agency problem: if you are a large, complex company and you’ve failed, you want the regulators to be as confused, scared, and uninformed as possible so they will bail you out. It’s worked before. What’s the penalty for a failed firm that doesn’t do this well? They are already failed. If you are less cynical about the financial markets than I am, it’s still costly, time consuming and kind of a pain in the ass to collect this information well, so you will probably half-ass it.

I'd add something even more fundamental: can this work even in theory? Mike is right that banks have lots of reasons to do a self-serving job when it comes to drafting their plans, and when times are good it's unlikely that the Fed or any other regulator is going to be especially tough on them. But beyond that, is it even possible to set forth a plan in advance that would, say, unwind Citigroup cleanly and without a big government bailout? I have my doubts, and I'd sure like to hear a few skeptical experts weigh in on this. What would a real resolution plan for Citigroup look like?

In another post, I think Mike gets to the key issue: we really ought to be more concerned with detection than with resolution. Once a gigantic bank has started to spiral out of control, it's probably going to need some kind of massive government support no matter what kind of resolution plan it has in place. So what's really important is stopping that spiral before it starts. But that gets us back to things like limiting leverage, insisting on more robust capital requirements, insisting that derivatives are traded openly and only by firms with the collateral to back them up, etc. Resolution authority is something the federal government needs — regardless of whether or not it's messy — but I'd put it somewhere in the bottom half of the top ten things we should be concerned about.

I am, however, extremely persuadable on this point. So: is resolution authority more important than I think? And if so, what would it take to do it right? I'll try to follow up on this later.

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Reporting on Oil

Kevin Drum — Fri, 19 Mar 2010 06:02:03 +0000

Here's a story that shows the value of the Freedom of Information Act:

The U.S. government faces shortcomings in producing its oil-inventory data, according to internal Department of Energy documents, casting doubt on figures that affect the production and prices of the world's most important industrial commodity.

The documents, obtained through a Freedom of Information Act request, expose several errors in the Energy Information Agency's weekly oil report, including one in September that was large enough to cause a jump in oil prices, and a litany of problems with its data collection, including the use of ancient technology and out-of-date methodology, that make it nearly impossible for staff to detect errors. A weak security system also leaves the data open to being hacked or leaked, the documents show.

....On Sept. 16, the EIA released data showing almost four million barrels of oil had vanished from the Cushing storage hub in Oklahoma during a single week. The market paid particular attention because Cushing is the nation's most important commercial storage facility. Its oil is used to fill orders from buyers on the New York Mercantile Exchange. Oil futures jumped 2.2% after the report.

But out of the sizable drop at Cushing, 1.7 million barrels represented a correction made after the EIA discovered a previous error in one company's reporting, according to the emails. James Beck, who heads the team that conducts the weekly survey, confirmed the correction in an interview.

Good to know.

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Zoning and Sprawl

Kevin Drum — Thu, 18 Mar 2010 23:28:28 +0000

Matt Yglesias has been making the case recently that zoning and land use laws encourage suburban sprawl, and if we did away with them we'd have a greater number of dense, walkable neighborhoods. Cato's Randall O'Toole took exception, so Matt condensed his argument into PowerPoint form:

Throughout America there are many regulations that restrict the density of the built environment.
Were it not for these restrictions, people would build more densely.
Were the built environment more densely built, the metro areas would be less sprawling.

There's a lot I could say about this, but that's a mistake in a blog post. So I'll stick to one main point: these regulations aren't something that's been imposed by "government." They exist because people really, really, really want them.

I need to be clear here: I'm neither praising nor condemning this, just describing how things are. To get an idea of how strongly people feel about this, you really need to come live in a suburb for a while. But failing that, consider the balance of power here. Corporations would like to be able to build wherever and whatever they want. Wealthy land developers would like to be able to build wherever and whatever they want. And local governments hate single-family neighborhoods because they're a net tax loss: they cost more in services than they return in property tax remittances. And yet, even with corporations, wealthy developers, and local governments all on one side, suburban zoning is ubiquitous. This is a triumvirate that, under normal circumstances, could get practically anything they wanted, but in this case it's not even a close fight. Suburban residents have them completely overwhelmed.

That's how strong the desire is for suburban sprawl. Again: I'm not taking a position on whether this is good or bad. And I'm not saying the fight is hopeless. I'm just saying that everyone needs to understand what they're up against here. It's not zoning per se that causes sprawl, it's the fact that lots of registered voters actively want sprawl and have successfully demanded rules that keep density at bay. These kinds of land use regulations aren't going away without the mother of all knock-down-drag-out fights first.

And now for a second point, even though I said I wouldn't make one: walkability is very difficult to create. It's not enough to build a bunch of houses with shopping nearby. It's not enough to have a few big apartment buildings. And there's no practical way to convert an existing suburb into a high-density area. The thing is, you can't be 90% walkable. You have to be 100% walkable, and for a development of any size you have to jam people together to get enough density to truly make that happen. You will never get this outside a central business core where the price of land is so high that you have no choice.

So....I dunno. Maybe eventually we'll run out of oil and everyone will have to move into urban cores whether they like it or not. Short of that, though, I just don't see how it's going to happen. Working to keep existing city centers walkable seems eminently doable and eminently worth doing. Outside of that, though, building a truly walkable neighborhood strikes me as the next best thing to impossible.

So here's a serious question: outside of a big city core, has anyone ever successfully built a walkable, high-density suburb? Not a village or a small town. I mean something really dense and walkable: a place where sidewalks are busy, mass transit is good, and there are plenty of high-rise apartment buildings. I know the New Urbanist folks talk about this a lot, but do any actually exist? Educate me, peeps.

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Reining in Healthcare Costs

Kevin Drum — Thu, 18 Mar 2010 18:14:21 +0000

Ezra Klein does a good job of describing why healthcare reform not only should pass, but probably will pass:

If you're a liberal House Democrat, here's what you'd be voting against: Legislation that covers 32 million people. A world in which 95 percent of all non-elderly, legal residents have health-care coverage. An end to insurers rescinding coverage for the sick, or discriminating based on preexisting conditions, or spending 30 cents of each premium dollar on things that aren't medical care. Exchanges where insurers who want to jack up premiums will have to publicly explain their reason, where regulators will be able to toss them out based on bad behavior, and where consumers will be able to publicly rate them. Hundreds of billions of dollars in subsidies to help lower-income Americans afford health-care insurance. The final closure of the Medicare Prescription Drug Benefit's "doughnut hole."

If you're a conservative House Democrat, then probably you support many of those policies, too. But you also get the single most ambitious effort the government has ever made to control costs in the health-care sector. According to the Congressional Budget Office, the bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed. And then there are all the other cost controls in the bill: The Medicare Commission, which makes entitlement reform much more possible. The programs to begin paying doctors and hospitals for care rather than volume. The competitive insurance market.

The cost controls in the bill are a good start. But they're going to have to get better over time to have any chance of seriously reining in healthcare inflation, and it would be nice to think that once the partisan warfare is over and Republicans give up their fantasy of repealing the bill after a November triumph, they'll finally get serious about cost controls too. Because one way or another, it's going to take both parties giving cover to each other to get the job done.

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The Enemy Belligerent Act of 2010

Kevin Drum — Thu, 18 Mar 2010 17:13:31 +0000

Marc Ambinder wrote about John McCain and Joe Lieberman's "Enemy Belligerent, Interrogation, Detention, and Prosecution Act of 2010" a couple of weeks ago, but I missed it. It's basically designed to allow us to detain enemy belligerents indefinitely if they meet certain criteria:

The bill asks the President to determine criteria for designating an individual as a "high-value detainee" if he/she: (1) poses a threat of an attack on civilians or civilian facilities within the U.S. or U.S. facilities abroad; (2) poses a threat to U.S. military personnel or U.S. military facilities; (3) potential intelligence value; (4) is a member of al Qaeda or a terrorist group affiliated with al Qaeda or (5) such other matters as the President considers appropriate. The President must submit the regulations and guidance to the appropriate committees of Congress no later than 60 days after enactment.

The bill applies to U.S. citizens as well as foreign nationals, and the determination of whether someone is "high value" is made by the High-Value Detainee Interrogation Team and confirmed by the Secretary of Defense and the Attorney General. Glenn Greenwald provides his usual mild-mannered commentary:

It's probably the single most extremist, tyrannical and dangerous bill introduced in the Senate in the last several decades, far beyond the horrific, habeas-abolishing Military Commissions Act. It literally empowers the President to imprison anyone he wants in his sole discretion by simply decreeing them a Terrorist suspect — including American citizens arrested on U.S. soil. The bill requires that all such individuals be placed in military custody, and explicitly says that they "may be detained without criminal charges and without trial for the duration of hostilities against the United States or its coalition partners," which everyone expects to last decades, at least. It's basically a bill designed to formally authorize what the Bush administration did to American citizen Jose Padilla — arrest him on U.S. soil and imprison him for years in military custody with no charges.

Well, sometimes mild-mannered commentary is just what the doctor ordered. This sounds every bit as bad as Glenn says it is. Basically, it reminds me of the Alien and Sedition Acts, which we've long since decided was not exactly a shining bright spot in our nation's history.

My hope is that the reason this bill has gotten so little attention is that no one thinks it has any chance of passage. Unfortunately, given the current mood of the country and the obvious angst of centrist Democrats about attacks on their terrorism-fighting credentials, that hardly seems plausible. Of course it has a chance of passage. This is well worth keeping an eye on.

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Corporate Douchebaggery Watch

Kevin Drum — Thu, 18 Mar 2010 16:20:18 +0000

This kind of story always strikes me as just plain weird. Back in 2007, WellPoint pledged that its charitable foundation would give $30 million in grants to help the uninsured:

However, WellPoint's public records indicate that from 2007 to 2009 the foundation gave less than $6.2 million in grants targeted specifically at helping uninsured Americans get access to coverage and care — barely one-fifth of what was promised and just 11% of the charity's total giving over the last three years.

"It was just not something that the company really wanted to do," said one former executive, who, like others interviewed for this story, asked not to be identified out of concern that discussing WellPoint could have adverse career consequences. "So it went by the wayside."

WellPoint's flack says that she's been "assured" that they have, in fact, given $30 million to help the uninsured, but the reporting process is "complicated" and they don't care to break the numbers down for nosy outsiders. Translated, that means they didn't do it. But why? $30 million is chump change for these guys. Why bother reneging on this promise? Are they trying to confirm that they're the scumbags everyone thinks they are? Or did they just not figure that anyone would ever follow up on this?

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All Systems Are Go

Kevin Drum — Thu, 18 Mar 2010 16:03:02 +0000

One of the roadblocks in the way of the reconciliation rider to the Senate healthcare bill is that, in order to meet reconciliation rules, it has to decrease the budget deficit by at least $1 billion. According to the latest CBO score, that's no problem:

The incremental effect of enacting the reconciliation proposal — assuming that H.R. 3590 had already been enacted — would be the difference between the estimate of the combined effect and the previous estimate for the Senate passed bill, H.R. 3590. That incremental effect is an estimated net reduction in federal deficits of $20 billion over the 2010-2019 period over and above the savings from enacting H.R. 3590 by itself.

Click the link for details. The reconciliation rider would also continue to reduce federal deficits in the decade after 2019, just like the main Senate bill. As far as I know, this is the last hurdle in the way of healthcare reform aside from, you know, actually voting on it. That should happen sometime this weekend.

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Quote of the Day: Do the Right Thing

Kevin Drum — Thu, 18 Mar 2010 15:15:54 +0000

From Marjorie Margolies-Mezvinsky, who I've blogged about before, on her vote to pass Bill Clinton's budget in 1993:

While it is easy to say my balanced-budget vote cost me reelection, that assumes the line of history that followed the bill's passage. Had I voted against it, the bill wouldn't have passed, the Republican opposition would have been emboldened, the Clinton presidency would have moved into a tailspin . . . and all of this could have just as easily led to my undoing.

Simply put, you could be Margolies-Mezvinskied whether you vote with or against President Obama. You will be assailed no matter how you vote this week. And this job isn't supposed to be easy. So cast the vote that you won't regret in 18 years.

If anything, defeat of the healthcare bill is likely to lead to bigger House losses this November than otherwise. So good policy is good politics, no matter how distant or hard to believe that seems in the heat of the moment. So let's all do the right thing, OK?

By the way, after being offline for most of yesterday due to a computer upgrade that took (surprise!) longer than I expected, I'm now typing this post on a blazing fast new box loaded with gobs of memory and Windows 7. Does it seem even slicker and more insightful than usual?

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You and Your Browser

Kevin Drum — Wed, 17 Mar 2010 18:30:46 +0000

Via Tyler Cowen, this comes from a Microsoft Research paper about why ordinary people are probably justified in ignoring most security advice on the internet:

Browser vendors have invested considerable effort in making it harder to ignore certificate errors. In Firefox version 3, when encountering an expired, invalid or self-signed certificate the user sees an interrupt page explaining that the SSL connection failed. If he chooses to add an exception he sees another interrupt page with more warnings and a choice to add an exception or "get me out of here." If he elects (again) to add an exception he must click to get the certificate, view the certificate, and then add the exception. Internet Explorer 8 is somewhat less intrusive, but the procedure also seems designed to suggest that adding exceptions is very risky. Is it? Ironically, one place a user will almost certainly never see a certificate error is on a phishing or malware hosting site. That is, using certificates is almost unknown among the reported phishing sites in PhishTank. The rare cases that employ certificates use valid ones. The same is true of sites that host malicious content. Attackers wisely calculate that it is far better to go without a certificate than risk the warning. In fact, as far as we can determine, there is no evidence of a single user being saved from harm by a certificate error, anywhere, ever.

I've long wondered about those certificate errors I get from time to time, but apparently they're just that: errors. Now I know I can just ignore them and still sleep soundly at night.

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Quote of the Day: Rock Bottom

Kevin Drum — Wed, 17 Mar 2010 18:01:20 +0000

From Time's Jay Newton-Small, suggesting that Democrats have hit rock bottom and have nowhere to go but up — if they pass healthcare reform, that is:

Oh how quickly things can change. If you pass the bill, next week's coverage is likely to trumpet triumph, the most productive legislative session since LBJ, an historic and seminal victory....As Republicans used to say before the 2004 elections defending Medicare Part D, it's hard to spend hundreds of billions of dollars expanding health care coverage and not have it be a net positive in the polls.

Memories are short, but healthcare reform is forever. And passing historic legislation that improves people's lives in concrete ways is the best way to beat the midterm blues.

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Inflationary Demons

Kevin Drum — Wed, 17 Mar 2010 17:37:23 +0000

Matt Yglesias notes that Michael Kinsley has a strange column in the Atlantic this month ("My Inflation Nightmare") warning about the possibility of runaway inflation in our future. I read it a few days ago and shrugged. But it stuck with me anyway. Here's Matt:

What’s strange about the column is that I don’t know how I could possibly refute it. Kinsley freely acknowledges that “virtually every leading economist across the political spectrum” disagrees with him, and he doesn’t dispute the details of any of their analyses. He also acknowledges that while it would be possible for him to make investment decisions that reflect his belief in a coming period of inflation, he’s not doing it “because I lack the courage of my convictions.”

....I note that not only does Kinsley’s column explicitly discuss the lack of evidence for Kinsley’s thesis, but it also details the theoretical error Kinsley is making—thinking too moralistically about the economy. He says “on economic matters, I’m a puritan.”....In his view, a greater punishment must be over the horizon for the sake of the moral order. And since recession is, by his lights, not enough the only other economic calamity on the menu is inflation. And so, he deduces, we must be heading for inflation, even though he himself recognizes the reasoning as so specious that he won’t use it as the basis for investment decisions.

I'm going to defend Kinsley a bit. One reason is that although he freely talks about the inner demons that prompted his heresy, he does, in fact, also offer up a concrete reason for his fears: "My specific concern is nothing original: it’s just the national debt....We talk now of trillions, not yesterday’s hundreds of billions." This is not a completely nonsensical concern, even if it would be better expressed as a percent of GDP rather than in raw dollars. What's more, if Kinsley had wanted to write something a little more sophisticated, he could have spent some time on the Fed's likely problems unwinding its trillion dollar balance sheet over the coming years, something that has at least the potential for sparking inflationary pressures if it isn't timed pretty delicately.

But that's not the real reason for defending Kinsley. The real reason is this: I sort of agree with him. Is it because we were both around for the 70s and remember what happened then? Maybe, though Paul Krugman and Brad DeLong were around then too and they're not worried. And intellectually, like Kinsley, I agree with them: inflation just doesn't seem like a big issue right now. But what about a few years from now? It really does look as if our political system is going to find it next to impossible to control our long-term federal deficit, and at the same time the dollar is going to have to come down in value eventually. Both of these things, along with the Fed's operations, pose inflationary potential. And I have a fairly healthy respect for the proposition that if the Fed loses its reputation as an inflationary hawk, it's much harder to get back than you might think.

So here's the question: if all the people you respect say that inflation isn't a big issue; if all the market evidence points toward moderate inflationary expectations; and if your fears of inflation are almost certainly grounded in demons from your youth — if all that's true, but you still feel the fear anyway, what should you do? Nothing? Or should you write about it, being honest along the way about what's driving you?

I'd vote for writing about it, for one simple reason: if smart people are still worried about this even though the experts say there's nothing to worry about, the experts need to do a better job of telling us why we're nuts. Brad DeLong, I invite you to write a Kevin Drum Smackdown Watch about long-term inflationary fears. Pretend you're writing a response to a respected liberal economist, since that's more likely to produce a serious scholarly survey. Tell me why I'm crazy.

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Half a Parliament is Worse Than None

Kevin Drum — Wed, 17 Mar 2010 16:47:29 +0000

The New York Times reports today on just how deliberate the Republican strategy of obstructionism has been:

Before the health care fight, before the economic stimulus package, before President Obama even took office, Senator Mitch McConnell, the Republican minority leader, had a strategy for his party: use his extensive knowledge of Senate procedure to slow things down, take advantage of the difficulties Democrats would have in governing and deny Democrats any Republican support on big legislation.

....For more than a year, he pleaded and cajoled to keep his caucus in line. He deployed poll data. He warned against the lure of the short-term attention to be gained by going bipartisan, and linked Republican gains in November to showing voters they could hold the line against big government.

Jon Chait comments:

Let me be clear about something: I am not blaming McConnell¹....Electoral politics is a zero-sum competition. Most democracies have systems where the opposing parties work in open conflict to each other, and, contra David Brooks, this does not result in Hutu vs. Tutsi slaughter.

Yes, there was a long period in American politics where racial cleavages created a situation where the parties had little internal ideological cohesion, and as a result Washington developed a series of cultural norms discouraging the practice of cohesive parties maximizing their electoral self-interest. Over time, though, such social norms will never hold up. Ultimately, the parties are going to maximize their partisan self-interest as allowed under the rules. If you don't like the result, you need to change the rules.

The next time Democrats find themselves in the minority, there's going to be a lot of establishment pressure not to follow the McConnell model. Be bipartisan. Don't obstruct. That would be terrible advice. I hope that Democrats would remember 2009-2010 well enough to favor a reform of the Senate to disallow holds, the filibuster, and other counter-majoritarian tactics. But if they can't succeed in changing the rules, they should follow McConnell's example, because he has shown the way to do it.

Italics mine. Changing the rules is the key. It's true that most democracies "have systems where the opposing parties work in open conflict to each other," but that's because they also have parliamentary rules that make it possible for a majority party to govern. We don't. Over the past couple of decades we've slowly morphed into a country with a de facto parliamentary legislature but without the parliamentary machinery that makes it work. The irony, as usual, is rich: conservatives, who normally rail against liberal attraction to European models of governance, have apparently decided that one European tradition they like is parliamentary-style party cohesion. But if that's what they want, they need to support parliamentary style rules as well. A strong country can't have one without the other.

¹I'd actually put this differently. I don't blame McConnell for obstructing healthcare reform. It's a big bill and it was always going to inspire intense opposition. And minority parties should have some ability to obstruct and delay huge bills like this. However, I do blame him for obstructing everything. It's one thing to treat big legislation as a partisan affair — it is! — but it's another to gum up the works just for the sake of gumming up the works, as the GOP has done on bills and appointments that ended up getting virtually unanimous support on their final vote. Enough's enough.

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Our Fabulous Bipartisan Senate

Kevin Drum — Wed, 17 Mar 2010 16:14:31 +0000

Last month a jobs bill came up for a cloture vote in the Senate. Five Republicans voted for it. Today it came up for a final vote. Eleven Republicans voted for it. Chuck Schumer hailed the result: "Today is really a turning point. And there are two words that symbolize it — jobs and bipartisan."

Hmmm. Doesn't sound like a turning point to me. It sounds like lots of Republicans are still willing to posture and obstruct against anything and everything Democrats try to do, even bills that they actually approve of and want to be recorded favoring. The only difference is that this time there were six Republicans in that category instead of 20 or 30. Not exactly a new era in comity.

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What's the Next Step After "Insane"?

Kevin Drum — Wed, 17 Mar 2010 15:56:59 +0000

I might be getting myself in trouble by blogging about something where I don't know the backstory, but check out the latest from California:

Gov. Arnold Schwarzenegger, taking aim at what remained of a deficit-cutting package drafted by Democrats, said Tuesday he planned to veto $1.1 billion in projected savings realized largely through cuts to public transit. Democratic lawmakers had approved the measure as part of a package they said would have addressed $4 billion of California's estimated $20-billion deficit.

....Republican lawmakers, whom majority Democrats were able largely to bypass in writing their budget plan because it did not raise taxes, cheered the governor's planned vetoes.

....Schwarzenegger said he would reject the lawmakers' gasoline tax plan because it differed from the proposal he first made in January. Schwarzenegger's plan would have lowered gas taxes by 5 cents per gallon. The plan Democrats pushed through the Legislature would keep gas taxes at their current level.

This is insane. In order to tackle a massive deficit, Democrats were willing to cut a billion dollars out of transit funding — a traditional Democratic priority — and Schwarzenegger vetoes it because they didn't also include a tax cut. As a way of tackling a massive deficit. And the California Republican caucus cheers.

I can't even think of anything snarky to say. It's like living in a Lewis Carroll novel, except with real people. Assuming you still consider California Republicans to be real people, that is.

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Online Advertising Watch

Kevin Drum — Wed, 17 Mar 2010 15:25:25 +0000

After sitting through an SXSW panel about magazines on the iPad, Felix Salmon has a brainstorm about online advertising:

After the panel ended, I got to talking to one attendee about bridal mags, and it struck me that the bridal category could be one of the first to be truly revolutionized by the iPad. After all, bridal mags are quite unashamedly bought for the advertising content, rather than any supposedly independent editorial: the idea is that brides-to-be will flick through them, looking carefully at pretty much every ad, searching for that idea which inspires them to spend thousands of dollars on something for their wedding.

On an iPad, that experience can become much more immersive and interactive: brides could spend days if not weeks flicking through the offerings of all the different advertisers, adding various products and ideas to their virtual scrapbooks, finding local retailers for anything they're interested in, and firing off carefully-curated scrapbooks, in PDF form, to their wedding planners, parents, bridesmaids — even occasionally the fiancé too. I don't know how much inclusion in that kind of an app would be worth to an advertiser, especially one who jumped in and created deep wells of content rather than simply repurposing their print ads. But clearly there's an opportunity here for brands to really connect with readers in a new and very exciting way.

Maybe! But I wonder. If the big draw of these magazines really is advertising, won't some bright soul just start up a bridal advertising aggregation site that skips all that annoying editorial stuff in the first place? It would be nothing but a great browsing experience for ads, and since it could be run by a staff of one, the cost to advertisers would be tiny. If this took off, it could be the death of bridal magazines, not their rebirth.

Unless that editorial content turns out to be more important than we think. Upcoming brides, what say you?

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Why is Obama Ignoring the Lehman Scandal?

Kevin Drum — Wed, 17 Mar 2010 03:06:40 +0000

Mike Konczal thinks the Lehman Brothers accounting scandal is being wasted:

One thing that I’m finding surprising is that the President and the Treasury Secretary aren’t out there beating the hell out of this story. For financial reformers, this report should be like a “Get 2 Free Financial Reforms” monopoly-style card falling out of the sky. Why isn’t the administration thumping the hell out of this story?

I remember when Anthem Blue Cross Blue Shield decided to raise rates 39% in the middle of a recession and Obama immediately got on the point that this is exactly why we need comprehensive health care reform. I remember thinking at the time “If a giant scandal blows up in the financial sector, I bet he’ll go equally as hard as to why this proves we need comprehensive financial reform.”

Oddly, that isn’t happening. Senator Ted Kaufman is giving a speech today about how this fraud calls for tougher regulation, which is fantastic. Why isn’t the administration?

Mike suggests that part of the answer is that Tim Geithner is compromised by his past presidency of the New York Fed. After all, he can hardly scream blue murder about Lehman's bookkeeping outrages when he was the guy who was supposed to be overseeing their bookkeeping in the first place.

There's probably something to this. Sellout Obama apologist that I am, though, I think there's another, less sinister possibility: the White House wants all its ammunition focused on healthcare right now. They'll spare a few words on other topics here and there, but basically this is not the week for anything to push healthcare reform off the front page. If it passes the House this weekend, however, financial reform probably moves to the top of the list when Obama's overseas trip is over.

At least, I hope so.

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