Brad DeLong

Noam Scheiber on Obama’s Worst Year: 2011

2012-02-10T05:58:35-08:00

Minting large-denomination platinum coins to expand the money supply, pointing out that appropriations bills constructively repeal the debt ceiling, recess-appointing Nobel Prize winners to the Federal Reserve Board, using FHFA to attempt to rebalance the housing market--there were lots of things Obama could have done in 2011 to boost the economy.

Noam Scheiber:

Obama’s Worst Year: BACK IN THE SUMMER of 2009, David Axelrod, the president’s top political aide, was peppering White House economist Christina Romer with questions in preparation for a talk-show appearance. With unemployment nearing 10 percent, many commentators on the left were second-guessing the size of the original stimulus, and so Axelrod asked if it had been big enough. “Abso-fucking-lutely not,” Romer responded. She said it half-jokingly, but the joke was that she would use the line on television. She was dead serious about the sentiment. Axelrod did not seem amused….

Only in the fall did Romer finally gain an ally—White House economic adviser Larry Summers, who had begun to echo her pleas. But Orszag insisted that any additional stimulus be paired with deficit-reduction. The result was stalemate. Even when the two sides worked out a compromise—$100 to $200 billion of stimulus in the short term, with offsetting cuts over ten years—the truce quickly unraveled.

Seated in the Roosevelt Room in early December 2009, the president wondered why both sets of ideas were so timid. Orszag grumbled that it was, in fact, disappointing to offer so little on the deficit front. Summers interjected that the economy was in dire need of more stimulus. Each side then labeled the other’s proposals political nonstarters, and the president lost his patience. “You know what, this is the same meeting we’ve been having,” he said, excusing himself. “Talk to me when you’ve thought this through.” The bickering soon grew so loud that Orszag’s deputy, Rob Nabors, lunged to shut the door.

With no agreement forthcoming, it was Orszag who filled the vacuum throughout the fall. He urged the president to freeze domestic spending in his next budget and favored setting up a commission of Washington elders to recommend trillions in savings over a decade. Summers believed such ideas were gimmicks unworthy of a president. To colleagues he complained that “what’s really important in life is not to believe your own bullshit.” The president sided with Orszag.

BY JANUARY 2011, two months after Democrats suffered a rout in the congressional midterm elections, the West Wing again faced a critical choice between engaging with Republicans and playing partisan hardball. Should they tackle the trillion-dollar deficit, co-opting the anti-government zeal that Republicans had ridden to power? Or should they try to lower the stubbornly high unemployment rate, which had exceeded 9 percent for 20 straight months?

The president’s team quickly concluded that the deficit was the higher priority. Bill Daley, a former Commerce secretary and bank executive who had recently taken over as chief of staff, considered the administration so out of touch on the issue of government spending that large cuts could only bring political benefits. David Plouffe, who had replaced Axelrod as the president’s top political counselor, thought Obama needed to establish himself as a budget-cutter to regain credibility with voters. “Plouffe specifically said, ‘We’re going to need a period of ugliness’—he meant with the left—‘so that people in the center understand that we’re not wasting their tax dollars,” recalls a former administration official who observed the discussions….

The decision to focus on the deficit in 2011 was defensible at the time. It wasn’t until much later that the economy’s weakness became clear…

Ummm… Noam:

The economy's weakness was plain in the summer of 2009. It was plain in the winter of 2010. It was plain in the summer of 2010. It was plain in the winter of 2011. It did not "become plain" sometime in 2011.

I have not found anybody who claims that Daley and Plouffe understood the situation.

Noam goes on:

[O]ne judgment call that was harder to forgive. It had to do with the debt ceiling…. Many incoming Republican members of Congress had campaigned on their refusal to raise the limit, which was rapidly approaching, and senior Treasury Department officials worried that their resistance could prove disastrous. Most economists believed that hitting the debt ceiling could heighten doubts about the government’s creditworthiness and trigger a run on U.S. Treasury bonds, driving interest rates into the stratosphere. But the Tea Party Republicans asserted that not raising the debt ceiling would simply force a profligate Congress to spend less money.

After the midterm elections, Geithner’s chief of staff, Mark Patterson, thought the administration should try to defuse the debt-limit issue once and for all before the incoming Republicans arrived. He drafted a law giving the president the authority to raise the debt ceiling unilaterally and sent it to the White House. To sell it politically, the president could explain that renewing the upper-income Bush tax cuts, as Republicans were then demanding, would cost the government $700 billion over ten years, forcing it to hit the debt ceiling sooner.

The White House was initially interested, but dropped the idea once Republicans made clear they would oppose it. But, of course, the way to win concessions from obstructionist opponents isn’t to sound them out quietly. It’s to cause them public discomfort. As one former Treasury aide who was involved explains: “Imagine the alternative reality where the president comes out in December and says, ‘I understand you want to increase the high-end tax cuts. But that will make the deficit go up. … I am willing to do some of what you want to do, but you have to pay for it by raising the debt ceiling.’” At the very least, it would have put the GOP on the defensive.

But the White House didn’t have an appetite for going to war so soon after the midterms…. There wasn’t a lot of fight in folks,” says the former Treasury aide. “We [at Treasury] were a little bit obsessed. They were, ‘Yeah, yeah, yeah, we’ll deal with it later.’ ”

Sensing an advantage, the GOP pounced. Within a few months, Republicans had begun to insist they would only raise the debt ceiling if Democrats agreed to cut trillions from the deficit over a decade—essentially threatening the country with financial ruin unless they got their way.

The proper response to such a threat is to refuse to negotiate under duress. Treasury pleaded with the White House to hold the line and, for a while, it did. But, in mid-April, the White House blinked….

WHEN THE BIPARTISAN talks over the long-term deficit began in early May, the White House was prepared to hammer away at each galling detail of the GOP’s proposals…. But when the administration’s envoys to the talks—Vice President Joe Biden, Geithner, Lew, Reed, and Gene Sperling, the president’s top economic adviser—trooped back from their first few meetings with Eric Cantor and Jon Kyl, the second-ranking Republicans in the House and Senate, they conveyed a fateful message to their colleagues: Hold your fire. “The view from the negotiators in the room was that publicly attacking the Republicans would blow up the negotiations,” recalls a former White House aide involved. “They thought the negotiations were going well. No one was leaking out details to the press. They thought they could do it.”…

In June, the negotiators reached a provisional agreement with Republicans on more than $1 trillion in cuts, and the Obama contingent had begun to believe a much larger deal was in sight….

The problem was that Obama’s team had actually presented an optimistic view of what was possible—what it had assumed would be the best-case scenario. The negotiators hadn’t actually broached the idea of tax hikes with Cantor and Kyl in any detail, and the two Republicans certainly hadn’t said they would be open to them. Not even meager hikes, not even in return for a longstanding conservative goal like scaling back Medicare. In fact, Cantor and Kyl had waved off Democratic efforts to pin them down on the tax question.

Eventually, one congressional Democrat participating in the negotiations, worried that the conversation had focused too much on cuts for Medicare recipients of modest means, insisted to the Republicans that they could defer the tax discussion no longer…. “Let me get this right,” Kyl finally said to Lew and Sperling when the discussion flared up again. “You’re saying there are Medicare savings you think would be good policy. But you won’t do them unless we agree to raise taxes?” Lew and Sperling looked back at him stone-faced and simply said, “Yes.” A few days later, on June 23, Cantor and Kyl withdrew from the negotiations. Even the deal the president had deemed insultingly weak was out of reach….

For most of July, Obama and Boehner went back and forth at frequent intervals. But while the buzz of activity mimicked a high-stakes negotiation, there was never anything to show for it. At one point, over the July Fourth weekend, the president called back his entire economic team from vacation because it looked as if the talks were ripening. By the following weekend, Boehner’s office went silent with no explanation. Sperling began cracking that he “wouldn’t want to date these guys. They leave without having the ‘can we see other people’ conversation.” After a few weeks of this routine, it was blindingly obvious that Boehner wouldn’t be bringing conservatives with him on any deal involving taxes.

Under normal circumstances, the logical response to a negotiation in which one’s counterpart walks away from increasingly attractive offers is simply to give up. But, by late July 2011, this was no longer an option. There were less than two weeks before the government’s mounting pile of IOUs ran smack into the debt ceiling, risking global financial calamity… the White House still had to reach agreement with the Republican House. Not surprisingly, given that Obama was determined to avoid a debt ceiling catastrophe while many Republicans believed hitting the limit might do some good, the eventual deal skewed heavily toward Republican priorities. It cut $900 billion over a decade from the pot of money Congress doles out each year and instructed a special “supercommittee” of congressmen and senators to find at least $1.2 trillion more in cuts. Were the committee to fail at this task, then the deal called for automatic cuts totaling $1.2 trillion over a decade, with roughly half to come from domestic programs, including Medicare. The deal raised not one cent of taxes.

FOR TWO AND A HALF YEARS, Obama had been hatching proposals with an eye toward winning over the opposition. In most cases, all it had gotten him was more extreme demands from Republicans and not even a pretense of bipartisan support. Now, after the searing experience of the deficit deal, he still wanted reasonable, centrist policies. But he was done trying to fit them to the ever-shifting conservative zeitgeist. When he finally turned back to jobs in August, he told his aides not to “self-edit” proposals to improve their chances of passing the Republican House. “He pushed us to make sure this was not simply a predesigned legislative compromise,” one recalls. Sperling, who had long been a voice for ambitious policy, took the directive to heart. By the end of the month, his staff had come up with $450 billion worth of proposals to boost the economy, including an expanded version of the payroll tax cut Congress had approved the previous December…. It wasn’t the only valuable lesson the president had learned. He also seemed to recognize that the nonstop commotion over the deficit was a political loser, especially if he was at the center of it…. Obama was finally shedding the caution of his first three years in office. Even before the deficit negotiations collapsed, he'd begun criticizing Republicans for their aversion to “shared sacrifice.” He gave an impassioned speech about economic inequality and vowed to ensure that millionaires paid their fair share in taxes. “It is wrong for Warren Buffett’s secretary to pay a higher tax rate than Warren Buffett,” he famously said.

For voters contemplating whether he deserves a second term, the question is less and less one of policy or even worldview than of basic disposition…. [Obama's] adjustments didn’t come until the crisis was already at hand. His initial approach was too passive and too accommodating, and he stuck with it far too long…. Sooner or later, Obama may encounter a crisis that can’t be reversed at the eleventh hour…

Noahpinion: Department of "WTF?!?!"

2012-02-09T21:04:25-08:00

Noah Smith:

Thursday Roundup (2/9/2012): 3. John Taylor thinks that our economic recovery has been terrible, and continues to be terrible. He chalks this up to the failure of "Keynesian" policies. I think it would be interesting to see him argue with Tyler Cowen, who says that we are having a good, strong recovery, and that this is evidence of the failure of "Keynesian" macro.

Liveblogging World War II: February 9, 1942

2012-02-09T21:03:34-08:00

February 9, 1942 : Detroit Auto Plants Turn Out Last Civilian Car; Refocus on War Production

Quote of the Day: February 9, 2012

2012-02-09T14:48:33-08:00

"Demagogues who were too old to enter the army if there should be a war, others who entertained so high an opinion of their own ability that they did not believe they could be spared from the direction of the affairs of state in such an event, declaimed vehemently and unceasingly against the North; against its aggressions upon the South; its interference with Southern rights, etc., etc.

"They denounced the Northerners as cowards, poltroons, negro-worshippers; claimed that one Southern man was equal to five Northern men in battle; that if the South would stand up for its rights the North would back down. Mr. Jefferson Davis said in a speech, delivered at La Grange, Mississippi, before the secession of that State, that he would agree to drink all the blood spilled south of Mason and Dixon's line if there should be a war.

"The young men who would have the fighting to do in case of war, believed all these statements, both in regard to the aggressiveness of the North and its cowardice. They, too, cried out for a separation from such people. The great bulk of the legal voters of the South were men who owned no slaves; their homes were generally in the hills and poor country; their facilities for educating their children, even up to the point of reading and writing, were very limited; their interest in the contest was very meagre--what there was, if they had been capable of seeing it, was with the North; they too needed emancipation. Under the old regime they were looked down upon by those who controlled all the affairs in the interest of slave-owners, as poor white trash who were allowed the ballot so long as they cast it according to direction."

--U.S. Grant, Personal Memoirs (via Ta-Nehisi Coates)

Tracking the Forward March of Human Liberty...

2012-02-09T14:39:45-08:00

From my perspective the nadir of human liberty in the twentieth century comes in the first half of the 1930s. Thereafter we have a long march--a march that was fastest in the North Atlantic from 1942 to 1975 or so, and that has continued (albeit at a slower pace) since then. But Milton Friedman thought not. And now it turns out that a surprisingly large number of people think not, even today.

With Friedman I think I understand. He was curiously blind to racism, sexism, etc.--and to the importance of their decline. As I see it, he saw only the failures of social democratic regulation (transportation, professional practice, nimbyism, drug war, etc.) and none of the successes (telecommunications, federalization of food and drug regulation, finance, etc.) and none of the places where society in 1980 was still underregulated (pollution, medical insurance, etc.). From my perspective, Friedman had a touching but naive faith in the bona fides, competence, and benevolence of his political masters. And he had a great overestimation of how successful the policies he believed in--stable money stock growth, deregulation, "starve the beast" through low taxes--would turn out to be.

With people today I don't understand. I really don't see a rationale for believing today that 1980 was in any sense a nadir of human liberty--a point well down the Road to Serfdom--or for believing that the progress of human liberty has been materially more rapid after 1980 than it was in the 50 years before.

Noah Smith performs the public good of picking up the litter with respect to John Cochrane:

Noahpinion: A standard intellectual-Republican narrative of history: John Cochrane has a new post up in which he discusses the historical importance of Milton Friedman's book Free to Choose…. The first half of the post is a discussion of the difference between negative and positive rights, with which I largely (but not completely) agree. But the second half consists of a reading of events since 1980 with which I take a number of exceptions….

1980 was an inflection point for the advance of freedom…! Yes, some of the Friedmans' dark worries did not pan out. Why not? Because people read the book! The Friedmans were fighting against the "tide of history." And turned it back…

[Cochrane's] appears to me to be a very standard intellectual Republican narrative of recent history; if you surveyed registered Republicans with postgraduate degrees, and then took an average of their responses, it seems like you might get something like this. Now, standard narratives are not necessarily wrong. But this narrative happens to be one about which my feelings are quite mixed…. I agree about China. I basically agree about India (though where did Keynes support a "license raj"??). I agree about the Cold War and the spread of democracy. I agree about inflation. None of these positive developments should be forgotten or ignored.

But there are some points with which I strongly disagree. Let me address these:

"[1980] was the end of stagnation in the US and UK." What? Really?? What about the Bush years? You know, the 8 years when the inflation-adjusted stock market did worse than in the 1970s, income stagnated, and GDP growth underperformed past booms, all despite massive tax cuts and substantial deregulation?

"The economic and political ills of the 1970s seem to be returning." Really? Inflation?? No. I know there are some people who believe that a fiscally induced hyperinflation is just around the corner, but that is pure speculation...

"US and UK inflation -- the result of mindless "stimulus"" Really?? But budget deficits were low in the 1970s, and only exploded in the Reagan years (and again in the Bush years). And most economists believe that the 70s inflation was caused by loose monetary policy (and possibly oil shocks), not by fiscal policy.

Basically, in 2000, this Republican narrative was looking pretty good - though not entirely thanks to Republicans. Bill Clinton seemed to have proven that market liberalism did not require exploding deficits and exploding inequality (the ills of the Reagan years) in order to create prosperity. But then came the Bush years, and America doubled down on the Milton Friedman program with more tax cuts, more deregulation, more privatization. And income stagnated, stocks stagnated, and growth was lackluster, while debt and inequality resumed the explosive growth of the Reagan years. By the eve of the financial crisis, the Republican narrative was looking pretty shopworn…

I would quibble with one point. I would say that it was not the Republican narrative of ever-more deregulation, ever-greater tax cuts, ever-higher degrees of inequality, and ever-larger structural deficits that looked good as of 2000. I would say it was, rather, the Clinton narrative of smart neoliberalism: using market incentives and mechanisms to achieve social democratic goals.

Paul Krugman piles on. Many hands make light work:

Reaganite Delusions: The great era of US economic growth was the postwar generation; even during the good years of the 90s we didn’t achieve comparable growth, and overall, the post-Reagan era was marked by slower growth than the equivalent period of time pre-Reagan. And I haven’t even gotten into the income distribution thing.

All of which makes me wonder: what goes on in these peoples’ minds? Do they never even think of actually looking at the numbers, because they know that Reagan ushered in a great boom? Inquiring minds (which they obviously don’t have) want to know.

I will leave the discussion of negative and positive liberty to the trained professionals in the field--but I would say that if you have not listened very closely on these issues to Amartya Sen, you should not claim to be an economist.

On the data issues... I am thinking, increasingly, that what is going on is a combination of selection by right-wing funding sources for complaisant intellectuals, of subservience to whatever their political masters set forth as the party line (individual mandate as a conservative responsibility principle, anybody?), and is at some level a simple lack of work ethic: people unwilling to open up their web browsers to look at the data, people unwilling to do their homework, and people unwilling to take even small steps to see whether their prejudices meet the test when marked to market. It is, after all, very hard not to notice that for America's lower, working, and middle classes, the economic stagnation in real compensation per hour that started in the early 1970s did not magically come to an end on January 21, 1981 but has--alas!--continued (with a short interruption in the Clinton years) to this day.

That is really hard to miss.

Jonathan Chait vs. Veronique de Rugy

2012-02-09T13:30:21-08:00

JC:

Why I’m So Mean: People often ask, “Why is Jonathan Chait so mean?” It is a fair question…. The latest person to ask it is ubiquitous right-wing misinformation recirculator Veronique de Rugy, who notes that I am "constitutionally incapable of disagreeing with anyone without impugning motives, professionalism, I.Q. or mental stability."

I’m actually not incapable of disagreeing with people without insulting their intelligence, motives, or other qualifications. I especially enjoy debating the most intelligent and interesting conservatives… not to mention numerous liberal writers I respect.

But it is true that I do spend a lot of time arguing with the lesser lights of the intellectual world as well, and de Rugy herself is a good example. Our current debate offers a useful example of why I do this. De Rugy wrote a column centered around the claim that the United States has a more progressive tax system than any other advanced country, and as her sole piece of evidence cited the fact that rich people pay a higher share of the tax burden in the U.S. than in other countries. I wrote a response, noting that this reasoning is completely idiotic. Rich Americans pay a bigger share of the tax burden because they earn a bigger share of the income, not because the U.S. tax code is more progressive.

De Rugy’s reply is an incoherent collection of hand-waving that does not come close to addressing this very simple and fatal flaw with her claim. She… conflat[es] the marginal tax rate (the percentage tax you pay on your last dollar) with the total tax rate (the overall percentage of your income paid in tax), using “income tax” as a stand-in for total taxes, and trying to broaden the debate into a bigger philosophical dispute. But it’s not a philosophical dispute. It’s a simple case of her making up false claims based on extremely elementary errors.

And this is why I am forced to be so mean. There are just a lot of people out there exerting significant influence over the political debate who are totally unqualified. The dilemma is especially acute in the political economic field, where wealthy right-wingers have pumped so much money to subsidize the field of pro-rich people polemics that the demand for competent defenders of letting rich people keep as much of their money as possible vastly outstrips the supply. Hence the intellectual marketplace for arguments that we should tax rich people less is glutted with hackery. The very simple fallacy I pointed out by de Rugy has been knocking around for years, without end. (Here it is in a piece by Stephen Moore in yesterday’s Wall Street Journal op-ed page. Here is Senator Jim DeMint making it today in an interview with the approving editors of Reason.) A similar problem exists, perhaps to an even worse extent, with climate change denial.

Most people don’t follow these issues for a living and have a hard time distinguishing legitimate arguments from garbage. I don’t mean this patronizingly: I certainly would have trouble distinguishing valid arguments from nonsense in a technical field I didn’t study professionally. But that's why there’s a value in signaling that some arguments aren’t merely expressing a difference in values or interpretation, but are made by an unqualified hack peddling demonstrable nonsense.

Being so mean is a labor of love, I confess, but also one with a purpose.

I must say, I do find it very hard to see how, in her words, anybody professional, with good motives, and mentally stable could have written what Veronique de Rugy wrote in response to Chait. But I am anxious to be enlightened as to how this would be possible, if anybody cares to do so…

Econ 210a: UC Berkeley: Spring 2012: Memo Question: To what extent should we view the late eighteenth and early nineteenth centuries in Britain as a unique turning point in economic and social development?

2012-02-08T18:31:55-08:00

Econ 210a: UC Berkeley: Spring 2012: Memo Question:

To what extent should we view the late eighteenth and early nineteenth centuries in Britain as a unique turning point in economic and social development?

Econ 1: U.C. Berkeley: Spring 2012: Files for February 8 Lecture

2012-02-08T16:19:11-08:00

It looks as though my office hours will be interrupted at 3 by a (hopefully) brief faculty meeting...

2012-02-08T10:46:03-08:00

It looks as though my office hours will be interrupted at 3 by a (hopefully) brief faculty meeting...

Office hours today: 2-3, 4-6.

What Jonathan Gruber Meant When He Said That Although Charles Murray's "Losing Ground" Was Impressive as Rhetoric, "The Facts Were Wrong"

2012-02-08T06:53:21-08:00

Sandy Jencks vs. Charles "Cross Burner" Murray:

How Poor Are the Poor?: Systematic efforts at assessing the impact of [welfare] benefits on illegitimacy rates support my version of the Harold and Phyllis story rather than Murray’s. The level of a state’s AFDC benefits has no measurable effect on its rate of illegitimacy. In 1984, AFDC benefits for a family of four ranged from $120 a month in Mississippi to $676 a month in New York. David Ellwood and Mary Jo Bane recently completed a meticulous analysis of the way such variation affects illegitimate births.17 In general, states with high benefits have less illegitimacy than states with low ones, even after we adjust for differences in race, region, education, income, urbanization, and the like. This may be because high illegitimacy rates make legislators reluctant to raise welfare benefits.

To get around this difficulty, Ellwood and Bane asked whether a change in a state’s AFDC benefits led to a change in its illegitimacy rate. They found to consistent effect. Nor did high benefits widen the disparity in illegitimate births between women with a high probability of getting AFDC—teen-agers, nonwhites, high school dropouts—and women with a low probability of getting AFDC.

What about the fact that Phyllis can now live with Harold (or at least sleep with him) without losing her benefits? Doesn’t this discourage marriage and thus increase illegitimacy? Perhaps. But Table 2 shows that illegitimacy has risen at a steadily accelerating rate since 1950. There is no special “blip” in the late 1960s, when midnight raids stopped and the “man in the house” rule passed into history. Nor is there consistent evidence that illegitimacy increased faster among probable AFDC recipients than among women in general.

Murray’s explanation of the rise in illegitimacy thus seems to have at least three flaws. First, most mothers of illegitimate children initially live with their parents, not their lovers, so AFDC rules are not very relevant. Second, the trend in illegitimacy is not well correlated with the trend in AFDC benefits or with rule changes. Third, illegitimacy rose among movie stars and college graduates as well as welfare mothers. All this suggests that both the rise of illegitimacy and the liberalization of AFDC reflect broader changes in attitudes toward sex, law, and privacy, and that they had little direct effect on each other.

But while AFDC does not seem to affect the number of unwed mothers, as Murray claims, it does affect family arrangements in other ways. Ellwood and Bane found, for example, that benefit levels had a dramatic effect on the living arrangements of single mothers. If benefits are low, single mothers have trouble maintaining a separate household and are likely to live with their relatives—usually their parents. If benefits rise, single mothers are more likely to maintain their own households.

Higher AFDC benefits also appear to increase the divorce rate. Ellwood and Bane’s work suggests, for example, that if the typical state had paid a family of four only $180 a month in 1980 instead of $350, the number of divorced women would have fallen by a tenth. This might be partly because divorced women remarry more hastily in states with very low benefits. But if AFDC pays enough for a woman to live on, she is also more likely to leave her husband. The Seattle–Denver “income maintenance” experiments, which Murray discusses at length, found the same pattern.

The fact that high benefits lead to high divorce rates is obviously embarrassing for liberals, since most people view divorce as undesirable. But it has no bearing on Murray’s basic thesis, which is that changes in social policy after 1965 made it “profitable for the poor to behave in the short term in ways that are destructive in the long term.” If changes in the welfare system were encouraging teen-agers to quit school, have children, and not take steady jobs, as Murray contends, he would clearly be right about the long-term costs. But if changes in the welfare system have merely encouraged women who were unhappy in their marriages to divorce their husbands, or have discouraged divorced mothers from marrying lovers about whom they feel ambivalent, what makes Murray think this is “destructive in the long term”?

Are we to suppose that Phyllis is better off in the long run married to Harold if he drinks, or beats her, or molests their teen-age daughter? Surely Phyllis is a better judge of this than we are. Or are we to suppose that Phyllis’s children will be better off if she sticks with Harold? That depends on how good a father Harold is. The children may do better in a household with two parents, even if the parents are constantly at each other’s throats, but then again they may not. Certainly Murray offers no evidence that unhappy marriages are better for children that divorces, and I know of none.

Shorn of rhetoric, then, the “empirical” case against the welfare system comes to this. First, high AFDC benefits allow single mothers to set up their own households. Second, high AFDC benefits allow mothers to end bad marriages. Third, high benefits may make divorced mothers more cautious about remarrying. All these “costs” strike me as benefits.

Consider Harold and Phyllis again, but this time imagine that they married in 1960 and that it is now 1970. They have three children. Harold still has the deadend job in a laundry that Murray describes him as having taken in 1960, and he has now taken both to drinking and to beating Phyllis. Harold still has two choices. He can leave Phyllis or he can stay. If he leaves, Phyllis can try to collect child support from him, but her chances of success are low. So Harold can do as he pleases.

Phyllis is not so fortunate. She is not the sort of person who can earn much more than the minimum wage, so she cannot support herself and three children without help. If she is lucky she can go to her parents. Otherwise, if she lives in a state with low benefits, she has two choices: stick with Harold or abandon her children. Since she has been taught to stick with her children, she has to stick with Harold. If she lives in a state with high benefits she has a third choice: she can leave Harold and take her children with her. In a sense, AFDC is the price we pay for Phyllis’s commitment to her children. At 0.6 percent of total US personal income, it does not seem a high price.

Giving Phyllis more choices has obvious political drawbacks. So long as Phyllis lives with Harold, her troubles are her own. We may shake our heads when we hear about them, but we can tell ourselves that all marriages have problems, and that that is the way of the world. If Phyllis leaves Harold—or Harold leaves Phyllis—and she comes to depend on AFDC, her problems become public instead of private. Now if she cannot pay the rent or does not feed her children milk it could be because her monthly check is too small, not because she doesn’t know or care about the benefits of milk or because Harold spends the money on drink. Taking collective responsibility for Phyllis’s problems is not a trivial price to pay for liberating her from Harold. Most of her problems will, after all, remain intractable. But our impulse to drive her back into Harold’s arms so that we no longer have to think about her is the kind of impulse decent people should resist.

The idea that Phyllis will be the loser in the long run if society gives her more choices exemplifies a habit of mind that seems as common among conservatives as among liberals. First you figure out what kind of behavior is in society’s interest. Then you define such behavior as “good.” Then you argue that good behavior, while perhaps disagreeable in the short run, is in the long-run interest of those who engage in it. Every parent will recognize this ploy: my son should take out the garbage because it is in his long-run interest to learn good work habits, not because I don’t want to take it out or don’t want to live with a shirker. The conflict between individual interests and the common interest, between selfishness and unselfishness, is thus transformed into a conflict between short-run and long-run self-interest. Unfortunately, the argument is often false...

Why Oh Why Can't We Have Better Right Wing Think Tanks?: Stuart Butler/Heritage Foundation/Individual Mandate Edition

2012-02-08T06:29:56-08:00

Yes, Stuart Butler of the Heritage Foundation is a bullshit artist. Why do you ask?

Kenneth Thomas:

Middle Class Political Economist: Heritage Doubles Down on Individual Mandate Denialism: [T]he Heritage Foundation has been bellowing against the Affordable Care Act despite the fact that the critical elements (individual mandate, community rating, and subsidies so everyone can afford insurance) were first proposed by -- the Heritage Foundation!In USA Today (via Don Taylor) Stuart Butler, author of the Heritage lecture linked above, says "Don't Blame Heritage for ObamaCare Mandate." He writes:

The confusion arises from the fact that 20 years ago, I held the view that as a technical matter, some form of requirement to purchase insurance was needed in a near-universal insurance market to avoid massive instability through "adverse selection" (insurers avoiding bad risks and healthy people declining coverage). At that time, President Clinton was proposing a universal health care plan, and Heritage and I devised a viable alternative. My view was shared at the time by many conservative experts, including American Enterprise Institute (AEI) scholars, as well as most non-conservative analysts. Even libertarian-conservative icon Milton Friedman, in a 1991 Wall Street Journal article, advocated replacing Medicare and Medicaid "with a requirement that every U.S. family unit have a major medical insurance policy." My idea was hardly new. Heritage did not invent the individual mandate.

What this self-serving narrative omits, as Taylor points out, is any mention of Butler's original proposal, linked above, from October 1989. This is more than three years prior to the Clinton health care legislation he claimed to be opposing. Butler's entire article puts his support of the mandate in "the 1990s," despite the fact that he had to have been conducting research on it prior to lecturing on it in 1989. Indeed, he cites no publication prior to his own where an individual mandate was proposed. That doesn't mean one isn't out there, but he gives us no reason to think there is.

He continues:

Additionally, the meaning of the individual mandate we are said to have "invented" has changed over time. Today it means the government makes people buy comprehensive benefits for their own good, rather than our original emphasis on protecting society from the heavy medical costs of free riders.

This is a very strained distinction. I'm not aware of the President or any other supporter of the mandate (I myself would prefer single payer) claiming people are to be forced to buy insurance "for their own good." Just as with Governor Romney's health care reform in Massachusetts, the idea behind the individual mandate remains preventing free riders from not getting insurance until they are sick. That is crucial in making it possible to require insurance companies to insure anyone regardless of pre-existing conditions….

While I guess it is in some way intellectually appealing to see Butler try to explicitly defend his changed position, the fact of the matter is that his defense is entirely bogus. You don't craft a policy in 1989 to defend against a proposal in 1993 by a President who hasn't been elected yet. No, the truth of the matter is that the individual mandate was the conservative approach to expanding health care access right up until the time President Obama advanced it as his own. Then it became both bad policy, and unconstitutional, to boot.

Liveblogging World War II: February 8, 1942

2012-02-08T06:00:16-08:00

Soldiers of the 5th and 18th Japanese army divisions cross the Johore Straits and land on the island of Singapore.

Quote of the Day: February 8, 2012

2012-02-08T05:58:00-08:00

"Spinoza was the first to argue that the Bible is not literally the word of God but rather a work of human literature; that “true religion” has nothing to do with theology, liturgical ceremonies, or sectarian dogma but consists only in a simple moral rule: love your neighbor; and that ecclesiastic authorities should have no role whatsoever in the governance of a modern state."

--Steven Nadler, A Book Forged in Hell: Spinoza's Scandalous Treatise

Memo to Republican Base: You May Be Opposed to Family Planning and to Griswold v. Connecticut, But Most of America Is Not

2012-02-08T05:56:16-08:00

With the Exception of the 2008 Democratic Primaries, Barack Obama Has Always Been Lucky in His Opponents...

2012-02-07T18:52:28-08:00