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Public Not Ready to Give Up on Healthcare

Kevin Drum — Tue, 09 Feb 2010 22:59:08 +0000

The Washington Post reports today that both liberals and conservatives are in favor of compromise on healthcare — as long as the other guys are the ones doing the compromising. It's a start! The results aren't quite even, though:

But even Republicans are critical of their congressional leadership, with 44 percent seeing them as doing too little to strike deals with Obama; that compares with just 13 percent of Democrats worried about inaction on Obama's part.

That's something to work with. The Fox News wing of the Republican Party obviously isn't in the mood for compromise, but this is a reminder that there's still a quieter, non-Fox wing that would like to see some things get done. And as the chart on the right shows, 63% of the country thinks "lawmakers in Washington" should keep trying to pass comprehensive healthcare reform, including 42% of Republicans and a firm majority of independents. It's not clear what all these people think they're signing up to when they say they want "comprehensive" reform, but that's still a pretty healthy level of support. At the very least it should help stiffen a few Democratic spines in Congress.

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The Healthcare Summit

Kevin Drum — Tue, 09 Feb 2010 19:52:09 +0000

Jon Chait writes about President Obama's proposed healthcare summit meeting later this month with Republicans:

Skeptics around Washington are already warning that the summit will be nothing more than Kabuki theater, allowing each side to grandstand on television while providing little in the way of substantive debate or additional understanding for the folks watching back home.

That's not the point. Obama knows perfectly well that the Republicans have no serious proposals to address the main problems of the health care system and have no interest (or political room, given their crazy base) in handing him a victory of any substance. Obama is bringing them in to discuss health care so he can expose this reality.

I agree that this is almost certainly Obama's intent. The question is whether it will work. The GOP leadership has already responded to Obama's offer with a list of preconditions for the meeting, a tactic straight out of Negotiation 101, but also one that works pretty well. What's more, if they decide to show up anyway, they'll be a lot better prepared than they were for their Q&A a week ago. My guess is that they'll have some pretty good sounding arguments lined up about consumer focused healthcare, the need for market-driven reforms, the evils of top-down government control, etc. etc. Those aren't things that Obama will be able to conclusively swat down in a few hours.

But we'll see. I don't have high hopes for the summit because Democrats haven't shown much ability to control the media narrative lately, and that's what this is really all about. Hopefully they'll do better than I think.

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The Pain of Spain is Mainly in the....Euro

Kevin Drum — Tue, 09 Feb 2010 19:21:07 +0000

Paul Krugman writes about Europe's troubles today:

Most press coverage of the eurozone troubles has focused on Greece, which is understandable: Greece is up against the wall to a greater extent than anyone else. But the Greek economy is also very small....

Well, OK, but Lehman Brothers was also pretty small relative to the rest of Wall Street. A failure in Greece could easily have knock-on effects that start taking out other weak countries and then spreads to not-so-weak countries. Still, point taken. Moving on:

....in economic terms the heart of the crisis is in Spain, which is much bigger. And as I’ve tried to point out in a number of posts, Spain’s troubles are not, despite what you may have read, the result of fiscal irresponsibility. Instead, they reflect “asymmetric shocks” within the eurozone, which were always known to be a problem, but have turned out to be an even worse problem than the euroskeptics feared.

The rest is worth reading if this stuff seems mysterious to you. It's very short, comes complete with some colorful charts, and gets across the main problems very succinctly. Basically, the problem is that Spain is in big trouble and needs to devalue its currency, but it can't because it doesn't have its own currency anymore. It has the euro, and the rest of the eurozone (i.e., Germany) doesn't want to adopt an expansionist monetary policy just to bail out Spain and a few other countries. So they're stuck.

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Is Killing Terrorists a Sign of Weakness?

Kevin Drum — Tue, 09 Feb 2010 17:36:39 +0000

Yesterday Fred Kaplan wrote a blistering critique of Sarah Palin's demagogic mockery of Barack Obama's anti-terrorist cred:

Obama, after all, has nearly tripled the number of U.S. troops sent to Afghanistan. He has approved nearly twice as many CIA airstrikes against Taliban targets in Pakistan during his first year of office as President Bush did in his final year (65 vs. 36), killing more than twice as many militants in the process (571 vs. 268).

He has sent military trainers to help the Yemeni government fight al-Qaida insurgents. He has continued to boost the military budget. He has maintained the Bush administration's secret surveillance programs (despite protests from many Democrats). And Palin seems to have forgotten the time, last April, when Obama authorized SEAL sharpshooters to kill the three armed pirates who'd hijacked the merchant ship Maersk Alabama off the coast of Somalia.

I didn't get around to commenting on this, but it seemed like a pretty good reply. What right-wing hawk could argue with all this, after all? The answer, it turns out, is former Pentagon apparatchik and torture apologist Marc Thiessen:

Hold the applause. Obama's escalation of the "Predator War" comes at the very same time he has eliminated the CIA's capability to capture senior terrorist leaders alive and interrogate them for information on new attacks. The Predator has become for President Obama what the cruise missile was to President Bill Clinton — an easy way to appear like he is taking tough action against terrorists, when he is really shying away from the hard decisions needed to protect the United States.

But what, exactly, does Thiessen mean here? Matt Yglesias translates:

The piece would make sense if only Thiessen were willing to write in the English language. He is, as we’ve seen, an advocate of torture. He thinks torture is an excellent thing, and like the leaders of the Spanish Inquisition he thinks it’s morally obligatory for the government to torture people. From inside this twisted mental space, the notion that killing terrorists is too soft on terror starts to make sense. After all, in Thiessenland it’s better to let four terrorists go free if that lets you torture a fifth. That’s just how awesome he thinks torture is. But he won’t write the word “torture” or say clearly “the problem with Obama killing these terrorists is that he should be torturing them.”

That pretty much seems to be true. Thiessen's use of the phrase "question them effectively" does indeed seem to be a thin euphemism for "torture them." After all, although the Obama administration has (following the lead of the Bush administration) increased the use of drone strikes, it hasn't, in fact, eliminated the CIA's capability to capture terrorists. What it has done is insist that interrogations of captured terrorists follow the guidelines in the Army Field Manual. In other words, no torture. But for some people, I guess that amounts to the same thing.

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Is Twitter Ruining the World?

Kevin Drum — Tue, 09 Feb 2010 17:07:04 +0000

George Packer is getting beat up for dissing Twitter, and now he says he's getting beat up for his response to the beatdown:

Just about everyone I know complains about the same thing when they’re being honest — including, maybe especially, people whose business is reading and writing. They mourn the loss of books and the loss of time for books. It’s no less true of me, which is why I’m trying to place a few limits on the flood of information that I allow into my head....The Internet and the devices it’s spawned are systematically changing our intellectual activities with breathtaking speed, and more profoundly than over the past seven centuries combined. It shouldn’t be an act of heresy to ask about the trade-offs that come with this revolution. In fact, I’d think asking such questions would be an important part of the job of a media critic, or a lead Bits blogger.

Instead, the response to my post tells me that techno-worship is a triumphalist and intolerant cult that doesn’t like to be asked questions.

I confess that I just don't get the vituperation on either side. The main response to Packer's original blog post came from New York Times Bits blogger Nick Bilton, and it was just....a response. Nothing to really get upset about. Ditto for Marc Ambinder's response, which Packer also links to. I don't doubt that some of the responses Packer got were triumpalist and intolerant, but that's just the nature of arguments on the internet. Hell, I get comments and emails by the hundreds telling me I'm a douchebag just because I support an excise tax on high-cost healthcare plans.

Beyond that, I have a hard time understanding why people get so worked up about other people's esthetic and lifestyle choices. I watch some crap TV and read some crap books sometimes. Other people prefer opera or stamp collecting. So what?

Likewise, I find Twitter useful because I'm a blogger. My job is to stay plugged into the news cycle throughout the day, and a constant stream of real-time tweets from a select group of people helps with that. For me, it's a lot less distracting than keeping the television going in the background, which is how a lot of people do this. But if I were, say, a medievalist plugging away on the definitive history of Roger Bacon and the birth of modern empiricism — well, Twitter probably wouldn't be very useful. A distraction, in fact. Again, so what?¹

Packer's response, I gather, is that he thinks blogs and Twitter and the new information economy in general aren't just esthetic choices. They're changing the way we live in profound ways, and we ought to question whether those changes are a good thing. That's hard to argue with, but considering the long, unedifying history of cranky elites complaining that new technology is turning our brains to mush and sending the world to hell in a handbasket, surely the burden of proof has shifted? I'm pretty open to Packer's side of things, actually, but I wouldn't give up printed books (16th century), newspapers (17th century), magazines (18th century), the telephone (19th century), or radio, TV, movies, or the internet (20th century) even though they all had their critics at the time too. The critics even made some good points sometimes, but I still wouldn't give up any of this stuff. A few years from now, I might feel the same way about Twitter (21st century).

As a personal choice, read and view what you want. But if you're going to add to the "death of culture" oeuvre, you really need to have a serious argument to make. And if you do, I promise to read it. As long as someone brings it to my attention via email, Google alert, blog trackback, or Twitter first.

¹For the record, this is pretty similar to my usual response about whether blogs are good or bad:

It's also why the endless debate over whether blogs are better or worse than the MSM is pointless. In the same way that newspapers excel at broad coverage of breaking news, TV excels at images, magazines excel at long analytic pieces, and talk radio excels at ranting screeds, blogs also excel at certain things. Trying to compare them to "journalism" is a mug's game, like trying to figure out if a beanbag is really a chair. Who cares? Beanbags are great for certain forms of sitting down and lousy at others.

Same for Twitter. It's good for quick, snarky comments and real-time links to interesting stuff. If that's not what you want, then don't use it.

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Mirandizing Abdulmutallab

Kevin Drum — Tue, 09 Feb 2010 15:00:00 +0000

Somehow I missed this when it came out, but last week Richard Serrano and David Savage wrote a piece in the LA Times about what really happened during the questioning of Christmas bomber Umar Farouk Abdulmutallab:

FBI agents questioned him at the hospital for just under an hour. They did not give him the Miranda warning, which advises suspects that anything they say can be used against them at trial, citing an exemption that allows them first to seek crucial information on any pending crime...."He was making comments like, 'Others were following me.' And that is a circumstance where you've got a potential disaster, that there are others out there and you don't have to Mirandize him right away."

But the questioning stopped when doctors said they needed to sedate Abdulmutallab to treat his injuries. At that point, the sources said, the agents backed off....When Abdulmutallab awakened, a second team of FBI agents was sent in. Authorities thought he might be willing to say even more to the second set of agents.

"We had to see if he was still willing to talk," another source said. "And it was pretty quickly apparent to them that he wasn't. He had had a change of mind. It was only after establishing that with some confidence that they decided to go ahead and Mirandize him."

But by that time, the second source said, "We had already talked to him for almost an hour and he provided a lot of information."

This is probably old news to most readers, but I figure if I missed, others might have too. So here it is. Bottom line: Abdulmutallab was treated the same way the Bush administration treated Richard Reid and every other terrorism suspect caught on U.S. soil since September 11th.

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"Finish the Kitchen"

Kevin Drum — Tue, 09 Feb 2010 01:53:38 +0000

As told by E.J. Dionne, this is a brilliant extended metaphor for why Democrats need to pass healthcare reform. It's about Rep. Jay Inslee (D–Wash.), who lost his House seat after the failure of healthcare reform in 1994 and then won it back four years later:

He recounted all the grief he and his family went through while work on their kitchen renovation dragged on and on and on. "During that time, I had blood lust against my contractor," Inslee said. "Six months went by, and he was still arguing with the plumber. Eight months went by, and there were still wires hanging down everywhere, and he was having trouble with the building inspector."

But eventually, the job got done. "And now I love that kitchen," Inslee recalls saying. "I bake bread in that kitchen. My wife cooks great meals in that kitchen. The contractor's now a buddy of mine, and I've had beers with him in that kitchen."

Inslee looked at his colleagues and declared: "We've got to finish the kitchen." His point was that Americans won't experience any of the benefits of health-care reform until Congress puts a new system in place.

I called Inslee about his kitchen oration after Rep. David Wu (D-Ore.) told me it was one of the turning points in calming Democrats' nerves. "Now," Wu says, "people run into him in the hallway, smile and say, 'Finish the kitchen.' "

Anyone who's ever had any contracting work done understands this sentiment instantly. Likewise, everybody hates the legislative process while it's underway. But once healthcare reform becomes law, the storm will begin to blow over and everyone will start to focus instead on the real, concrete benefits of the bill and the people who made them into reality. And just to remind of you what those benefits are, here's the nickel summary again:

Insurers have to take all comers. They can't turn you down for a preexisting condition or cut you off after you get sick or lose your job.
Community rating. Within a few broad classes, everyone gets charged the same amount for insurance.
A significant expansion of Medicaid.
Subsidies for low and middle income workers that keeps premium costs under 10% of income.
Limits on ER charges to low-income uninsured emergency patients.
Mandates minimum levels of coverage.
Caps on out-of-pocket expenses.
A broad range of cost-containment measures.
A dedicated revenue stream to support all this.

Pass the bill. And the sooner the better. It's time to have a real accomplishment under our belts, not a bunch of exposed sheetrock and arguments over when it's going to be finished.

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A Modern Day King Canute

Kevin Drum — Tue, 09 Feb 2010 01:18:19 +0000

Ross Douthat suggests that we liberals are being too hard on Rep. Paul Ryan's "Roadmap for America's Future." In particular, we're being too hard on his Medicare proposal:

The difference between the cost-control proposals in the Democratic bill and the cost-control proposals in Ryan’s roadmap isn’t that the former are “complicated and really hard to understand” (read: smart) while the latter are simple, unimaginative and cruel. It’s that the Democratic bill wouldn’t come close to balancing the budget in the long run, and Ryan’s plan would.

But this just isn't true. In fact, Ryan's plan doesn't have any cost controls. It merely has payment caps. Here's a description of how it would work, excerpted from Ryan's summary of the legislative text:

Medicare Payment. For beneficiaries first becoming eligible on or after 1 January 2021, creates a standard Medicare payment to be used for the purchase of private-sector health coverage.

- Payment Amount. Standard payment is the average amount Medicare currently spends per beneficiary, and is indexed for inflation by the projected average of the consumer price index and the medical economic index. For affected beneficiaries, the payment replaces all components of the current Medicare program.

Aside from a few minor bells and whistles related to risk and income adjustments, that's it. Ryan takes the average amount Medicare spends today and sets that as the cap for vouchers that would be given to seniors to buy private insurance. The value of the vouchers would deliberately be allowed to grow at a lower rate than medical inflation.

This isn't cost control. Regardless of what you think about Democratic cost control proposals, there's nothing in Ryan's plan that even attempts to reduce medical costs.¹ There's simply an arbitrary cap on how much the government will pay. In 30 years that cap will be about half what it takes to actually buy insurance, and if you can't afford to pay the other half yourself then you're out of luck.

Now it's true that if we adopted Ryan's plan and stuck to it, it would balance the budget. But not by reining in medical costs. It would balance the budget by simply refusing to pay for medical treatment for all seniors. The same is true for Ryan's discretionary budgeting proposal: he simply sets a cap and declares that the domestic discretionary budget has to meet it.

This is silliness. Anybody can pick up a piece of paper, write down some cap numbers, and declare the budget balanced. But that does nothing to bind future congresses and provides no plausible mechanism for actually reducing spending. It's just a number, not a serious proposal.

¹Actually, elsewhere in his plan there are two proposals that might reduce the growth of medical costs a bit: full transparency on pricing and tort reform caps. But whether or not you like these ideas, they're a fringe part of Ryan's plan that would have only a minor impact on cost control. What's more, they don't matter. Ryan's plan specifically limits voucher growth to less than medical inflation no matter what medical inflation is. So even if these things lower medical inflation a bit, they'd lower the voucher cap at the same time. No matter how you slice it, his plan relies on simply capping payments and then letting seniors sink or swim.

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Goldman Sachs vs. the Taxpayers

Kevin Drum — Mon, 08 Feb 2010 22:10:01 +0000

In the New York Times this weekend, Gretchen Morgenson and Louise Story write about how Goldman Sachs both helped along the collapse of AIG and profited from it at the same time. Basically, Goldman acquired lots of mortgage-backed securities they thought were likely to tank, then bought CDS contracts from AIG to insure against that decline. Megan Carpentier summarizes the rest:

When Goldman’s investments declined, they submitted insurance claims for the losses, but insisted on determining the amount of their damages on their own, without any input from AIG, any auditor or the market.
After Goldman got as much money out of AIG as they thought they could, their stock analysts issued a report about how AIG was bleeding cash and their creditors wouldn’t negotiate, without mentioning that AIG was bleeding cash because of them and that Goldman was the creditor that wouldn’t negotiate. AIG’s stock tanked.
The government stepped in, took an 80 percent share in AIG and then paid Goldman and the other creditors all the money they’d asked AIG for at the start of the negotiations in 2007, without using their power to force AIG’s creditors to negotiate.

Given the scope of AIG's problems, I guess I doubt if any of this really mattered in the long run. AIG was going to collapse no matter what Goldman did or didn't do, so in a sense this is a bit of sideshow. But then there's this:

When the federal government, including then-Treasury Secretary Hank Paulson (who once served as chairman and CEO of Goldman Sachs), directed AIG to pay Goldman exactly what it wanted, it overrode significant and long-standing misgivings by AIG’s lawyers and accountants that Goldman’s estimates of its losses were correct. Morgenson and Story note that the prices on the very securities for which Goldman demanded insurance payments have since rebounded — but under the terms of the deal struck by the federal government, Goldman doesn’t have to pay a cent of its insurance settlement back to either AIG or the taxpayers. That’s quite the sweetheart deal for Goldman Sachs, if not taxpayers.

Now, of course, the question is what did Tim Geithner know about this and when did he know it? That story is still developing.

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Quick Hits

Kevin Drum — Mon, 08 Feb 2010 19:38:19 +0000

A few quick hits:

The Economist's Erica Grieder is at a Sarah Palin rally in Houston and reports that she's a lot better in person talking to an adoring crowd than she is on television being grilled by skeptical journalists. (And who wouldn't be, after all?) But there's also this: "Although Mrs Palin often attacks other politicians and says that her policies would be better than theirs, she doesn't welcome debate, and her preferred oppositional strategy is abrupt withdrawal. Think about the resignation from the Oil & Gas commission and from the statehouse, or her choice to "go rogue" rather than convince the McCain campaign of the merits of her approach. That's how you get 30% of the vote, not 51%."
A state department SUV plowed into a Daily Caller reporter last week. Result: a broken left knee, lacerations, bruises, and a ticket for jaywalking. Nice.
Healthcare premiums paid by employers aren't taxed. This lowers its effective cost, and simple economics says that it therefore increases consumption of employer-based healthcare. Austin Frakt is trying to figure out how much less healthcare we'd consume if we did away with its tax subsidiy, and comes up with a rough guess of $100 billion per year. "And that’s the price tag of health reform." So we'd spend less and the government would get an additional revenue stream. That's why so many of us like the idea of the excise tax, which is basically a start at taxing employer healthcare premiums like ordinary income.
Felix Salmon reports that Citigroup plans to start selling risk protection against a financial crisis. What could possibly go wrong?

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Why Do We Subsidize Debt?

Kevin Drum — Mon, 08 Feb 2010 18:41:38 +0000

I talk about leverage as the source of all evil in the financial sector fairly frequently, but it's been a while since I've had a post reminding everyone about the tax treatment that makes debt so attractive. Today, Pete Davis revisits this issue:

The corporate income tax deduction for interest produced a -6.4% tax rate on debt financed investments, while the double taxation of equity income (dividends and capital gains) produced a 36.1% tax on equity financed investments according to this 2005 Congressional Budget Office study. See Table 1. That negative tax rate is the root of the fiscal crisis. Taxpayers paid a large subsidy for Wall Street investors to take those risks.

....The hard part of tax reform is that you have to raise taxes on those getting the subsidies. There are far fewer of them than the many taxpayers who stand to get slightly lower tax rates, so Wall Street corporations will finance the lobbying to kill tax reform before it has to chance to prevent the next financial crisis. We'll end up with watered down quick fixes at best, and the roots of the next financial crisis will remain in the Tax Code.

I'm not sure that I buy the tax code as the "root" of the financial crisis, but it's certainly a contributing factor — and at the very least, removing its tax favored status would remove some of the incentive for the enormous gearing that made the housing bubble so catastrophic. If we want to address leverage abuse, this is one of the arrows that should be in our quiver.

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Quote of the Day: Living With DADT

Kevin Drum — Mon, 08 Feb 2010 18:11:02 +0000

From Andrew Sullivan, responding to Rich Lowry's claim that the military's Don't Ask Don't Tell policy isn't a substantial burden on gays because, after all, "we all have aspects of our lives we don't talk about":

Rich says that it's no big deal to live hiding one's sexual orientation. If you're straight, try it for one day.

Try never mentioning your spouse, your family, your home, your girlfriend or boyfriend to anyone you know or work with — just for one day. Take that photo off your desk at work, change the pronoun you use for your spouse to the opposite gender, guard everything you might say or do so that no one could know you're straight, shut the door in your office if you have a personal conversation if it might come up.

Try it. Now imagine doing it for a lifetime. It's crippling; it warps your mind; it destroys your self-esteem. These men and women are voluntarily risking their lives to defend us. And we are demanding they live lives like this in order to do so.

To be honest, it didn't look to me like Lowry's heart was really in this one. He didn't even have the talking points down. Why not come out of the closet, Rich, and admit that you're actually OK with repealing DADT?

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Healthcare's PR Battle

Kevin Drum — Mon, 08 Feb 2010 17:09:43 +0000

As regular readers know, I'm skeptical of Barack Obama's continued insistence that the way forward on healthcare is to keep talking with Republicans in the hopes that eventually they'll start cooperating. But hey — maybe his political instincts are the right ones. Maybe he understands better than me that the public needs to see graphically that Democrats did everything they could to work with the GOP and were completely rebuffed. Maybe.

In any case, he's proposed yet another meeting with Republicans later this month to chew the fat over healthcare reform and incorporate the very best ideas they have to offer. The problem, as Ezra Klein points out in detail this morning, is that the current Senate bill actually incorporates most of the four big ideas that Republicans have put on the table: buying insurance across state lines, allowing small businesses to pool together to buy insurance, allowing states more autonomy to implement their own ideas, and tort reform:

On Sunday, John Boehner and Mitch McConnell responded to Barack Obama's summit invitation by demanding Obama scrap the health-care reform bill entirely. This is the context for that demand. What they want isn't a bill that incorporates their ideas. They've already got that. What they want is no bill at all. And that's a hard position for the White House to compromise with.

Now, as Ezra explains, Republicans didn't get 100% of what they wanted. There's no real tort reform in the Democratic bills, at least not the kind that Republicans want, and the other three items are more limited than the original Republican proposals. Still, with the exception of tort reform, I think it's fair to say that GOP negotiators extracted quite a few concessions during the Gang of Six negotiations with Max Baucus. Certainly as much as any party should expect that controls only 40% of Congress.

Barack Obama wants a chance to make that clear to the country on national television. Republicans, understandably, are rejecting his invitation to meet because they're scared silly that he might succeed. But if they refuse to meet at all, they play into his hands as well.

I'm still not convinced this is the right way to go, but there's no question that Obama has put the GOP into a tough position. And since it's basically a PR move, it's largely going to succeed or fail based on how well Democrats and Republicans are able to make their case in the media. Stay tuned.

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Who Do You Trust?

Kevin Drum — Mon, 08 Feb 2010 16:46:27 +0000

AdAge reports that Edelman's "Trust Barometer" has grim news: we don't trust much of anybody anymore when it comes to product and company recommendations. But for a lucky few, there's also some good news:

Conversely, CEOs — who have of late been trotted out as public faces of their companies in times of stress, such as General Motors CEO Ed Whitacre — saw the biggest year-over-year increase from 17% in 2009 to 26% this year. Other groups seeing increases in the level of consumer trust were government officials (22% vs. 27%), a financial/industry analyst (46% vs. 52%)....

In some cases, social networks themselves may be contributing to the decline in trust. Platforms such as Facebook and Twitter have allowed people to maintain larger circles of casual associates, which may be diluting the credibility of peer-to-peer networks. In short, the more acquaintances a person has, the harder it can be to trust him or her. Mr. Edelman believes the Facebook component has "absolutely" played a role in diluting trust levels.

If this is really true, it's beyond bizarre. Consumers trust each other less but trust CEOs, government officials, and financial analysts more? In other words, they trust the very people who were most responsible for our recent financial collapse? WTF?

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FBI Procedure 101

Kevin Drum — Mon, 08 Feb 2010 16:08:51 +0000

White House counterterrorism chief John Brennan, apparently a little tired of Republican grandstanding over the fact that the Christmas bomber was taken into custody by the FBI, told Meet the Press yesterday that he had personally briefed the GOP leadership about this the day after Christmas and nobody had complained about it. Spencer Ackerman reports their response:

Sure enough, Sen. Chris Bond (R-Mo.) and Rep. Pete Hoekstra (R-Mich.), the ranking Republicans on the congressional intelligence committees, insisted that Brennan never specifically told them the FBI would Mirandize Abdulmutallab. “If he had I would [have] told him the Administration was making a mistake,” Bond said. The entire Republican leadership, including fact-averse Sen. Mitch McConnell (R-Ky.) and House GOP leader John Boehner (R-Ohio) echoed Bond’s claims in one form or another. Apparently these men, who claim leadership on national security, know less about FBI procedure than the average movie-goer. Obviously the FBI Mirandizes suspects in their custody.

I suppose facts don't really matter in this case, since Republicans have decided that yammering about Obama being soft on airplane bombers is a winning strategy and they don't plan to stop no matter what. Still, just for the record, it would be nice if the FBI could tell us if it Mirandized all the terrorist suspects it held during the Bush administration. I'm pretty sure the answer is yes, and I'm pretty sure no Republicans ever complained about it then.

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Deficit Fever

Kevin Drum — Mon, 08 Feb 2010 06:11:28 +0000

Paul Krugman wonders why everyone is suddenly panicked over the long-term deficit:

The main difference between last summer, when we were mostly (and appropriately) taking deficits in stride, and the current sense of panic is that deficit fear-mongering has become a key part of Republican political strategy, doing double duty: it damages President Obama’s image even as it cripples his policy agenda. And if the hypocrisy is breathtaking — politicians who voted for budget-busting tax cuts posing as apostles of fiscal rectitude, politicians demonizing attempts to rein in Medicare costs one day (death panels!), then denouncing excessive government spending the next — well, what else is new?

It's more than that, of course. Guys like David Walker and Pete Peterson have been banging the deficit drum for years and were mostly dismissed as tedious cranks. Editors would barely grant them a squib on A16 for their speeches and PowerPoint presentations. Likewise, the long-term problems of Medicare and Social Security have been common knowledge for a long time and haven't changed a whit in the past year. The other causes of the deficit — Bush-era tax cuts, Bush-era war spending, Bush-era Medicare expansion, and a Bush-era recession — are also common knowledge. And the global recession makes short-term deficits far more defensible than they ever were under Bush.

Given all this, the fact that Republicans think deficit mongering is a handy political tool isn't enough to explain the sea change in media attention. Reporters are all properly cynical about political opportunism, after all. The far more important cause of the change is conservative media. Despite the fact that the operation of the noise machine is hardly a secret, reporters and editors remain curiously obtuse about the effect it has on them. But when the machine goes into overdrive, as it has with the deficit, its memes take on a life of their own. The fact that "regular people" are talking about the deficit is what makes it news, but of course they're only talking about it because every conservative outlet in the country suddenly contracted deficit fever last year on January 20th. And to appropriate a saying, when the Drudge/Fox/Rush axis catches a fever, the rest of the media catches pneumonia. So more people talk about it. And the media pays even more attention to it. Nice work if you can get it.

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Climate Change and its Discontents

Kevin Drum — Mon, 08 Feb 2010 04:04:27 +0000

I haven't been following in detail the various recent disputes about specific global warming claims, but if Walter Russell Mead is to be believed, there are more than I thought:

The former head of IPCC has publicly said the IPCC risks losing all credibility if it can’t clean up its act. The head of the largest British funder of environmental research has joined the head of Greenpeace UK in criticizing the IPCC. (At Greenpeace, they want Pachauri to resign.) The Dutch government has demanded that the IPCC correct its erroneous assertion that half of the Netherlands is below sea level. Actually, it’s only about a quarter. A prediction about the impact of sea level increases on people living in the Nile Delta was taken from an unpublished student dissertation. The report contained inaccurate data about generating energy from waves and about the cost of nuclear power (this information was apparently taken without being checked directly from a website supported by the nuclear power industry). The deeply environmentalist Guardian carries a story documenting the decline in both public and Conservative Party confidence in need to address global warming.

....When the IPCC has its former chief, the Guardian newspaper and the Dutch government demanding change, something has got to give.

This is in addition to the CRU emails, the Himalayan glacier debacle, the Chinese weather station controversy, and a problem with claims about north African crop reductions. Apparently, when it rains, it pours.

But as I said, I haven't been following this stuff closely. The CRU emails mostly seemed overblown to me, and taken by themselves they'd probably have blown over pretty quickly. But start adding all this other stuff — even if none of it really affects the core claims of climate change — and the public is going to tune out even more than it already has unless the climate community either provides some explanations post haste or else makes credible commitments to clean up its act in the very near future.

For now, though, since I haven't spent a lot of time digging into these disputes myself, I'm just posting this in order to generate comments and responses. Is there anything to them? Or just a whole bunch of mud being thrown on the walls by the usual suspects?

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Obama's Inner Circle

Kevin Drum — Mon, 08 Feb 2010 03:14:59 +0000

If you hate Rahm Emanuel — and I know lots of you do — you're going to love Edward Luce's Financial Times piece that blames Barack Obama's reliance on a small inner circle of aides for his first-year growing pains:

In dozens of interviews with his closest allies and friends in Washington — most of them given unattributably in order to protect their access to the Oval Office — each observes that the president draws on the advice of a very tight circle. The inner core consists of just four people — Rahm Emanuel, the pugnacious chief of staff; David Axelrod and Valerie Jarrett, his senior advisers; and Robert Gibbs, his communications chief.

....Administration insiders say the famously irascible Mr Emanuel treats cabinet principals like minions. “I am not sure the president realises how much he is humiliating some of the big figures he spent so much trouble recruiting into his cabinet,” says the head of a presidential advisory board who visits the Oval Office frequently. “If you want people to trust you, you must first place trust in them.”

In addition to hurling frequent profanities at people within the administration, Mr Emanuel has alienated many of Mr Obama’s closest outside supporters. At a meeting of Democratic groups last August, Mr Emanuel described liberals as “f***ing retards” after one suggested they mobilise resources on healthcare reform.

“We are treated as though we are children,” says the head of a large organisation that raised millions of dollars for Mr Obama’s campaign. “Our advice is never sought. We are only told: ‘This is the message, please get it out.’ I am not sure whether the president fully realises that when the chief of staff speaks, people assume he is speaking for the president.”

This comes via Steve Clemons, who says Luce's observations aren't getting as much currency as they should:

This Luce piece is unavoidably, accurately hard-hitting, and while many of the nation's top news anchors and editors are sending emails back and forth (I have been sent three such emails in confidence) on what a spot-on piece Luce wrought on the administration, they fear that the "four horsepersons of the Obama White House" will shut down and cut off access to those who give the essay 'legs.'

....President Obama needs to take stock quickly. Read the Luce piece. Be honest about what is happening. Read Plouffe's smart book again. Send Rahm Emanuel back to the House in a senior role. Make Valerie Jarrett an important Ambassador. Keep Axelrod — but balance him with someone like Plouffe, and get back to putting good policy before short term politics.

Noted without comment, since I don't really know if Luce and Clemons have it right. But both pieces are worth a look, and anyway, I figure there's a good audience out there for a bit of good anti-Rahm porn. Enjoy.

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Is Greece the Next Shoe?

Kevin Drum — Mon, 08 Feb 2010 00:32:17 +0000

Simon Johnson is following the economic crisis that's mounting daily in Greece — and in Spain, Portugal, Ireland, and Italy — and is deeply pessimistic:

The IMF cannot help in any meaningful way. And the stronger EU countries are not willing to help — in part because they want to be tough, but also because they do not have effective mechanisms for providing assistance-with-strings. Unconditional bailouts are simple — just send a check. Structuring a rescue package that will garner support among the German electorate — whose current and future taxes will be on the line — is considerably more complicated.

The financial markets know all this and last week sharpened their swords. As we move into this week, expect more selling pressure across a wide range of European assets.

As this pressure mounts, we’ll see cracks appear also in the private sector. Significant banks and large hedge funds have been selling insurance against default by European sovereigns. As countries lose creditworthiness — and, under sufficient pressure, very few government credit ratings will hold up — these financial institutions will need to come up with cash to post increasing amounts of collateral against their derivative obligations (yes, the same credit default swaps that triggered the collapse last time).

I can't pretend to have any kind of deep knowledge about this. But ever since the 2008 bank bailout I've had a persistent buzz in my head telling me that another shoe is likely to drop somewhere. I thought it might be Eastern Europe, channeled through Austria, or maybe something in Asia. The Dubai default seemed like a canary in the coal mine. Or even some kind of shock in the U.S. related to ARM resets. But now it looks like it might be Greece.

Hopefully Johnson is just being overly pessimistic. But one of the key lessons of the 2008 crash was how fast things can go south when markets lose confidence. If Greece fails, it won't just slowly slide into default, it will get pushed there by opportunistic investors who suddenly decide to place huge bets on its failure, aided by panicked investors who see what's happening and all try to head for the exits at once. If and when that happens, Europe or the IMF or the United States will have only a few days to act to prevent it from becoming a continent-wide rout.

On the other hand, Greece's sale of treasury bonds last week went pretty well. So maybe things aren't as bad as we think. That's what I keep telling myself, anyway.

UPDATE: More here: "The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity — while admirable in one sense — is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes."

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More on the Sugar Lobby

Kevin Drum — Sun, 07 Feb 2010 21:47:59 +0000

Earlier this morning I posted a chart showing how much money had been spent lobbying against a tax on sugared beverages by Pepsi, Coke, and the American Beverage Association. I just want to make one more point about it.

Assuming the LA Times did its sums correctly,¹ this is one of the clearest examples you'll ever see of how much money can be spent lobbying on one specific piece of legislation. Usually that's hard to figure out, since industries spend a lot of money lobbying all the time, and it's hard to say how much is spent on one issue vs. another. But for six straight years, these three companies spent about $3 million on lobbying activities. Then in 2009 that suddenly jumped to $37 million. Since there wasn't much else going on that would have seriously affected them, that means they spent $34 million just to defeat the sugar tax.

For comparison, that's nearly as much as the entire aerospace industry spends on lobbying for the entire defense budget each year. It's five times more than the sugar lobby itself spends lobbying on all sugar-related issues each year. It's about as much as organized labor spends on all lobbying activities for everything.

That's the kind of muscle that the business community can bring to bear when it cares to. As much as the entire annual lobbying budget of organized labor or the aerospace industry, all for one single piece of legislation that never really had a ton of support in the first place. That's a lot of leverage.

¹The caveat here is that the Times used CRP figures for 2003-08 but its own research for 2009. So it's possible that the comparison isn't apples-to-apples due to different methodologies.

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Photo of the Day: Cheat Sheet Edition

Kevin Drum — Sun, 07 Feb 2010 17:39:36 +0000

Sarah Palin is a PR genius. The same way that Madonna is a PR genius or Al Sharpton is a PR genius. No matter how tired we get of them, somehow they always figure out a way to keep themselves in the public eye.

Yesterday Palin delivered a routine stemwinder to a medium sized crowd and managed to get a ton of publicity for it. But that's not all! It turns out that last night's speculation was right: she really did have a cheat sheet on the palm of her hand that she consulted during the softball Q&A after the speech. Just like your average seventh grader taking an algebra test. Has any politician in history ever done this before?

And even the notes themselves are fascinating. Here's what she wrote down:

Energy

~~Budget~~ Tax Cuts

Lift American Spirits

The most obvious question is: why would anyone need to write this stuff down? It's not like she's trying to remember the quadratic equation or anything. For someone who swims in the seas that Palin swims in, this is about the equivalent of writing down a note to remember your birthday.

But enough mockery. At this blog we prefer a more high-minded, policy-oriented critique of our major politicians. So here it is: it turns out that Sarah Palin doesn't believe in budget cuts. In fact, she went to the trouble of deliberately crossing it out. Just like every other garden variety faux fiscally conservative Republican, she doesn't really want to cut the budget because that runs the risk of annoying some interest group or another. She only wants to cut taxes. Normally, though, we don't have graphological proof of this. With Palin, now we do.

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Quote/Chart of the Day: The Sugar Lobby

Kevin Drum — Sun, 07 Feb 2010 17:03:25 +0000

Today's all purpose post begins with the quote of the day. It comes from the LA Times:

From the beginning, fast food and beverage company executives were uneasy about President Obama. He and his wife were known advocates of healthy eating.

That is scary! Advocates of healthy eating could pose a real problem. The industry's response is our chart of the day:

The entire story is worth reading. As a policy matter I'm not sure whether I support a tax on sugared beverages or not, but in the end it really doesn't matter. What matters is that the food industry doesn't want it, they're willing to spend a lot of money to make sure it never happens, and both interest groups and politicians are unwilling to risk losing their support. So, no tax.

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Chart of the Day: The Volcker Rule

Kevin Drum — Sun, 07 Feb 2010 05:45:13 +0000

Commercial banks typically make long-term loans, something that can be risky because it ties up their money for years at a time. But usually this isn't a big problem, since commercial banks also have a very stable deposit base that provides the bulk of their funding.

Conversely, investment banks get a great deal of their funding from overnight loans in the repo market. This can be inherently risky too, but usually it's not a big problem either because their investments aren't in long-term loans, but in liquid securities that can be bought and sold quickly if their funding goes south.

But what happens when you have a mismatch? What if institutions with volatile, short-term funding are tying up their money in long-term loans? Via Mike Konczal, Raj Date says this is the real problem we need to address, not Paul Volcker's plan to prevent commercial banks from doing proprietary trading:

Many of the credit bubbleʼs excesses can be traced to the “shadow banking” sector, which is essentially the intersection between commercial banking and investment banking business models: shadow banks take illiquid credit and interest rate risk (like commercial banks), but fund themselves principally through the wholesale markets (like investment banks). Because of long-recognized regulatory loopholes, shadow banks were also frequently able to operate with significantly lower capital requirements than commercial bank competitors. With both capital and funding advantages in hand, shadow banks grew to some 60% of the U.S. credit system.

....With that context in mind, the focus of the Volcker Rule, as currently described, seems misplaced — or at least too narrow. The crisis did not stem from commercial banks stumbling into investment banking businesses; the crisis did stem, in the main, from allowing firms that fund themselves in the wholesale markets to take on credit and rate risk as though they were commercial banks or hedge funds.

Note that cheap credit + low capital requirements = enormous leverage. And that makes the entire shadow banking system extremely fragile. The key chart in Date's presentation is below, but the entire thing is short and worth reading. More later.

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The Power of Palin

Kevin Drum — Sun, 07 Feb 2010 04:50:30 +0000

Andrew Sullivan watched Sarah Palin's speech to the tea party convention tonight and came away scared:

Above all, she is capable of generating a personality cult — much, much more so than Obama, because she can harness Christianism to her divine destiny. The power of this kind of appeal — of a charismatic, beautiful woman, an icon of the pro-life cause, persecuted by the evil elites, demonized by libruls, and commanding the biggest military on earth — should not in my view be under-estimated.

I totally get this. On the other hand, here's the New York Times:

The convention had gathered here to try to turn the activism of the Tea Party rallies over the last year into actual political power. Her speech was the keynote event of the convention, and the big draw for many of the 600 people who had paid $549 to attend — another 500, organizers said, paid $349 just to see for her speech alone.

Granted, that's a fair chunk of change for the average tea partier. Still, only about a thousand people were willing to pay it, and a thousand people is really not a huge number. Palin obviously has an impressive gut feel for the politics of resentment, but over time I think her Fox News gig is going to have the same effect that running for vice president did: it's going to make her less popular. As she makes the inevitable transition from fascinating pop icon to dreary regular commentator with nothing original to say, her star is going to wane.

Plus there's the apparent fact that she writes notes on her hand to remind her of things to say. Or so it seems. You be the judge about 45 seconds into this clip. (Alternative explanation: There was nothing on her hand. Looking down was a deliberate stunt designed to start lefty tongues wagging, thus providing her with yet another example of how liberal elites are so threatened by her that they have to invent ridiculous sneers every time she so much as moves her head a few inches. But does she have the animal cunning to plan something like that? Your call.)

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