Month: June 2012

Pete Peterson’s go-to gal

by digby

I read an email earlier today in which the writer referred to Lori Montgomery of the Qashington Post as the Judy Miller of deficit reduction. Dean Baker explains why:

Readers of an article that highlighted a study by the National Association of Manufacturers warning of the loss of nearly 1 million jobs due to cuts in military spending are undoubtedly asking this question. They no doubt remember a plan cooked up by the paper’s publisher, Katherine Weymouth, to sell lobbyists access to its reporters at dinners at her house. This article essentially lent the paper’s authority to a completely misleading study.

The basic story here is very simple, when you are in a severe downturn any spending creates jobs. If we spend money on schools and hospitals that creates jobs. If we pay people to dig holes and fill them up again, it creates jobs. And, if we pay people to build weapons for the military it creates jobs.

There is nothing magical about military spending in this story. In fact, research that was not paid for by the National Association of Manufacturers shows that military spending actually creates fewer jobs per dollar than other types of government spending.

When the economy is not in a downturn, then military spending destroys jobs. An analysis done for CEPR by Global insights showed that a long-run increase in military spending of 1 percent of GDP (roughly the amount spent on the war in Iraq in its peak years) would reduce the number of jobs by almost 700,000. The hardest hit sectors would be construction and manufacturing.

If the Post wanted to inform rather than mislead its readers, it could have just run a piece pointing out that cutting government spending at this point in the business cycle will cost jobs. (Raising taxes will also cost jobs, but not by as much, especially if the tax increases target higher income people who would not change their spending much in response to a decline in disposable income.)

In short deficit reduction right now will cost jobs. The politicians in Washington may not understand this fact, but the Post’s reporters and editors should.

No, they’ve all been captured by marauding Austerians who insist that the only thing that will save the economy is for average people to sacrifice. We’ve seen this move over and over again …

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A Republican lets the cat out of the bag on voter ID

by digby

Not that it wasn’t obvious, but still …

House Majority Leader Mike Turzai (R-Allegheny) suggested that the House’s end game in passing the Voter ID law was to benefit the GOP politically.

“We are focused on making sure that we meet our obligations that we’ve talked about for years,” said Turzai in a speech to committee members Saturday. He mentioned the law among a laundry list of accomplishments made by the GOP-run legislature.

“Pro-Second Amendment? The Castle Doctrine, it’s done. First pro-life legislation – abortion facility regulations – in 22 years, done. Voter ID, which is gonna allow Governor Romney to win the state of Pennsylvania, done.”

The statement drew a loud round of applause from the audience. It also struck a nerve among critics, who called it an admission that they passed the bill to make it harder for Democrats to vote — and not to prevent voter fraud as the legislators claimed.

Well, since there is no systemic voter fraud that’s been denying GOP victories, we know that the only reason was vote suppression. Nice to see them admit it for once.

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QOTD, Abraham Lincoln edition

by David Atkins

It’s always funny to me when conservatives try to take credit for Abraham Lincoln simply because he was a “Republican.” Most progressives, of course, point to his position against slavery and discrimination to argue that he wouldn’t dream of joining the ranks of the modern Republican Party.

But Lincoln wasn’t just a progressive on race. Just as importantly, he was a progressive on labor and capital as well. My favorite Lincoln quote is this one:

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.

In the same way that Ronald Reagan would be considered a RINO, Lincoln would be called dangerous Communist today.

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Loosey Goosey rules for congressional insider

by digby

I guess this is just one of the perks:

In January 2008, President George W. Bush was scrambling to bolster the American economy. The subprime mortgage industry was collapsing, and the Dow Jones industrial average had lost more than 2,000 points in less than three months.

House Minority Leader John A. Boehner became the Bush administration’s point person on Capitol Hill to negotiate a $150 billion stimulus package.

In the days that followed, Treasury Secretary Henry M. Paulson Jr. made frequent phone calls and visits to Boehner. Neither Paulson nor Boehner would publicly discuss the progress of their negotiations to shore up the nation’s financial portfolio.

On Jan. 23, Boehner (R-Ohio) met Paulson for breakfast. Boehner would later report the rearrangement of a portion of his own financial portfolio made on that same day. He sold between $50,000 and $100,000 from a more aggressive mutual fund and moved money into a safer investment.

The next day, the White House unveiled the stimulus package.

Boehner is one of 34 members of Congress who took steps to recast their financial portfolios during the financial crisis after phone calls or meetings with Paulson; his successor, Timothy F. Geithner; or Federal Reserve Chairman Ben S. Bernanke, according to a Washington Post examination of appointment calendars and congressional disclosure forms.

The lawmakers, many of whom held leadership positions and committee chairmanships in the House and Senate, changed portions of their portfolios a total of 166 times within two business days of speaking or meeting with the administration officials. The party affiliation of the lawmakers was about evenly divided between Democrats and Republicans, 19 to 15.

They have no shame.

Questions about conflicts of interest and possible insider trading on Capitol Hill prompted Congress to pass the Stock Act this year. The act specifically bans lawmakers, their staffs and top executive branch officials from knowingly using confidential information gleaned from their legislative roles to benefit themselves, their family members or friends.

The act does not prohibit lawmakers from trading stocks in companies that appear before them or from reworking their portfolios after briefings with senior administration officials. Top executive branch officials are banned from investing in industries they oversee and can influence — for example, Fed chairmen are prohibited from investing in the financial sector.

The Post analysis did not turn up evidence of insider trading. Instead, the review shows that lawmakers routinely make trades that raise questions about whether members of Congress have an investing advantage over members of the public.

“Members of Congress are still loosey-goosey about what they require of themselves,” said Painter, who teaches securities law at the University of Minnesota. “I think it’s time for Congress to impose the same rules on themselves that they impose on others. The Stock Act doesn’t do that

Hey, why shouldn’t they be able to profit from their inside information? Isn’t that what our great economy is built on?

Mandate madness

by digby

Ezra has a rundown of how the Republicans strategized their opposiiton to health care. This is just an excerpt:

The first step was, perhaps, the hardest: The Republican Party had to take an official and unanimous stand against the wisdom and constitutionality of the individual mandate. Typically, it’s not that difficult for the opposition party to oppose the least popular element in the majority party’s largest initiative. But the individual mandate was a policy idea Republicans had thought of in the late-1980s and supported for two decades. They had, in effect, to convince every Republican to say that the policy they had been supporting was an unconstitutional assault on liberty.
But they succeeded. In December 2009 every Senate Republican voted to call the individual mandate unconstitutional. They did this even though a number of them had their names on bills that included an individual mandate.

Ok. But here I am again, saying well, yeah. It’s right there on page 376 of the health care chapter of the Republican Playbook. It was written by Bill Kristol in 1993:

Any Republican urge to negotiate a “least bad” compromise with the Democrats, and thereby gain momentary public credit for helping the president “do something” about health care, should also be resisted. Passage of the Clinton health care plan, in any form, would guarantee and likely make permanent an unprecedented federal intrusion into and disruption of the American economy–and the establishment of the largest federal entitlement program since Social Security. Its success would signal a rebirth of centralized welfare-state policy at the very moment we have begun rolling back that idea in other areas. And, not least, it would destroy the present breadth and quality of the American health care system, still the world’s finest. On grounds of national policy alone, the plan should not be amended; it should be erased…

The president makes his pitch to the 79 percent of Americans who are inclined to agree that “the system” isn’t working, hoping to freeze health care debate on the level of grand generalization about structural defects. He is on the side of the angels rhetorically–denunciations of the status quo, easy moralism about his own alternative, rosy predictions of a utopian future in which security is absolutely guaranteed. Republicans can defeat him by shifting that debate toward specific, commonsense questions about the effect of Clinton’s proposed reforms on individual American citizens and their families, the vast majority of whom, again, are content with the medical services they already enjoy.

Republicans should ask: what will Bill Clinton’s health care plan do to the relationship most Americans now have with their family doctor or pediatrician. What will it do to the quality of care they receive? Such questions are the beginning of a genuine moral-political argument, based on human rather than bureaucratic needs. And they allow Republicans to trump Clinton’s security strategy with an appeal to the enlightened self-interest of middle-class America.

Granted, the constitutional question itself was new, but so what? The political strategy was exactly the same. The mandate was just an added agenda item among all the others that were designed to make people feel they were losing something instead of gaining.

And the mandate issue was a good one. Even a lot of liberals, including yours truly, were queasy about it because we hated the idea of being forced to buy a product from sleazy insurance companies who are making a profit from this government edict. It wasn’t all that difficult to see that it would be controversial.

Anyway, the hard line opposition was baked into the cake. Why anyone ever thought otherwise is beyond me. This is the political world we live in — have been living in for some time. I don’t understand the surprise.

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Papers please!

by digby

Twitter has made Supreme Court decision day rather entertaining. The only time I’ve ever seen this sort of instant, and often wrong, analysis was Bush vs Gore with reporters standing on the steps reading aloud from the decision and trying to figure out what it said.

the same thing happened this morning in the Arizona Immigration case. At first everyone was thrilled that the Court had struck down most of the law. But within a short period of time it was clear that it had actually left the most heinous piece of the law intact (with an opening to revisit another day.) Here’s Greg Sargent:

The court’s decision to strike down the first three provisions is welcome news to immigration advocates, and suggests the Obama administration was right to challenge the law. But advocates expected that those provisions wouldn’t survive the decision. The problem is that the court upheld the aspect of the law that is most worrisome — the part that requires police to check the status of a person if there is “reasonable suspicion” that the person is here illegally.

“The real make or break was the show-me-your-papers provision,” Frank Sharry of America’s Voice tells me. “Basically they upheld it.”

There are several problems here. The first is that this could lead to racial profiling, says Marshall Fitz of the Center for American Progress. “It’s not a sweeping victory for the other side, but the provision we most worried about was the one giving cops the ability to stop people and ask for their papers,” Fitz says. “We think this will lead inevitably to racial profiling, based on the way they sound and the way they look.”

Second: The fact that the High Court has suggested that there are ways for states to implement and/or interpret this law could encourage other states to try their own versions of it, rather than dissuade them from doing so. Efforts to emulate the Arizona law are alreadyunderway in a handful of states.

“There are lots of Joe Arpaios out there,” Fitz says, in a reference to the Arizona sheriff. “States will say, `Look, they upheld this.’”

It would appear that we are going to see the laboratories of democracy experiment with “your papers please” policies. If it goes the way Alabama’s did it would probably behoove everyone to start carrying their passports with them. Remember?

To arrest one foreign car-making executive under Alabama’s new tough immigration laws may be regarded as a misfortune; to arrest a second looks like carelessness.

A judge has acted to put a Japanese employee of Honda Motor Company out of his misery by dismissing immigration charges against him, three days after he was booked under Alabama’s new immigration laws that have been billed as the most swingeing in America. Ichiro Yada is one of about 100 Japanese managers of the company on assignment in southern state.

The whole thing was so embarrassing that they’re trying to reform the law.

And then there’s this:

Alabama tomato farmer Darryl Copeland looked out over his seedlings and fretted about this year’s harvest.

He was afraid his seasonal migrant workforce might not return for the summer picking season, opting to stay away rather than risk running afoul of Alabama’s stringent immigration law. The crew he awaits is picking the Florida harvest.

“I had to cut back my planting not knowing if the labor is going to be available,” said Copeland, 47, who planted just two-thirds of his 30 acres on the far side of Straight Mountain in northeastern Blount County.

“I don’t know what we’re going to do if they run every illegal out of here. It’s going to be hard to stay in business.”

Fellow Blount County tomato farmer Tim Battles planted just 12 of his 25 acres because of uncertainties engendered by the law.

“I’ve got $160,000, $170,000 in my crop,” he said. “Let’s say (immigration enforcement officers) come in July and haul everyone off. I lose it all. What they’re doing down in Montgomery (the state capital) is governing us out of a job.”

Modeled after Arizona’s controversial 2010 immigration law, Alabama’s statute and others also passed last year – in Georgia, Indiana, South Carolina and Utah – require state and local law enforcement officers to verify the immigration status of those they suspect of being in the country illegally.

Now, Alabama is finding out whether it can live without undocumented immigrants, estimated to number 120,000 in 2010, who flocked to this southern state only in recent decades.

There’s always chain gangs.

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The “expenditure” trap

by digby

You know I’m just an old country blogger with no particular expertise, but I’ve been warning about this Tax Reform scam for quite some time.

Jared Bernstein is on the case:

A couple of my CBPP colleagues have written an important paper—a warning, really—on tax reform. Chuck Marr and Chye-Ching Huang describe a trap that almost every tax reform effort I’ve heard about in recent months risks falling into. It’s critical that we wrap our heads around this, because major tax reforms are rare and if one is coming—and it might well be—we can’t afford to blow it.

This is their warning:

–the mantra of all tax reform initiatives these days is “lower the rates, broaden the base” where the latter means ending certain tax expenditures (a wide variety of tax breaks and credits ranging from the Earned Income Credit—a wage subsidy for low wage workers—to the reduced rate on capital gains).

–but most of the actual reform proposals—like those of Rep Paul Ryan, Gov Romney, or the Bowles-Simpson commission—cut rates first, with an agreement to find the base broadeners later (Bowles-Simpson, to be fair, included “illustrative” cuts, but the members of the commission were unable to reach agreement on them).

Therefore, TAX REFORM THAT LOWERS RATES WITHOUT FIRST LOCKING IN HIGHER REVENUES WILL VERY LIKELY FAIL TO RAISE THOSE REVENUES.

Now I happen to be very skeptical that ending “tax expenditures” for the wealthy will ever end up raising revenues because they have armies of tax lawyers and lobbyists to ensure that won’t happen. (They could raise some revenue by screwing the poor and middle class by ending things like the EITC and the home mortgage deduction, however.) So, I think the best course is to substantially raise the rates on the wealthy and then see how it goes.

But certainly we shouldn’t lower them first and then let the “tax expenditure” sit for another day. That’s just nuts.

The whole thing sounds very much like the supply-side magical thinking that screwed us hard for several decades. “Shazaam! We can lower your rates and it will bring in more revenue!” It never seems to bring in any money but the rates become the baseline and stay too low to properly fund the government. It’s the drowning in the bathtub strategy.

Anyway, I’m just glad to see that people are starting to push back on “tax reform” as it’s currently constructed. It’s a loser for the people in any number of ways. Actually lowering overall taxes for the wealthy at this moment of such extreme income inequality is just daft.

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Chris Hayes’ Brilliant Iron Law of Meritocracy

by David Atkins

I’ve been reading Chris Hayes’ superb and revelatory book Twilight of the Elites over the weekend. Delving into political non-fiction often arms me with facts I wasn’t aware of, but rarely am I presented with new ideas I hadn’t considered or grappled with before in some way.

Hayes’ book does just that, asking profound questions about the very nature of society we are trying to build, and the arguments we are using to get there. One of Hayes’ central arguments lies in the weakness of meritocracy as a principle for societal organization, riffing on Michels’ classic “Iron Law of Oligarchy.” He puts it thus (Chapter II, pp. 56-7):

In order to live up to its ideals, a meritocracy must comply with two principles. The first is the Principle of Difference, which holds that there is vast differentiation among people in their ability, and that we should embrace this natural hierarchy and set ourselves the task of matching the hardest working and most talented to the most difficult, important, and remunerative tasks.

The second is the Principle of Mobility. Over time, there must be some continuous competitive selection process that ensures that performance is rewarded and failure punished. That is, the delegation of duties cannot be simply made once and then fixed in place over a career or between generations. People must be able to rise and fall along with their accomplishments and failures…

At the broader social level it means we expect a high degree of social mobility. We hope that the talented children of the poor will ascend to positions of power and prestige while the mediocre sons of the wealthy will not be charged with life-and-death decisions. Over time, in other words, society will have mechanisms that act as a sort of pump, constantly ensuring that the talented and hardworking are propelled upward, while the mediocre trickle downward.

But this ideal, appealing as it may be, runs up against the reality of what I’ll call the Iron Law of Meritocracy. The Iron Law of Meritocracy states that eventually the inequality produced by a meritocratic system will grow large enough to subvert the mechanisms of mobility. Unequal outcomes make equal opportunity impossible. The Principle of Difference will come to overwhelm the Principle of Mobility. Those who are able to climb up the ladder will find ways to pull it up after them, or to selectively lower it down to allow their friends, allies, and kin to scramble up. In other words: “Whoever says meritocracy says oligarchy.”

This may not sound terribly profound at first. Elites game the system for their own benefit. We know this.

But to point out that the success of elites in this regard is an inevitable consequence of a meritocratic society is to call into question the very foundation of the rhetoric and ideology of most of the left-leaning spectrum, from progressive to neoliberal. It shakes to the core much of the entire liberal program. As Hayes says on pages 47-8:

Ultimately the meritocratic creed finds purchase on both the left and right because it draws from each. From the right it draws its embrace of inequality…and from the left it draws its cosmopolitan ethos, a disregard for inheritance and old estbalished order, a commitment to diversity and openness and hostility to the faith, flag family credo of traditional conservatism. It is “liberal” in the classical sense.

The areas in which the left has made the most significant progress–gay rights, inclusion of women in higher education, the end of de jure racial discrimination–are the battles it has fought or is fighting in in favor of making the meritocracy more meritocratic. The areas in which it has suffered its worst defeats–collective action to provide universal public goods, mitigating rising income inequality–are those that fall outside the meritocracy’s purview. The same goes for conservatives. Those who rail against unions and for reduced taxes on hedge fund bonuses have the logic of meritocracy on their side, yet those who want to keep gay men and women from serving openly in the military do not.

Through Hayes’ lens, liberalism for much of the last half century has been about opening the meritocracy up to all segments of the population without discrimination based on intrinsic ephemera such as race, religion, gender or sexual orientation. This has meant a full embrace of the same pseudo-meritocratic impulse that has led to the renaissance of Objectivism on the right and the dominance of neoliberalism on the left.

If Hayes is right, what has been missing from much of leftist discourse isn’t just economic inequality or the struggles of working families. What’s missing is discussion of luck.

After all, what could be more iconoclastic to the edifice of the neoliberal and conservative systems? Declaring the Masters of the Universe incompetent is a given. Calling them evil is commonplace and mostly worth a chuckle. Using words such as heartless, bumbling, uncaring, greedy, inept, callous, and self-serving barely makes a dent.

But to call Lloyd Blankfein “lucky”, or to say that Bill Gates and Mark Zuckerberg were simply “fortunate”–that’s something altogether different. That’s revolutionary. It cuts against the dominant discourse of the institutional left and right to reorient the entire social contract. It challenges not only the ethic of equality of opportunity, but also the legitimacy of much of the inequality of outcomes.

Hard work is still a key to success, of course. But what has been lost in modern culture is that many fail to achieve traditional measures of success despite high intelligence and hard work, while many “succeed” despite constant failure. Social connections are a huge factor. Most of our governing elites come from Ivy League universities, despite the fact that a huge number of very bright and highly competent people never attended an Ivy League institution. And then there’s just being in the right place at the right time: how many Internet millionaires would have succeeded just as well had they been born in a pre-Internet world? How successful would Michael Jordan have been, had he been born in a country where soccer was the dominant sport?

Hard work is one factor in success, but it pales in comparison to good connections, family privilege, and dumb luck.

That idea is extremely threatening to the meritocratic status quo. And that itself is a sign that Hayes is on the right track.

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Raspberries

by digby

Featuring a baby turtle:

I feel better now.

h/t @attackerman

Revisiting the Tinkerbell strategy

by digby

There seems to be an unusual amount of handwringing and introspection as we await the Supreme Court decision on Obamacare. Suddenly, everyone is second guessing the legal and political strategy in light of what is now acknowledged to be an extremely aggressive, partisan opposition (which, btw, includes the Supreme Court.)

I try not to do this too much because it’s annoying, but in this case I just have to give a big “welcome to the club, folks” to all of those who insisted that any criticism at the time was simple minded naysaying and insisting that we all shut our traps and clap louder for the single greatest achievement since the enactment of social security. I certainly got a snootfull of it and it still stings.

I was ultimately in favor of the bill, but I certainly knew that it would be a miracle if it survived the inevitable legal and political onslaught, particularly the mandate, which always struck me as something of which people and the courts would inherently be suspicious. And I remember thinking that this was the stupidest thing I’d ever heard Bill Clinton say:

“The minute the president signs the health care reform bill, approval will go up, because Americans are inherently optimistic.”

One would have thought that he, of all people, would have understood that Republicans don’t give a shit about “the public.” After all, only five Republican Senators (the usual suspects) voted to acquit him on absurd, trumped up impeachment (which the public was adamantly opposed to.)

What burns about all this is that the permanent political establishment which pursued a puerile witchhunt in 1998 (and weakened our system immeasurably by lowering the bar for impeachment) told us all to “get over” Bush vs Gore and then dismissed us as shrill in 2003 is only now waking up to the fact that the Republicans have become a radical party that no longer operates within democratic norms. (Seriously, Bush vs Gore! What more do you need?)