2008 - %3, November

As Obama Taps Larry Summers, Recalling Summer's Days as a Regulation Foe

| Mon Nov. 24, 2008 2:58 PM PST

On Monday, President-elect Barack Obama announced his economic team, noting that Lawrence Summers would be the director of his National Economic Council. In touting Summers, Obama praised the former treasury secretary for his work during the Clinton years

Larry helped guide us through several major international financial crises – and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs. He also championed a range of measures – from tax credits to enhanced lending programs to consumer financial protections – that greatly benefited middle income families.
As a thought leader, Larry has urged us to confront the problems of income inequality and the middle class squeeze, consistently arguing that the key to a strong economy is a strong and growing middle class....And as one of the great economic minds of our time, Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges.

While some of that might be true, Summers has been a controversial figure, and it's likely no accident that he is being handed a position that does require him to be confirmed by the Senate.

But despite Summer's intellect and experience, it's worth remembering that he did blow one of the major calls of the 1990s: what to do about financial derivatives--those esoteric financial products (such as credit default swaps) that helped grease the way to the subprime meltdown. Not only did Summers oppose greater regulation for those financial instruments; he led the opposition against it.

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Nobody Knows Anything

| Mon Nov. 24, 2008 2:11 PM PST

NOBODY KNOWS ANYTHING....Via Tyler Cowen, I see that the Intercollegiate Studies Institute has released the results of their annual test on civics and history. The outcomes, as usual, are supposedly abominable: fewer than a third of the 2,500 randomly selected test takers managed to score higher than 60%.

Now, you can decide for yourself how hard the test is and whether a score below 60% is really that bad. (The test is here.) I managed to get all the questions right, but still, there were a fair number that were pretty far from obvious for most people. Is it really that big a deal, for example, that most Americans don't know that Socrates, Plato, Aristotle, and Aquinas would concur that certain permanent moral and political truths are accessible to human reason? Especially when the question and the five possible answers are being read to them over the phone?

Like I said, you can decide for yourself. But I just want to highlight one particular result: the average score by age group. As regular readers know, one of my pet peeves is the endless number of tests given to high school students and then trumpeted as evidence that kids today are abysmally ignorant. The standard headline is something like "80% of high school seniors can't find France on a map," but what I always wonder is: how many adults can find France on a map? Unfortunately, they never tell us that.

But ISI does. And the results are pretty simple: everyone is stupid. ISI themselves spin this as "Baby Boomers Do Best," but speaking ex cathedra for my generation, I really don't think that 52% vs. 47% (an average difference of less than two correct answers) says much about the awesomeness of boomer cultural literacy. Basically, the kids didn't do very well on ISI's test, but neither did the adults or the seniors, even though their average educational level is higher. This may be only a single fairly dubious data point, but it's still worth keeping in mind the next time you see one of those "Kids Are Stupid" headlines.

Other ISI findings, by the way, include these: the more education you have, the better you do; it doesn't matter much what kind of university you went to, whether you go to church, or what your politics are; watching lots of TV is bad for your score; and reading lots of history is good for your score. So there you have it.

An Immediate Obama Effect in African-American Communities?

| Mon Nov. 24, 2008 1:48 PM PST

Spotted over at Ben Smith's space, an attempt by the Washington DC police department to stop gun violence by invoking the President-elect.

dcpd.JPG

A quick look at the crime map application hosted by the DC police department shows that 1,726 crimes have been committed in the District of Columbia since Obama's election on November 4, an 11 percent drop from the same period last year. Unfortunately, homicides are up 100 percent, suggesting the need for this initiative and many others.

New Report Shows What The Economic Bailout Is Really Costing Us

| Mon Nov. 24, 2008 1:27 PM PST

Today, as Obama introduced his economic team, the Institute for Policy Studies (IPS) released a new report (.pdf) adding some context to the sheer sums of money being thrown at the financial-industry bailout. The top-line finding? The US and Europe have committed about $4.1 trillion so far, or about 40 times as much as they've spent on combating climate change and global poverty this year. The report, called "Skewed Priorities," speculates that Western governments will use the economic crisis as an excuse to pull back from their commitments to climate and development programs.

According to IPS Director John Cavanagh, "The financial crisis is only one of multiple crises that will affect every nation — rich or poor. Skyrocketing poverty and unemployment in the developing world will mean even more brutal global competition for jobs. Climate change imperils the very future of the planet. And yet thus far, the richest nations in the world appear fixated almost entirely on responding to the financial crisis, and specifically, on propping up their own financial firms."

Yes, the bailout seems necessary (at least that's what they tell us... and, as any of my childhood math teachers would attest, I am not one to make a judgment on that issue), but the IPS report does at least let us know what we're sacrificing in the name of righting our financial ship. From a press release announcing the report's publication:

Obama's Economic Stimulus Package: Whose Pump Will It Prime?

| Mon Nov. 24, 2008 1:18 PM PST

"I'm not going to discuss numbers right now," Barack Obama said this morning at his press conference, where he introduced his economic team but held off on providing details of their plans to respond to the deepening recession. In fact, the devil will be in those details. They will be a test of the president-elect's willingness to take bold action, as well as of his basic ideological approach to economics and social justice.

While various experts have projected a stimulus package costing anywhere from $600 billion to $1 trillion, Obama would only say that "we need a big stimulus package." At the same time, he declared, "95 percent of workers will receive a net tax cut," with those earning over $250,000 a year eventually paying "a little bit more." He has also indicated that he may take no immediate action to roll back Bush's tax cuts to the rich, but simply let them expire in 2010. So how will the Obama administration pay for a big stimulus program? For the most part through Keynesian style pump-priming—government spending that increases the huge deficit over the short term, in hopes of reducing it later under a recovered economy. It's the approach taken, most famously, by FDR—the man to whom the Obama is now being compared on a daily basis.

In fact, deficit spending has long been undertaken not only by New Deal Democrats, but by Republicans from Ronald Reagan to George W. Bush. These so-called fiscal conservatives have been only too happy to run up the national debt when it suits their ideological goals, whether they be military buildups or corporate handouts. Obama and his team will need to decide which larger goals their deficit spending will serve—what pumps they want to prime, and how. In particular, will their program to stimulate the economy reject the discredited "trickle down" approach, and address the extremes of wealth and poverty created over the last 30 years?

All-Expenses-Paid India Vacation, Courtesy of Your Health Insurer

| Mon Nov. 24, 2008 1:09 PM PST

tajmahal.jpgYou know your healthcare system has a problem when your insurance company starts offering to fly you halfway across the world for medical care.

Indiana-based health insurer WellPoint, Inc. has begun testing a program that allows patients to undergo elective surgeries in India instead of the US.

The program is currently available only to employees of a Wisconsin-based printing company whose employees WellPoint insures. And even though flights cost roughly $2,000 per person, round trip (according to Orbitz), it's still more cost-effective for WellPoint to send patients to India than it is to airlift them down to Milwaukee. Want your knee fixed up? Knee surgery typically costs $70,000-80,000 in the US; in India, it's a tenth that price.

Even more incredible is the fact that, at least according to the insurers, patients are actually more likely to receive high-quality, transparent care in India than they are here. An insurance-company medical officer quoted in the article says there's "a lot more willingness to share data about complication rates, the total number of procedures and the outcomes."

Now, I'm all for people receiving the best possible care at the lowest possible cost. But the fact that sending a patient to the other side of the world and back is less expensive than putting him up at a local hospital should send a strong signal to our policymakers (President-elect Obama, are you listening?) that our current system is beyond repair.

Photo used under a Creative Commons license from betta design.

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Will Ken Starr Defend Prop 8 in CA Supreme Court?

| Mon Nov. 24, 2008 12:52 PM PST

ken%20starr.jpgOverheard last week in DC at a right-wing legal convention: "We've all but confirmed that Ken Starr is going to take the case."--Jordan Lorence, senior counsel, Alliance Defense Fund.

The involvement of the former Clinton special prosecutor in efforts to preserve California's new ban on gay marriage really wouldn't come as much of a surprise. Two years ago, Starr, now dean of the Pepperdine law school, represented a bunch of anti-gay marriage groups, including the Mormon Church, in amicus briefs in some of California's gay marriage litigation. He's been involved in the issue for a while, now. Given the intense interest in other people's sex lives that Starr demonstrated during his investigation of the Lewinsky scandal, he seems a perfect fit for the job.

Of course, when I asked him at the Federalist Society conference to confirm the gossip, he said with a laugh, "No comment." Later, I asked Lorence whether he had indeed confirmed Starr as counsel. Looking a bit shocked that he'd been caught blabbing out of school, he pleaded ignorance, suggesting that he had no intelligence on the matter whatsoever, despite his earlier boasts to a Harvard law student about his inside line to Starr. He did confirm that he would not be doing the arguing himself, nor would another lawyer from the alliance who has argued such cases before. I take all this to mean that Starr is likely to take the case.


Scouring the Budget

| Mon Nov. 24, 2008 12:00 PM PST

SCOURING THE BUDGET....Barack Obama rolled out his economic team today: Tim Geithner at Treasury, Christina Romer to head up the CEA, Larry Summers to head the White House Economic Council, and Melody Barnes as chair of his domestic policy council. Ben Bernanke, of course, is already in place as Fed chief. But what about Peter Orszag? Why wasn't he up on stage with the rest of them? Ben Smith provides a clue:

Obama's staff won't elaborate, but the President-Elect said just now that he'd roll out a plan to cut the federal budget tomorrow — something both presidential candidates said they'd do, but neither detailed.

"[T]o make the investments we need, we'll have to scour our federal budget, line-by-line, and make meaningful cuts and sacrifices as well — something I'll be discussing further tomorrow," Obama said.

I'm not sure why Obama wants to have a whole separate rollout for this — maybe he just wants more than one day's worth of headlines? — but obviously Orszag will be the star of that particular show. Via Taegan Goddard.

Admitting the Problem

| Mon Nov. 24, 2008 11:38 AM PST

ADMITTING THE PROBLEM....James Joyner bemoans the lack of substance in the conservative blogosphere:

Part of the reason I'm drawn to the center-left blogs [...] while finding it increasingly difficult to find center-right blogs worth my time is that the former are much more likely to get beyond the debates of the 1980 election. There's almost no serious analysis of health care reform, urban planning, education, and many other issues that regularly crop up on the best lefty blogs on their conservative counterparts. If we read about those issues at all, they're framed as if Ronald Reagan were still aspiring to high office: Say No to socialism! Abolish the Department of Education! Government IS the problem!

Right. The world has changed in the past 20 years but conservatism doesn't really seem willing to accept it. Take global warming. Here's the rough conservative reaction to it starting in the early 90s:

  1. It doesn't exist.

  2. It exists but it isn't manmade.

  3. It's manmade, but it's too expensive to do anything about.

Even this is a generous assessment. A lot of conservatives are still stuck at #2, and sizeable chunk at #1. What this means is that they're basically shut out of the conversation entirely. Which is too bad, because I'd actually be sort of interested to hear a conservative take on how to address global warming that accepts both its reality and the necessity of doing something about it. If we really are facing a global environmental catastrophe, what shape would a conservative solution take? I don't think anyone knows. Likewise, conservative reaction to wage stagnation and growing income inequality has gone down a similar road:

  1. It doesn't exist.

  2. It exists, but consumption inequality is what really matters.

  3. ??

Our current financial meltdown has pretty much wiped out #2 as a plausible explanation, since the stagnating middle class can no longer borrow to keep up their consumption. But what's #3? Will it be yet another attempt to deny that the problem even exists? Or some kind of interesting conservative take on what to do about it?

Global warming and skyrocketing income inequality are problems that didn't even exist in 1980, which means there is no "Reaganite" solution to appeal to. There might still be conservative takes on these things, but they won't do any good until conservatives actually accept that these are real problems that people genuinely care about. That day still seems pretty far off.

Obama and Iraq

| Mon Nov. 24, 2008 10:38 AM PST

OBAMA AND IRAQ....Ross Douthat suggests that perhaps liberals ought to be happy with the relative hawkishness of Barack Obama's national security team:

By putting the job in the hands of Robert Gates and Hillary Clinton — a Republican appointee and a primary-season rival who attacked him from the right on foreign policy — Obama has effectively given realists and liberal hawks partial ownership of whatever happens in Iraq between now and 2011. In a best-case scenario for progressives, Gates and Clinton will play the role Colin Powell played in the run-up to the Iraq War (except with a better final outcome, obviously): Their association with the policy will help keep non-progressives on board when things get dicey, and then once the job is done they'll be pushed aside and someone like Susan Rice will take over Obama's post-occupation foreign policy.

Obviously I don't really think it will work out quite like that. But just as the neoconservative agenda was better-served, at least in the short run, by having Powell as one of the public faces of Iraq War hawkery (rather than, say, John Bolton), I think there's at least a plausible scenario in which the progressive movement ends up being better off in the long run if Hillary Clinton, rather than someone to her left, is at the helm when a spasm of violence pushes Iraq back on to the front pages, and Republicans start accusing the Obama Administration of squandering the Bush-Petraeus gains with a too-precipitous withdrawal.

My own problem isn't with one or two of Obama's rumored appointees, but with the fact that his team doesn't seem to have even token representation from the liberal wing of the party. That said, though, I think Ross is right about this. If the Iraqi parliament approves the SOFA agreement later this week, then Obama will have almost perfect cover for withdrawing from Iraq: he'll be doing it under a deal approved by George Bush, and the withdrawal itself will be implemented by Republicans and centrist Democrats. Under the circumstances, it will be virtually impossible for conservatives to accuse him of "losing" the war in Iraq.

There's no telling if this is actually what Obama has in mind, or if he's putting together a centrist foreign policy team because he genuinely wants a centrist foreign policy. It could be a bit of both. And in any case, in the end Obama's foreign policy will be set by....Barack Obama. Tea leaf reading will have to wait a while longer, I guess.