2009 - %3, January

So How's That Working Out For You Guys?

| Fri Jan. 30, 2009 12:45 PM PST

SO HOW'S THAT WORKING OUT FOR YOU GUYS?....Lockstep opposition to all things Obama isn't working out too well for the GOP according to recent polling done by Democratic pollster Stan Greenberg. CQ's Balance of Power reports:

A survey of 1,200 voters in 40 traditionally Republican congressional districts now held by Democrats [] shows Obama's post-election honeymoon reaching a rapturous stage, with 44 percent of voters strongly supporting his policies. [Another 26% "somewhat support" his policies. –ed]

A full 64 percent favor his economic plan, compared to 27 percent against. And precisely that same proportion favors the stimulus in 13 states that are expected to have competitive Senate races in 2010: Kentucky, Florida, Missouri, North Carolina, New Hampshire, Pennsylvania, Louisiana, Colorado, Ohio, Kansas, North Dakota, Wisconsin and Illinois.

If DC Republicans continue to lash their fate to the SS Talk Radio, I think they can expect to see more and more of this.

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Broadband

| Fri Jan. 30, 2009 12:34 PM PST

BROADBAND....Over at TPMCafe, Yochai Benkler provides a nice little summary of the broadband provisions in the stimulus bill:

The Senate proposal is better along two dimensions. First, it stands at 9 billion dollars instead of 6 billion dollars....Second, it is all to be administered through the NTIA, through a program that was set up during the Clinton Administration to support experimentation and deployment of public and non-profit efforts, and to study public networks.

....The House bill is, however, clearer on the access conditions imposed on those who receive funds. It requires grantees not only to adhere to the minimal net neutrality standards adopted by the FCC's Statement of Principles, but also to run both wired and wireless broadband networks on an "open access basis." The FCC is charged with defining what "open access" means within 45 days of the passage of the Act, but historically (that is, before the Bush-appointed FCC reversed course), open access was the loose term applied to the approach that typified the 1996 Telecommunications Act: that is, competition from new entrants would be the best check on incumbent abuses, and competition would be created by forcing the incumbents to let the new entrants use some pieces of the incumbents' network as leverage to overcome the very high startup costs associated with offering any useful service at all to customers.

There's more at the link, including this weird factlet about the House bill: it stipulates that half the broadband money would be under the control of the Secretary of Agriculture. Because, um, who else comes to mind when you think of high-speed telecommunications infrastructure policy?

Anyway, it would be nice if the final bill makes at least a start at reinstituting the principles of net neutrality as part of its language. I think this is a more complex issue than a lot of the blogosphere likes to admit, but it's fundamentally the right direction to go. This is a good sign that Barack Obama agrees.

GAO: Treasury's Vision for TARP is "Unclear"

| Fri Jan. 30, 2009 12:27 PM PST

The Government Accountability Office has just released its second report [PDF] on the Treasury Department's Troubled Asset Relief Program, and the troubling key takeaway is this: Treasury's "strategic vision for TARP remains unclear." Uh-oh. At present, TARP is the primary mechanism for ensuring the nation's economy doesn't entirely collapse. In other words, having more than an ad hoc plan for spending billions of taxpayer money needed to happen, like, yesterday.

With trademark understatedness, the GAO explains the problem:

[E]arly on Treasury outlined a strategy and approach to purchase whole loans and mortgage-backed securities from financial institutions, but changed direction to making capital investments in qualifying financial institutions as the global community opted to move in this direction. Moreover, once Treasury determined that capital infusions were preferable to purchasing whole mortgages and mortgage-backed securities, Treasury did not clearly articulate how the various programs (such CPP, SSFI, and TIP) would work collectively to help stabilize financial markets.

Virginia Could Finally Close Gun-Show Loophole

| Fri Jan. 30, 2009 12:22 PM PST

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Get ready. There's a battle brewing in Virginia over gun rights, and if the comments to my recent piece on assault weapons are any indication, it's not going to be pretty. After years of trying, the Senate Courts of Justice Committee last week voted 8-7 to pass legislation closing the so-called "gun-show loophole."

While commercial sellers are already required to perform instant background checks before completing a sale, small-time, amateur dealers (who, according to the Washington Post, make up an estimated 35 percent of sellers are Virginia gun shows) are not. The fear is that this opens an opportunity for the mentally insane or criminally minded to bypass safeguards meant to keep weapons out of their hands.

The bill's provisions are modest at best. It does nothing more than extend the intent of the law to cover all gun transactions. Gun show operators would be required to ensure that all dealers, including amateurs, have the ability to conduct instant checks. In practice, this would amount to the small inconvenience of strolling across the aisle to use computers already maintained by professional dealers.

The law would not apply to black powder or antique weapons, nor would it affect buyers with permits to carry concealed firearms.

The bill must now pass the full Senate, before moving on to the House of Delegates, where Republicans are expected to fight fiercely to defeat it.


Photo used under a Creative Commons license from Michael (mx5tx).

The World's Most Famous Shoe

| Fri Jan. 30, 2009 12:07 PM PST

THE WORLD'S MOST FAMOUS SHOE....An orphanage in Tikrit has constructed a giant statue of a shoe to commemorate the "heroic action" of Muntadhar al-Zeidi, the journalist who threw his shoes at George Bush last month. Seriously. But then the government took it down. Spoilsports.

*Who's Your Sugar Daddy?

| Fri Jan. 30, 2009 11:16 AM PST

WHO'S YOUR SUGAR DADDY?....Is the massive U.S. stimulus plan sucking up all the liquidity in the world, preventing developing countries from stimulating their economies? Apparently this is the complaint du jour at Davos, but Daniel Drezner is unimpressed:

To be generous, these complaints are not completely without foundation. They are a little odd, however. If the United States does not engage in greater stimulus, then other countries are going to have to pick up the slack, or this recession will last a long time. Indeed, count me in the Martin Wolf/Brad Setser camp of those who would love to see other countries — *cough* China, *cough* — starting to boost their own consumption as a means for igniting global growth, because that would also help to redress the macroeconomic imbalances that are at the heart of the current predicament.

To date, however, the efforts by most of these other countries have been underwhelming. [What about China?–ed. Their stimulus has targeted investment rather than personal consumption, so yes, them too.] If I were Obama, I wouldn't trust other countries to provide the locomotive power necessary to get the global economy moving again. So I don't see how they can blame the United States for doing what they are choosing not to do.

Agreed. But we still need a long-term plan to address those macroeconomic imbalances eventually.

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Root Causes

| Fri Jan. 30, 2009 11:00 AM PST

ROOT CAUSES....Ryan Avent, plugging a blog that will remain nameless because it inexplicably continues to host anonymous posts, a practice I despise, says:

This week, the blog is hosting a discussion among economists on IMF economist Olivier Blanchard's suggestion that pervasive uncertainty is at the root of the crisis....

Sounds like a fine discussion. But just as an aside, why do people so frequently insist on trying to root out the cause of the crisis? Can't it be a liquidity crisis and a solvency crisis and a confidence crisis and a regulatory crisis all at once? Who says there has to be one true cause?

Upshot of Boy Scouts' Anti-Gay Policy: Logging Their Forests

| Fri Jan. 30, 2009 10:57 AM PST

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From the San Francisco Chronicle:

"The Boy Scouts had to suffer the consequences for sticking by their moral values," said Eugene Grant, president of the Portland, Ore., Cascade Pacific Council's board of directors. "There's no question" that the Scouts' anti-gay, anti-atheist stance has cost the organization money, he said. As a result, he said, "every council has looked at ways to generate funds. . .and logging is one of them."

According to an investigation by the Chronicle and four other Hearst papers:

  • Scout councils have ordered the logging of more than 34,000 acres of forests--perhaps far more as forestry records nationwide are incomplete.
  • More than 100 scout groups--one third of all Boy Scouts councils nationwide--have conducted timber harvests.
  • Councils logged in or near protected wildlife habitat at least 53 times.
  • Councils have authorized at least 60 clear-cutting operations and 35 salvage harvests, logging practices that some experts say harm the environment but maximize profits.

I was a Scout as a kid, and this is not the Boy Scouts that I used to know. It's sad that an obsession with what should be an irrelevant social issue has sabotaged their core principles. We've seen the same thing happen with other organs of the Religious Right as churches that should be doing good works have become obsessed with gay marriage and abortion. But while many evangelicals have begun moving back toward the center--look at Creation Care--the Boy Scouts are inexplicably going the other way. Let's just hope their vast land holdings aren't destroyed as they they slowly implode.

What do Trader Joe's and Whole Foods Have Against Canada Anyway, Eh?

| Fri Jan. 30, 2009 10:51 AM PST

Trader Joe's, Whole Foods, WinCo, and Houston's restaurants are just a few of the 5,000 establishments pledging to boycott Canadian seafood.

Why, eh? We thought you'd ask. The ban is a part of the Humane Society's ProtectSeals campaign to curb commercial seal hunting in the Great White North—the world's largest massacre of marine mammals.

Says Whole Foods: "(We're) suspending any purchase of seafood from the areas where the brutal killing of baby seals is taking place until the fishermen commit to stopping this practice."

According to HSUS's countdown clock, 2009's hunt is due to commence in a mere two months. Last year, seal hunters promised a more humane approach—but as Mother Jones' Julia Whitty noted, it was far from humane.

If you too care about protecting the seals, you can sign a pledge not to buy Canadian seafood, urge your local grocer to join the boycott, or purchase products like this adorable T-shirt:

save-seals.jpg

—Nikki Gloudeman

Funding the Feds

| Fri Jan. 30, 2009 10:32 AM PST

FUNDING THE FEDS....Via Matt, Pete Davis reports on a lunch talk yesterday from spending guru Alice Rivlin:

Her most striking remarks were how forcefully she warned that we should undertake long-term deficit reduction measures now. Without them we will face rising interest rates before the economy has enough time to recover as foreign purchasers of U.S. Treasury debt balk at buying a lot more of it. She boldly asserted "Now is an excellent time to fix Social Security and Medicare."

....Rivlin predicted we will need a new revenue source to cope with our long-run deficit problem, a value-added tax. I'm biased on this subject. I formulated House Ways and Means Chair Al Ullman's VAT proposal in 1979. There's no way to protect the poor and the elderly from such a tax, and it could become quite a money machine for a lot of government spending I would prefer to avoid. Rivlin has promoted a VAT for a long time because it is a more efficient tax and because it would harmonize our trade with the rest of the world, almost all of which has a VAT.

I have a lot of sympathy for Rivlin's view. Here are a few random comments to add to what she says:

  • I'm all for fixing Social Security now if it will get the issue off the table once and for all. It's a distraction. What's more, the fixes needed are fairly minor and doing it while Democrats have a big majority is good timing. But — although the fixes can be legislated now, they should be scheduled to phase in slowly starting around ten years from now. The last thing we should be doing is pouring more money into the trust fund right now.

  • If we're looking for a new revenue source that won't hit us in the pocketbook immediately (while we're in a recession), but will provide a medium and long-term funding source, how about passing cap-and-trade? Even if we move full speed ahead, the machinery takes a while to implement, which means it won't start up until 2012 or so. And even if part of the revenue is rebated to low-income families, it still provides a steady and growing revenue stream after that.

    Oh, and it helps to keep us from destroying our planet, too. Just a little side benefit.

  • I'm a big fan of using a VAT (in addition to the payroll tax and other existing funding) to fund national healthcare. Economically, it's a pretty good tax; it can be made progressive if it's properly implemented; and it's a universal tax for a universal program. More details here.

  • I am, oddly enough, not really in favor of vastly increased funding for other social programs. Some increased funding is OK, but it should be kept under pretty strict scrutiny — and not just on the generic grounds that all spending ought to be monitored carefully to make sure it's effective and pruned away when it's not.

    Here's why. I'm obviously more open to high government spending than most conservatives, but even liberals think there's a limit to how much of the economy ought to be under government control. Speaking for myself, I'd put that limit at 40-45% of GDP. Somewhere in the low 40s, anyway. Currently, total government spending (state/local/federal) is in the low 30s, which means we can afford to increase spending by about 10% of GDP. I figure that changes to Social Security will eat up about 2% of GDP and funding a true national healthcare plan will eat up around 7-8%. That doesn't leave room for very much more, and even reductions in defense spending only give us another point or so to work with. So we should be pretty careful with other long-term spending commitments.

That's my take, anyway. This is a pretty good time to be talking about these changes, even if they don't get phased in immediately. We desperately need credible plans for future reductions of our current account deficit (which is tied to the federal deficit), and this is a good time to do it even if the plans don't get phased in immediately. I expect Obama to kick off a rollicking discussion of this stuff later this year.