2009 - %3, March

Rachel Maddow Live!

| Tue Mar. 31, 2009 12:27 PM PDT
OK, it's not live.  She was live at a MoJo fundraiser on Saturday, though, and we taped her conversation with editors Clara Jeffery and Monika Bauerlein so everyone else could see it too.  The clip on the right is all about Maddow's secrets to ratings success, and there are more clips here.  View them all!

It was a packed event, and when it was over I was almost afraid Maddow was going to get trampled by the throngs of fans who wanted their picture taken with her.  Marian and I didn't stand a chance against the crowd, though, so no pictures of us I'm afraid. Maybe next time.

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Can Obama Get Anything Done?

| Tue Mar. 31, 2009 12:18 PM PDT
John Dickerson says Obama has (justifiably) given up on working with Republicans:

At a recent lunch with reporters, Budget Director Peter Orszag was asked if he could name a useful idea submitted by Republicans. He couldn't — and didn't even pretend he'd considered many. When House Republicans put out a budget last week, Press Secretary Robert Gibbs said, "The party of no has become the party of no ideas."

Gibbs probably wouldn't have said that 40 days ago, when the White House was treating the issue of bipartisanship more carefully. But after party-line votes in the House and Senate and minimum flexibility from GOP leaders, Obama aides say that Republicans are not "acting in good faith." Which leads them to two conclusions: One, their acts of conciliation buy them nothing in negotiations with the GOP; two, and more important, they've decided they'll pay no political price for acting in a more partisan fashion.

Jon Chait says he's not getting much support from his own party either:

The last Democrat who held the White House, Bill Clinton, saw the core of his domestic agenda come to ruin, his political support collapse, and his failure spawn a massive Republican resurgence that made progressive reform impossible for a decade to come. The Democrat who last held the White House before that, Jimmy Carter, saw the exact same thing happen to him.

At this early date, nobody can know whether or not Barack Obama will escape this fate. But the contours of failure are now clearly visible. In Obama's case, as with his predecessors, the prospective culprit is the same: Democrats in Congress, and especially the Senate. At a time when the country desperately needs a coherent response to the array of challenges it faces, the congressional arm of the Democratic Party remains mired in fecklessness, parochialism, and privilege.

A landslide victory isn't what it used to be, I guess.  Opposition has made Republicans near monolithic, while victory has done nothing for Democrats except sharpen their longtime infatuation with the circular firing squad.  It's times like this that make me wish I were a heavy drinker.

Sending a Message

| Tue Mar. 31, 2009 10:55 AM PDT
Jeffrey Goldberg talks to Israel's new prime minister and reports back:

In an interview conducted shortly before he was sworn in today as prime minister of Israel, Benjamin Netanyahu laid down a challenge for Barack Obama. The American president, he said, must stop Iran from acquiring nuclear weapons — and quickly — or an imperiled Israel may be forced to attack Iran’s nuclear facilities itself.

....In unusually blunt language, Netanyahu said of the Iranian leadership, “You don’t want a messianic apocalyptic cult controlling atomic bombs. When the wide-eyed believer gets hold of the reins of power and the weapons of mass death, then the entire world should start worrying, and that is what is happening in Iran.”

....Neither Netanyahu nor his principal military advisers would suggest a deadline for American progress on the Iran nuclear program, though one aide said pointedly that Israeli time lines are now drawn in months, “not years.” These same military advisers told me that they believe Iran’s defenses remain penetrable, and that Israel would not necessarily need American approval to launch an attack. “The problem is not military capability, the problem is whether you have the stomach, the political will, to take action,” one of his advisers, who spoke on condition of anonymity, told me.

I don't believe Israel has the military means to take out Iran's nuclear facilities.  Hell, even the U.S. only barely has the means.  So why is Netanyahu bluffing like this?  To put pressure on Obama, obviously.  But to what end?  Why go out of his way to start off his relationship with Obama with warnings and threats?  This isn't a smart move on his part.

Millions Of Americans Travel Abroad For Health Care

| Tue Mar. 31, 2009 10:38 AM PDT

Remember when we were the gold standard? Now, there's an entire niche industry springing up to help Americans get good health care they can afford.

From CNN:

Sandra Giustina is a 61-year-old uninsured American. For three years she saved her money in hopes of affording heart surgery to correct her atrial fibrillation. "They [US hospitals] told me it would be about $175,000, and there was just no way could I come up with that," Giustina said.
So, with a little digging online, she found several high quality hospitals vying for her business.... Within a month, she was on a plane from her home in Las Vegas, Nevada, to New Delhi, India. Surgeons at Max Hospital fixed her heart for "under $10,000 total, including travel."
How do they do it? With wacky ideas like these one: "Max neurosurgeon Dr. Ajaya Jha said the hospital can provide high-quality care at low prices because the staff work hard to cut waste. 
"I've seen hospitals in the US where they open up something costing $10,000 and say, 'Oh it's not working. OK, give me another one.' We would never do that here. Even for 100 rupees (about $2) -- we would say, "Do we need to open this suture? Do we need to open this gauze?' We are very conscious of cost."
The salary of a US surgeon is five times that of a surgeon in India. "We [surgeons in India] want to make a profit, but we don't want to profiteer. We don't want squeeze people and I think American industries should also think that way," Jha said.

Profit, not profiteering. What a concept.

Keeping Banks Small

| Tue Mar. 31, 2009 10:19 AM PDT
Given all the problems caused by banks too big to fail, should we just put a cap on bank size and be done with it?  Rortybomb says big banks don't charge lower interest rates, Steve Waldman says big bank size is a proxy for a lot of other problems, and Felix Salmon agrees with all of the above even if it's true that "there are no good and politically-feasible answers" for putting American banks on a diet.

But let's say this is all true, and that somehow it did become politically feasible to cap bank size.  What would be the result?  What follows is a little scattered, but maybe some other people who understand the industry better than me can pick it up where I leave off and provide some better analysis.

Felix suggests a cap of $300 billion in assets.  Fine.  But a cap on assets necessarily implies a cap on liabilities, and that means deposits are effectively capped too.  Let's call the deposit cap $200 billion in round numbers.  That means the end of nationwide banking since no bank that size can serve the entire country, but maybe you're OK with that.  A small price to pay etc. etc.

So here's what I wonder: what happens when you have a whole bunch of banks all operating at their maximum allowed size?  Do they keep taking in money but just sitting on it?  Of course not.  Do they essentially shut down, not taking any new customers?  What about natural growth among existing depositors?  (For that matter, what about natural asset growth?)

Even more important, what happens when banks can't compete with each other by growing?  What would they compete on?  My guess is that they'd compete on keeping the biggest, most profitable customers and would pretty much lose interest in smaller customers.  So small depositors would find themselves increasingly unwelcome, paying higher fees and penalties, having a harder time securing loans, and so forth.  After all, what incentive would a capped bank have to treat small depositors decently if they don't really want them in the first place?

Now, it might be that none of this would be a problem.  Capped banks would still compete with other capped banks to some extent, and unhappy customers could presumably still leave for smaller banks, who would compete for their business.  This is where I'd be interested in hearing from more knowledgeable people.  If you game this out, what does the industry end up looking like?  A regulated electric company that's effectively limited by the size of its service area?  A monopoly cable company?  A bunch of networks of loosely affiliated midsize banks?  Or what?  Anybody have a good idea?

Obama White House Close to Settling Missing Emails Case

| Tue Mar. 31, 2009 9:37 AM PDT

The long saga of the missing White House emails may be finally nearing its end. The Obama administration and two nonprofits that are suing it over millions of missing Bush-era emails have called a truce. A joint motion (PDF) and proposed order (PDF) filed by Justice Department lawyers and the plaintiffs, the National Security Archive and Citizens for Responsibility and Ethics in Washington (CREW), call for an indefinite stay of the case so the two sides can continue settlement negotiations. Both the White House and the nonprofits will have to withdraw their pending motions (including a White House motion to dismiss the case) and update the court on settlement proceedings in three months. But the whole ordeal could be over well before that—if contentious issues are resolved in the next few days or weeks.

"We just got a stay from the judge to give us some room to try to work things out," says Meredith Fuchs, the general counsel for the National Security Archive. "It will take a while before we know whether our talks are successful because our ability to resolve the case depends on nailing down lots of details: what happened, was it fixed, and will it happen again."

The National Security Archive and CREW have been pushing the White House to disclose information about millions of missing emails for years. The case began in 2007, after the Bush administration warned that it may have lost millions of emails that should have been archived under federal record-keeping laws. That brought the lawsuit to force the recovery of the emails and the adoption of a better archiving system. Bush administration lawyers fought the plaintiffs tooth and nail, successfully passing the buck to the next administration and keeping secret the details of how and why the emails were lost. In January, the Obama administration became the defendant in the case, and at first showed signs of continuing the Bush administration's legal strategy, filing a motion to dismiss the case the day after the new team took office. It's unclear what the Obama White House is now offering. But, no doubt, its more than what the Bush administration ever put on the table.

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Pentagon Bloat Continues Apace

| Tue Mar. 31, 2009 9:22 AM PDT
As Nick Baumann has reported here and here, Defense Secretary Robert Gates is in the midst revamping the Pentagon's defense acquisitions programs, preparing to kill those that have been draining the most funds from government coffers, such as the the F-22 fighter and the Zumwalt-class destroyer. If you need more evidence that there's a problem, see the GAO's seventh-annual report (.pdf) on cost overruns in selected Pentagon weapons systems. The government auditor found that the number of major defense spending programs has grown from 77 to 96 since the beginning of the Iraq War. Not surprisingly, costs have continued on their upward march from $1.2 trillion to $1.6 trillion over the same period, with R&D costs now an average of 42 percent over budget. More programs, more money, and, yes, more delays. Initial delivery on DOD program investments now averages 22 months. The reason for much of this is that our military seldom looks before it leaps: the services routinely budget big-ticket projects before the basic technology is in place, meaning that development is routinely delayed as technological hurdles emerge. From the GAO:
A majority of the programs GAO assessed were unable to fill all authorized program office positions, resulting in increased workloads, a reliance on support contractors, and less personnel to conduct oversight. In December 2008, DOD revised its policy for major defense acquisition programs to place more emphasis on acquiring knowledge about requirements, technology, and design before programs start and maintaining discipline once they begin. The policy recommends holding early systems engineering reviews; includes a requirement for early prototyping; and establishes review boards to monitor requirements changes--all positive steps. Some programs we assessed have begun implementing these changes.

Our Century's Hoover

| Tue Mar. 31, 2009 9:15 AM PDT
Back when my mother was a girl, the house would be silenced whenever "Mr. Hoover" gave a speech on the radio.  Which he did.  Often.  Sure, he had been repudiated at the polls by historic margins, but he was bitter and angry over FDR's policies and insisted on making sure everyone knew it for years and years after his defeat.

Well, I guess every generation needs its own Hoover.  It looks like John McCain is ours.

Welcome, Fox Nation!

| Tue Mar. 31, 2009 9:11 AM PDT

Have you checked it out yet? Fox is going to the Internets with an aggregator site that will try to lure conservative HuffPo-types (the homepage is similar even). Their top stories right now feature a picture of Spicoli (the only Sean Penn Bill O'Reilly likes), and  instead of an About Us page (because that phrase would be too Democratic?) they offer Our Purpose instead:

The Fox Nation was created for people who believe in the United States of America and its ideals, as expressed in the Constitution, the Declaration of Independence, and the Emancipation Proclamation. It is a community that believes in the American Dream: Life, liberty, and the pursuit of happiness. One that believes being an American is an honor, as well as a great responsibility—and a wonderful adventure.
This is a place for people who believe we live in a great country, a welcoming refuge for legal immigrants who want to contribute their talent and abilities to make our way of life even greater. We believe we should enjoy the company and support of each other, delighting in the creativity, ingenuity, and work ethic of one and all, while observing the basic rules of civility and mutual respect and, most importantly, strengthening our diverse society by striving for unity.
The Fox Nation is for those committed to the core principles of tolerance, open debate, civil discourse--and fair and balanced coverage of the news. It is for those opposed to intolerance, excessive government control of our lives, and attempts to monopolize opinion or suppress freedom of thought, expression, and worship. We invite all Americans who share these values to join us here at Fox Nation.

Why is it that the language of the right feels like a history textbook? And liberals don't believe in the American Dream, the Emancipation Proclamation? Plus, they go all Spider-Man on us with the great honor and great responsibility business. These tenets feel basic, it's the nuance where we disagree, the policies that make for a "great country." But never mind nuance, I'm still stuck on the "basic rules of civility" part, not exactly a guiding principle at Fox News.

Has the Economy Bottomed?

| Tue Mar. 31, 2009 8:32 AM PDT
Atrios thinks any optimism about the economy is misplaced.  Homes prices are continuing to fall, plus this:

There's still a big wave of ARM resets* coming, and the CRE implosion has just begun.

*Regarding ARM resets, some suggest this won't be a problem because interests rates are so low. But the issue is option ARMS ("pick a payment!") loans, where people have been making interest-only or even neg-am payments on the loans.

For what it's worth (about what you're paying for it, I'd say), I agree. Home prices probably have another 9-12 months left to fall, commercial real estate is imploding, rising savings rates are going to continue to depress consumption, and beyond that there's the rest of the world to think about too.  Eastern Europe looks set to collapse sometime later this year, and if/when that happens it's going to have a huge impact on western European banks.  Plus there's hedge funds.  So far they've weathered the storm fairly well, all things considered, but I keep waiting for the other shoe to drop on that score.

Anyway, that's all pretty discouraging stuff.  Hopefully we're both wrong and things are going to start picking up this summer.  But I'm afraid I doubt it.