2010 - %3, February

Are Tea Partiers Nuts?

| Tue Feb. 23, 2010 2:56 PM EST

In David Barstow's terrific New York Times piece about the tea party movement, he included the following line: "It is a sprawling rebellion, but running through it is a narrative of impending tyranny." Jay Rosen has a problem with this:

That sounds like the Tea Party movement I have observed, so the truth of the sentence is not in doubt. But what about the truth of the narrative? David Barstow is a Pulitzer Prize winning investigative reporter for the New York Times. He ought to know whether the United States is on the verge of losing its democracy and succumbing to an authoritarian or despotic form of government.....Seriously: Why is this phrase, impending tyranny, just sitting there, as if Barstow had no way of knowing whether it was crazed and manipulated or verifiable and reasonable? If we credit the observation that a great many Americans drawn to the Tea Party live in fear that the United States is about to turn into a tyranny, with rigged elections, loss of civil liberties, no more free press, a police state... can we also credit the professional attitude that refuses to say whether this fear is reality-based? I don’t see how we can.

....No fair description of the current situation, nothing in what the Washington bureau and investigative staff of the New York Times has picked up from its reporting, would support a characterization like “impending tyranny.” In a word, the Times editors and Barstow know this narrative is nuts, but something stops them from saying so— despite the fact that they must have spent over $100,000 on this one story. And whatever that thing is, it’s not the reluctance to voice an opinion in the news columns, but a reluctance to report a fact in the news columns, the fact that the “narrative of impending tyranny” is ungrounded in any observable reality, even though the sense of grievance within the Tea Party movement is truly felt and politically consequential.

I think this is seriously misguided. Sure, Barstow probably wants to refrain from outright opinion mongering in a new story. But as Rosen says, that's not really the issue here. The real issue is simpler: Barstow wants to treat his readers as adults.

Here's a similar situation that I ran across a few years ago. In the LA Times, Barbara Demick (I think) was able to score a rare, long interview with a high-ranking official of the North Korean government. The resulting story basically provided the DPRK view of things, and as you might expect, that view was pretty divorced from reality. Conservatives were outraged. How could she report this stuff with a straight face? Why was she providing Kim Jong-il's thuggish regime with this kind of cover?

But I found the story fascinating and I thought the conservative critique was as misguided as Rosen's. Demick made it perfectly clear who she was dealing with, and I knew perfectly well that North Korea is a brutal dictatorship whose views can hardly be taken at face value. Everyone bright enough to read the LA Times in the first place knows that. She didn't have to treat us like fourth graders and tell us explicitly.

Ditto for Barstow and his piece on the tea partiers. He's not writing for fourth graders. He's writing for literate adults who know perfectly well that a "narrative of impending tyranny" is nuts. If he wrote a piece about a cult that thinks the world is flat, would he really need to add a sentence telling us that, in fact, this is crazy because there's a mountain of evidence telling us the world is round?

Reporters for the New York Times aren't writing grade school primers. They don't have to tell us at every turn that the Holocaust was evil, that the earth revolves around the sun, that North Korea is a horrible dictatorship, or that the United States is not about to fall into tyranny. Just as I didn't explicitly say in this post that I didn't quote Rosen's entire argument above. You already know this, and you'd think I was treating you like idiots if I insisted on mentioning it in every blog post. Barstow's only crime was not treating his readers like idiots. We should all be fine with that.

Via Conor Friedersdorf, who has actually talked to conservatives who use the "impending tyranny" trope and says that sometimes it's nuts, but other times it's just hyperbole.

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Where Did All the Jobs Go?

| Tue Feb. 23, 2010 2:00 PM EST

Why were so few jobs created during the aughts? In net terms no jobs at all were created, but even if you exclude the post-bust years the aughts saw a net increase of only 7 million jobs compared to 22 million in the 90s. What happened?

Well, computerization may have played a role. Globalization too. Or maybe low federal spending on pure R&D. But in the current issue of the Washington Monthly, Barry Lynn and Phillip Longman finger an additional suspect. The problem, they note, wasn't a rise in job destruction, which was actually lower than in the 90s, but a lack of job creation. And the engine of job creation is small businesses.

So why did small businesses stop prospering in the aughts? The answer they propose is a new one: consolidation. Starting in the early 80s, as the Reagan administration decided to quit enforcing antitrust laws, big companies began merging in earnest, and by the early aughts it was common for three or four firms to control upwards of half or more of entire sectors. It happened in retail, it happened in banking, it happened in pet food, it happened nearly everywhere. And not only do big firms innovate less than small firms, they also prevent innovative small firms from ever getting a chance to grow in the first place:

Dominant firms can hurt job growth by using their power to hamper the ability of start-ups and smaller rivals to bring new products to market. Google has been accused of doing this by placing its own services—maps, price comparisons—at the top of its search results while pushing competitors in those services farther down, where they are less likely to be seen—or in some cases off Google entirely. Google, however, is a Boy Scout compared to the bullying behavior of Intel, which over the years has leveraged its 90 percent share of the computer microchip market to impede its only real rival, Advanced Micro Devices, a company renowned for its innovative products. Intel has abused its power so flagrantly, in fact, that it has attracted an antitrust suit from New York State and been slapped with hefty fines or reprimands by antitrust regulators in South Korea, Japan, and the European Union. The EU alone is demanding a record $1.5 billion from the firm.

To understand just how disadvantaged small innovative companies are in markets dominated by behemoths, consider the plight of Retractable Technologies, Inc., of Little Elm, Texas. The company manufactures a type of "safety syringe" invented by its founder, an engineer named Thomas Shaw. The device uses a spring to pull the needle into the body of the syringe once the plunger is fully depressed. This helps to prevent the sort of "needlestick" injuries that every year result in some 6,000 health workers being infected by diseases such as hepatitis and HIV. Since starting the company in 1994, Shaw has carved out a modest market niche, selling his lifesaving product to nursing homes, doctors’ offices, federal prisons, VA hospitals, and international health organizations for distribution in the Third World. But he’s not been able to break into the mainstream U.S. hospital market. The reason, he says, is that a company called Becton Dickinson & Co. controls some 90 percent of syringe sales in America and enjoys enough power over hospital supply purchasing groups to all but block adoption of Shaw’s device. In 1998, Shaw sued, charging restraint of trade, and in 2004 won what looked like a stunning victory: Becton Dickinson agreed to settle for $100 million, and the purchasing groups promised to change their business practices. But according to executives at Retractable Technologies, things have only gotten worse. "We probably have less of our products in hospitals today than we did ten years ago," says Shaw, who just won a patent-infringement case against Becton Dickinson and is pursuing another antitrust suit against the company. "I have spent what should have been the most creative, productive years of my life sitting in depositions. By the time I’m done fighting, my patents will have expired."

A few years back, Bess Weatherman, the managing director of the health care division of the private equity firm Warburg Pincus, spelled out the effect of such monopoly power on investments in new health care technologies. In a Senate hearing, Weatherman testified that "companies subject to, or potentially subject to, anti-competitive practices ... will not be funded by venture capital. As a result, many of their innovations will die, even if they offer a dramatic improvement over an existing solution."

The job growth of the 80s and 90s, Lynn and Longman suggest, was largely powered by companies that were founded in the 70s — companies like Apple, Microsoft, Oracle, and Genentech. By the time the 2000s rolled around, consolidation was largely complete and the pipeline of small, innovative companies was drier than it had been in decades.

They don't pretend that this is the sole explanation for the jobless aughts, or even that they've proven their case. "As we’ve noted," they say, "there are other [theories] having to do with changes in technology and international trade. These other theories are open to debate, but at least they’re being debated. What isn’t getting talked about is the role industry consolidation might be playing in all this. That needs to change."

I agree. One of the pathologies of modern conservatism — a pathology that's shared more often than I'd like by mainstream liberals — is that they're pro-business, not pro-free market. The difference is critical. Pro-business means passing laws that your business pals like, and as economists since Adam Smith have observed, what businessmen mostly like is lack of competition. The operation of a true free market, conversely, depends crucially on competition and plenty of it. And just as crucially, that requires government intervention to prevent a few behemoths from taking over every sector of the economy. Keeping a free market free takes a lot of work.

If Lynn and Longman are right, we need to start doing that work again. It's time for economists to start seriously debating whether our sputtering job machine is due in large part to our love affair with big business.

Harry Reid and the Public Option

| Tue Feb. 23, 2010 1:52 PM EST

Ezra Klein explains why Harry Reid is reluctant to publicly give the public option his full support:

Caucus politics present another dilemma: The public option died due to the opposition of Nelson, Landrieu, Lincoln, Lieberman and a handful of other conservative -- and vulnerable -- Democrats. Reid cut a deal with them, and they signed onto the final product. For many, that was a big political risk. The price was letting them say they killed the public option. Bringing it back to the bill will mean they voted for a bill that ended up including something they'd promised their constituents they'd killed. Cross them on this and you've lost their trust -- and thus their votes -- in the future.

My guess is that this is a much bigger deal than a lot of people think. Centrist Dems may be wrong to feel that the public option is a threat, but nonetheless they feel like they made a deal. For good or ill, no political leader can afford to renege on something like that. Not if he wants to stay leader, anyway.

The Excise Tax Takes Center Stage

| Tue Feb. 23, 2010 1:31 PM EST

Second only to the public option, probably the biggest intra-Democratic healthcare feud is over the excise tax, a tax on high-value healthcare policies that's designed to rein in the "Cadillac plans" favored as tax-free compensation by corporate executives, but that also takes a bite out of the high-end plans negotiated by blue-collar unions over the years in lieu of big raises. President Obama's plan, unveiled yesterday, cuts back the excise tax considerably but doesn't get rid of it completely. So how are liberal Dems likely to react to this? David Corn reports:

At that meeting with columnists a few weeks ago, Pelosi estimated that at most there were 20 Democrats in her caucus who might support an excise tax. The White House appears to be banking on a wholesale conversion of House Dems. But it's unclear whether Obama's alterations to the tax—which also include not counting dental and vision benefits as taxable and easing the tax for firms with higher health-care costs due to the age or gender of their employees—will win over Democrats on the House side. According to White House press secretary Robert Gibbs, the White House did not brief the House Democrats regarding its intentions on the excise tax until after the plan was devised. And during a White House conference call about the overall proposal, economic aide Jason Furman was asked if the administration had attempted to work out an excise tax deal with the House Democrats before releasing the plan. He replied that "everyone would appreciate it" if the Obama proposal led to lower premiums. In other words, no.

If this is true, it's surprising — and a little disturbing. There's no reason the White House has to agree to everything that House Dems want, but it would be nice to think that they at least have an idea of what might be a deal killer and what isn't. My own take is that House Dems got a lot of other things they wanted and that the excise tax has now been so weakened that it's no longer much of a threat. (For one thing, under Obama's plan it won't take effect until 2018. That gives liberals a lot of time to try to kill it entirely.)  Still, I wonder if the folks who have to vote on it agree? And more to the point, I wonder if the White House knows?

Shelby Rejoins Financial Talks

| Tue Feb. 23, 2010 1:29 PM EST

The prospects for Sen. Chris Dodd's financial-reform overhaul received a much needed bipartisan boost today, as Sen. Richard Shelby (R-AL), the ranking member on the Senate banking committee, has reportedly rejoined negotiations with Dodd, the committee's chair. Shelby had abandoned the negotiations earlier this month, largely over disagreements on whether Senate's financial-reform bill should include an independent Consumer Financial Protection Agency, a centerpiece of the House's financial-reform bill passed in December. Dodd's had replaced Shelby with Sen. Bob Corker (R-TN) as his Republican counterpart a few weeks ago.

Along with the news of Shelby's return are reports that the release of Sen. Dodd's bill might not occur until next week, a revision of earlier statements by a banking committee spokeswoman, Kirstin Brost, that a draft would come out this week and would be marked up next week. With Shelby now back in the mix, however, the fate of an independent Consumer Financial Protection Agency again hangs in the balance, and the agency could end up being folded into an existing department, like the Treasury, as Republicans like Sen. Corker have previously suggested.

Climate Bill: Not Dead Yet!

| Tue Feb. 23, 2010 1:01 PM EST

John Kerry on Tuesday called off the vultures swooping in on comprehensive climate and energy legislation, arguing that senators are closer than ever to sealing a deal.

"I'm excited. I know that's completely contrary to any conventional wisdom," he said, noting that he and Sens. Lindsey Graham (R-SC) and Joe Lieberman (I-Conn.) met last night with members of the Obama administration to discuss progress on a bill. "We're on a short track here in terms of piecing together legislation." (The optimism about the legislation is so far outside the expectations of most Senate observers that one reporter muttered "Is John Kerry delusional?" following his remarks.)

His remarks come a day after Max Baucus (D-Mont.), who would oversee key portions of a climate and energy bill as chair of the Finance Committee, indicated that legislation doesn't stand much of a chance of moving this year.

"I'll have to talk to Sen. Baucus," Kerry told reporters. "I've talked to Max Baucus any number of times personally and he has said to me each time he wants to get it done."

But Kerry was still reticent to give a date that the senators may introduce a bill, or even any indication of what that final bill might look like. "I'm not going into detail about what's in the bill," he said at an event at the National Press Club. "I just tell you it's comprehensive," he said, adding that "it will be different than anything that has been put on the table in the House or Senate to date."

The key sticking point, Kerry said, remains the method the bill will use to price carbon, and "every mechanism that's out there" remains on the table. Other essential elements for a deal, like nuclear power provisions, are important for "opening up some conversations" with senators, he said, but, "I don't think it's going to be the clincher for a final bill."

The White House also expressed enthusiasm about where Kerry's negotiations are heading. Asked whether the White House would offer specific legislative proposals on climate and energy, as it did yesterday on health care following months of stalemate, Carol Browner, special adviser on climate change and energy, said the Obama administration has no plans to put forward legislation proposals. "We think the work going on on the Hill is going at a nice speed, and we are going to continue to work with those folks," said Browner.

She also downplayed accusations that Obama and his administration have not done enough to prioritize climate and energy legislation. "In virtually every public appearance of the president he mentions these issues, he calls on Congress to do this," said Browner. "I think we have been abundantly clear about our desire for comprehensive legislation."

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Our Small Bore Senate

| Tue Feb. 23, 2010 1:00 PM EST

Harry Reid won his first battle on the jobs creation front yesterday:

The Senate voted Monday to advance a $15 billion jobs-creation measure, giving Democrats a key victory as they seek to reverse their declining political fortunes by emphasizing legislation to boost the economy. The chamber is now poised to pass the measure later this week.

Five Republicans, including new Sen. Scott Brown (Mass.) joined 57 Democrats in voting to proceed on the jobs bill, after a suspenseful buildup in which members of both parties wondered whether Senate Majority Leader Harry Reid (D-Nev.) could cobble together enough votes to proceed.

This is....just sad. Compared to a "normal" level of unemployment, there are currently something like 10 million more jobless people than we ought to have. Without action, that number will still be around 8 million next year. And we're screwing around with a payroll tax cut that might, with a tailwind, create around 100,000 jobs per year. It's not that this a bad policy choice, it's that the scope of the action is so plainly inadequate compared to the size of the problem.

Why so small? Because Republicans won't agree to a bigger bill, so Harry Reid has decided to push through a bunch of smaller measures instead. His thinking, apparently, is that he's going to dare Republicans to vote against these bills. If they cave, he wins. If they don't, it becomes good campaign fodder for November.

This is pretty unlikely to work, though. Reid managed to lasso a few Republicans for a tax cut, but he probably won't be able to do even that for the rest of his package. They'll filibuster and defeat even these small bore proposals.

Will they pay a price for this? Get serious. Suppose you're a Democrat running against some Republican who voted against Monday's bill. "You'd all have jobs today," intones your attack ad "if only Senator Wingnut hadn't voted against a moratorium on payroll taxes." Will anyone believe it? I don't see it. It's too abstract and people are too jaded about this kind of stuff actually having an effect. Sen. Wingnut will just say the bill was another Washington boondoggle that wouldn't have created a single job, the tea partiers will all cheer, and that will be that. It's just too hard to make the case for obstruction unless you can point to something that's both big and concrete.

The payroll tax bill is better than nothing. But it's also a sad commentary on the ability of Congress to tackle actual problems.

Lawmakers Introduce Contractor Crackdown Bill

| Tue Feb. 23, 2010 12:36 PM EST

If Sen. Bernie Sanders (I-Vt.) and Rep. Jan Schakowsky (D-Ill.) have their way—and, let's be honest, they probably won't—the days of most private security and military contractors operating in Iraq and Afghanistan would be numbered. On Tuesday the lawmakers, who are among the most vocal congressional critics of wartime contractors, introduced the "Stop Outsourcing Security Act" in the House and Senate. The legislation would mandate that diplomatic security, which is largely handled by contractors (with occasionally disastrous results—see Nisour Square, Blackwater; vodka butt shots, ArmorGroup), be performed solely by US government personnel. The bills, which would allow the White House to seek certain exceptions for mission-critical contractors, would also "restore the responsibility" of the US military over a variety of functions that have been outsourced, from training foreign security forces and guarding convoys to performing military intelligence and administering prisons. "The behavior of private contractors has endangered our military, hurt relationships with foreign governments, and undermined our missions overseas,” Schakowsky said today.

Sanders and Schakowsky introduced similar measures in 2007, but the bills never advanced. But here's a bit of interesting trivia. Who was Sanders' sole co-sponsor in the Senate? None other than Hillary Clinton, who on the campaign trail declared, "When I am President I will ask the Joint Chiefs for their help in reducing reliance on armed private military contractors with the goal of ultimately implementing a ban on such contractors." By the time she became Secretary of State, overseeing armies of contractors in Afghanistan and Iraq, she had changed her tune. "Whether we can go all the way to banning, under current circumstances, seems unlikely," she told State Department employees during a townhall meeting last February. Frankly, though, the main circumstance that had changed was that Clinton was no longer running for president.

Given the government's heavy reliance on contractors, the notion of banning them (or even phasing them out in any precipitous way) was just as unrealistic then as it is now. This point was underscored in a recent Congressional Research Service report that noted "many analysts and government officials believe that DOD would be unable to execute its mission without PSCs." The same report also made the point that run-amok contractors are fanning anti-American sentiment and undermining America's foreign policy goals in Iraq and Afghanistan. Given the challenges in Afghanistan and ongoing efforts to hold onto security gains in Iraq, that's really the last thing American troops or diplomats need. But the solution advanced by Sanders and Schakowsky is extremely unlikely to succeed—and could potentially do more harm than good, given that the military is already stretched thin and the State Department's diplomatic security branch has nowhere near the manpower to do what the lawmakers are asking. What's doable—or at least should be doable—is to make sure the right laws, regulations, and oversight is in place to keep contractors accountable, to hold them to the terms of their contracts and, this should go without saying, to the highest standards of conduct when they are representing US interests overseas. Iraq IG Stuart Bowen has an interesting plan for addressing some of the oversight challenges, which I covered today. And Sen. Patrick Leahy (D-Vt.), Sen. Ted Kaufman (D-Del.), and Rep. David Price (D-N.C.) have introduced bills intended to clarify some of the legal uncertainties surrounding contractors working overseas. But in the end, if the Obama administration can't solve its contractor problem, perhaps then it's time to revisit the Sanders/Schakowsky option.

The Torture Tapes

| Tue Feb. 23, 2010 12:00 PM EST

Guess what? According to a CIA memo, Republican senator Pat Roberts was told in 2003 about the agency's plan to destroy interrogation tapes that provided graphic evidence of the widespread use of torture against detainees, and he thought it was a fine idea:

At a closed briefing in 2003, the chairman of the Senate Intelligence Committee raised no objection to a C.I.A. plan to destroy videotapes of brutal interrogations, according to secret documents released Monday.

....According to a memorandum prepared after the Feb. 4, 2003, briefing by the C.I.A.’s director of Congressional affairs, Stanley M. Moskowitz, Scott Muller, then the agency’s general counsel, explained that the interrogations were reported in detailed agency cables and that officials intended to destroy the videotapes as soon as the agency’s inspector general completed a review of them. “Senator Roberts listened carefully and gave his assent,” the C.I.A. memo says.

....The same document says that Senator Bob Graham of Florida, the Democrat who had preceded Mr. Roberts as chairman, had proposed that the committee “undertake its own ‘assessment’ of the enhanced interrogation,” the C.I.A.’s term for coercive methods. Agency officials told Mr. Roberts that they would oppose allowing any Senate staff members to observe interrogations or visit the secret overseas prisons where they were taking place.

“Quickly, the senator interjected that he saw no reason for the committee to pursue such a request and could think of ‘10 reasons right off why it is a terrible idea,’ ” the report says.

Roberts says there's more to the story, but apparently he didn't feel inclined to explain exactly what that "more" might be. Stay tuned for what's sure to be an entertaining explanation one of these days.

5 Uses for Wall St.'s Bonuses

| Tue Feb. 23, 2010 11:15 AM EST

Bonuses on a resurgent, if not shrunken, Wall Street bounced back to more than $20 billion in 2009, up 17 percent from the year before, according to new data from the New York Comptroller's office. The average bonus was $123,850, and at three of biggest banks on the Street—Goldman Sachs, Morgan Stanley, and JPMorgan Chase, all of which taxpayers bailed out—bonuses jumped even more, up 31 percent from 2008. Mind you, 2009's bonus checks are nowhere near the ludicrously high totals we saw at the peak of the bubble, like the $34 billion in 2006 and $33 billion in 2007. (Who can forget this typical New York Times headline from bonus season in 2004: "That Line at the Ferrari Dealer? It's Bonus Season on Wall Street.") Still, when one in five Americans is "underwater" on their home and nearly one in ten are unemployed, $20 billion in bonuses is a staggering, incomprehensibly large sum that could go a long way if spread out across the rest of the population.

In that spirit, here are five alternative uses for that $20 billion in bonuses that might alleviate our current economic woes:

  1. You could pay the salaries of more than 390,000 public school teachers across the country.
  2. You could close nearly all of California's gaping budget hole.
  3. You could almost cover unemployment-fund shortfalls, now nearing $25 billion, in 25 different states.
  4. You could more than double the amount of Pell Grant funding given to students from low-income backgrounds who might not attend college otherwise.
  5. You could increase the budget of the Small Business Administration by more than 35 times, a much needed boost considering the SBA's coffers had dwindled from $3.5 billion in 1978 to $578 million in 2008.

But really, we'd all rather have a Ferrari anyway, right?