2011 - %3, January

WATCH: Sheppard and Corn on "Countdown"

Tue Jan. 4, 2011 1:59 AM PST

It was double duty for MoJo's Washington bureau on Monday as both Kate Sheppard and David Corn joined Keith Olbermann on MSNBC's Countdown. First, Kate dished on the EPA's new greenhouse gas regulations and incoming chair of the energy and commerce committee Rep. Fred Upton's (R-Mich.) plans to block them.

Then David Corn joined Keith to discuss Darrell Issa's plans to investigate the Obama administration.

Kate Sheppard covers energy and environmental politics in Mother Jones' Washington bureau. For more of her stories, click here. She Tweets here. Get Kate Sheppard's RSS feed.

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter and Facebook. Get David Corn's RSS feed.

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Banana Monoculture and Its Discontents

| Mon Jan. 3, 2011 10:18 PM PST

Felix Salmon on the blight threatening world banana production:

It turns out that the banana we all know and love — the Cavendish — is actually the second type of banana grown in enormous quantities and exported across Europe and North America. The first was the Gros Michel, which was wiped out by Tropical Race One; you might be saddened to hear that “to those who knew the Gros Michel the flavor of the Cavendish was lamentably bland.” Indeed, Chiquita was so sure that Americans would never switch to the Cavendish that they stuck with the Gros Michel for far too long, and lost dominance of the industry to Dole.

I asked my mother once if she remembered the bananas of her youth being better than the bananas of today, and she didn't. So maybe this whole banana blight thing is overrated. Then again, maybe not. Do I have any readers old enough to remember the taste of Gros Michel bananas? What were they like?

UPDATE: Commenter cld provides the dope:

The older bananas were tremendously better. They were larger and sweeter and rather creamier and the seeds within were longer and you could sort of taste them.

The texture of the Cavendish is more fibrous and not so even. On the other hand I think they keep a lot better than the Gros Michel, which would have spots all over it. (I mean on the inside).

Social Security Dealmaking

| Mon Jan. 3, 2011 3:55 PM PST

Atrios disagrees with my contention that a deal on Social Security could put it into balance for a good long time:

Social Security Will Never Be In Actuarial Balance

Not for more than a couple of years, anyway. If there's some deal to get there, then inevitably the Social Security Trustees will, perfectly justifiably, tweak a few assumptions about future economic activity so that there will be a DOOM scenario, an EVERYTHING'S AWESOME scenario, and a "uh oh maybe in about 40 years we will have a problem" scenario. And then Fred Hiatt will print another million ZOMG WE MUST DESTROY SOCIAL SECURITY NOW IN ORDER TO SAVE IT FORTY YEARS FROM NOW columns and some future president will marvel at those worthless IOUS and blah blah blah.

I don't really want to get into a blogspat over this, but this just isn't right. It's true that the Social Security Trustees normally produce three scenarios for future solvency (the 2010 version for trust fund solvency is on the right), but even critics almost universally use the intermediate scenario when they write about Social Security's finances. There's actually a plausible case to be made that the optimistic scenario has historically been closer to reality, but nonetheless, it's the middle scenario everyone uses. Even Fred Hiatt.

As for the actuaries making tweaks to their economic models, they do indeed do this. But if you look over trustees reports for the past 20 years you'll see that those tweaks have been small, have pushed in both directions, and have had only a tiny net effect on their projections. Obviously that could change in the future, but on past performance there's no real reason to think that tweaks to the forecast models will produce large changes to the forecasts themselves.

Needless to say, nothing is forever. Once we create food in replicators and have robot slaves to do all our work for us, I suppose no one will care about Social Security at all. But it's entirely possible to cut a deal on Social Security that will insure its long-term solvency for at least several decades, and that's about as much as anyone can ever hope for in real life.

And as long as I'm writing about this again, I'll reiterate a couple of points. First, the idea here is not that hardcore conservatives will stop attacking Social Security if a deal is reached. The idea is that they'll be ignored once they lose the support of centrist Beltway opinion — which they will if the intermediate trustees forecast shows the program in balance. Second, my support for a deal obviously depends on reaching a good deal. If Republicans refuse to consider revenue increases, then no deal. If they insist on means testing or increases to the retirement age, then no deal. Etc. But there are decent compromises available, and we should be just as willing to explore them as we are to reject deals that aren't good enough.

The Next Implosion

| Mon Jan. 3, 2011 3:03 PM PST

At our New Year's Eve party, I briefly got into a conversation with a friend about the next shoe to drop here in Orange County: now that residential real estate has finished (or nearly finished) its implosion, it's time for commercial real estate to implode. But that's not just a problem for Orange County, of course. Matt Yglesias points us to Gillian Tett:

The [Institute of International Finance] calculates that in March 2008, there was about $25bn worth of pre-crisis investment grade commercial real estate in distress. By March this year, however, that number had exploded to $375bn (and has probably swelled since).

Thus far, the banks have “dealt with potential delinquency problems in part by extending loans until 2011-13”, the IIF notes. Or, in layman’s terms, they have swept it under the carpet. But while this avoided defaults, the IIF reckons that about $1,400bn of CRE loans must be refinanced before 2014. Alarmingly, “nearly half of these are at present ‘underwater’, ie have mortgages in excess of the current value of the property”, it adds.

What's more, as Matt points out, owners of CRE aren't subject to the guilt-laden appeals to moral probity that homeowners are. Rather, "commercial property is owned by rich businessmen who’ll be expected to act like rich businessmen and try to maximize profits." This means they'll just default if it makes sense to do so. And in a lot of cases, it probably will. You can add this to the ever-expanding list of possible shocks to the global economy (oil, China, PIIGS, municipal defaults, etc.) that might still derail a fragile economic recovery. Buckle up.

Oakland Suspends Pot Farms

| Mon Jan. 3, 2011 2:26 PM PST

Was it all just a pipe dream? Oakland's audacious plan to legalize and tax large-scale marijuana farms is starting to sound like a totally rad idea that, upon further consideration, is only workable in a Harold and Kumar movie. Over the holidays, the city's pot-loving council members sent the plan back to the drawing board over fears that they might all go to prison. "It remains an open question" whether allowing the farms could expose the council to federal prosecution, the county DA informed them. Because, you know, the risks of building four, football-stadium-sized indoor grow operations that would together gross $200 million a year hadn't already been totally obvious. 

The council's hand-wringing is probably the result of the feds harshing their buzz. Early last month, California Watch reported that officials from the US Department of Justice had informed Oakland's city attorney that no, really, they weren't cool with the plan. The city council had been under the mistaken impression that the the farms would be left alone by the Obama DEA, which in 2009 announced that it would no longer raid legitimate medical marijuana operations.  But Oakland's plan to become "Oaksterdam" may have been a bit too Left Coast even for the O-man.

So what now? Council president Jane Brunner tells the San Francisco Chronicle that the pot farm plan is being reworded to exclude any possibility that its high-grade ganja could be used by recreational stoners (a California ballot measure that would have legalized recreational pot failed in November). In Oaksterdam, it's all about the meds now, or whatever.

The Financialization of America

| Mon Jan. 3, 2011 1:32 PM PST

Scott Sumner tries to explain why finance is so much more lucrative today than it was in the 50s and 60s:

Today the most productive members of society are not those who produce things, they are those who discover the things that need to be produced. Once you have the blueprint, it is easy to produce many types of software and pharmaceuticals. The big money goes to those who figure out the blueprint, but also to those who allocate capital to the guy who has the idea for a Google, or Facebook, or Twitter.

....And then there’s globalization, which means decisions about allocating capital can vastly improve productivity even in the old-line industries that were dominant in the 1960s, when the rest of the world hardly mattered. Finance is not that important in an agricultural economy or even in an economy where the mass production of goods can be done with almost military precision. It becomes extremely important in an economy where it is not at all clear what should be produced, or on what continent that production should take place.

This seems pretty unpersuasive. If Wall Street were making truckloads of money on their VC investments, then OK. Maybe he'd have a point. But I'm pretty sure that true venture capital constitutes a tiny fraction of finance sector earnings. Likewise, allocating capital to old-line industries is just....allocating capital to old-line industries. Why does it matter whether those industries are in Pittsburgh or Mumbai?

If the finance sector were truly creating lots of extra value, then most of us probably wouldn't mind that bankers were taking home outsize paychecks. But are they? Are overall global growth rates higher today than they were 50 years ago? Is productivity growth higher? Is modern finance repsonsible at all for higher economic growth than it was in 1965?

It sure doesn't seem like it — though I'm open to contrary evidence. Rather, it seems as if the explosion in finance over the past three decades has mostly consisted of rent seeking and massive increases in leverage and hidden risk thanks to post-Bretton Woods globalization and deregulation. The actual benefit to the rest of mankind is a little hard to suss out.

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Pakistan Drones' Success Rate: 2%

| Mon Jan. 3, 2011 1:13 PM PST

[Editor's Note: NAF researcher Katherine Tiedemann reminds us that US-led drone strikes in Pakistan tend to be CIA-run, not military-operated. The headline and post have been updated to reflect this.]

Our indefatigable editorial coordinator, Jen Phillips, pointed me to a New America Foundation study this morning on drone strikes in Pakistan...and the data does not inspire confidence.

According to NAF's research, there have been 215 drone attacks since 2004 in the bad-guy tromping grounds of northwest Pakistan, killing between 1,372 and 2,125 people. (The wide variation in estimates shows how difficult it is to track these stats, even with press and government reports.) Of those, 1061 to 1584 were called militants "in reliable press accounts." For those of you keeping score at home, that means that between 23 and 25 percent of all deaths from drone strikes are noncombatants. But here's the worse news:

Stress Success

| Mon Jan. 3, 2011 1:00 PM PST

Are prophecies of conservation doom self-fulfilling? That's the intriguing argument put forward in a new paper in Trends in Ecology and Evolution by Australian researchers Stephen T. Garnett and David B. Lindenmayer.

In "Conservation science must engender hope to succeed," the authors suggest that relentless communication of an impending mass extinction is failing to motivate politicians, policy makers, or the public, and is likely to be counterproductive:

Researchers need to provide the science not only for the campaigns lamenting environmental loss, but also, most importantly, for those celebrating the effectiveness of conservation. 

The authors acknowledge the immense challenges facing global biodiversity. Yet they remind us of enormous achievements of the past 50 years:

  • South Korea, almost denuded after the Korean War, now boasts forest cover across more than 63 percent of the country.
  • In Namibia, wildlife populations are increasing.
  • South Africa has completed a major expansion of Kruger National Park.
  • Iraqi engineers have reflooded the Tigris–Euphrates marshes.
  • Pioneering legislation has slowed species loss around the world, including the Bird Directive of the EU, the Habitats Directive of the EU, and the US Endangered Species Act of 1973.
  • In Australia, large-scale land clearing has been halted and most of the rainforest in the country is now contained within World Heritage sites.
  • The largest marine protected area in the world was recently enacted by one of the poorest nations on Earth, Kiribati.
  • The Antarctic Treaty has conserved more than 14 percent of our global land area—18 million square kilometers/6.5 million square miles—for longer than 50 years.

Garnett and Lindenmayer propose that scientists and communicators stress success via three actions:

  1. Hold a series of international conferences with published proceedings devoted entirely to describing successful conservation programs that have led to positive outcomes.
  2. Instigate journal editorial policies that promote the publication of papers highlighting successful conservation actions. Instigate special issues highlighting positive policy changes and achievements. Such journal policies are required because—the authors suspect—there's a bias towards citations of doomsaying papers.
  3. Complete interdisciplinary scientific research on the factors underpinning effective, successful, and sustained conservation. Do this in multiple settings at multiple scales, and use this research to boost future conservation effectiveness.

The paper:

  • Stephen T. Garnett and David B. Lindenmayer. Conservation science must engender hope to succeed. Trends in Ecology and Evolution. December 2010. DOI:10.1016/j.tree.2010.11.009.

Doing a Deal on Social Security

| Mon Jan. 3, 2011 12:35 PM PST

Digby reposts a summary today of last year's "Fiscal Responsibility Summit," in which Gene Sperling — now a top contender to replace Larry Summers as head of the NEC — said the Obama administration was interested in cutting a deal on Social Security, and warns against taking the bait:

I know I've posted that too often and regular readers are sick of it. But it's terribly important, I think, to understand that the rationale for liberals in this thing is that they are doing a good thing for the program, taking it "off the table" for the next 50 years and "making it sound." Now, I don't know if they really believe it, but it doesn't matter. What matters is that in the current environment whatever changes they come up with will come at the expense of the elderly because there will be no deal that requires tax hikes.

Atrios agrees:

I don't know why some liberals think that there is some deal, good or bad, which can somehow take the Social Security issue off the table until the end of time. As Ben Bernanke said, that's where the money is and they'll be trying to steal it in perpetuity. Cutting granny's benefits a bit won't change that.

I just don't think this is true. It's possible that Republicans will never agree to a Social Security deal that increases taxes, but keep in mind that Republicans are mainly obsessed with taxes on the wealthy. A small increase in payroll taxes and/or an increase in the payroll tax cap wouldn't affect the millionaire class much and might get a fair amount of GOP support. In any case, the only way to find out is to try. If they won't do the deal, then they won't do the deal.

But assume that a deal is possible. If it is, I think it's wrong to insist that it will come solely at the expense of the elderly, or that it won't do any good because Social Security will never be off the table anyway. On the first point, it's quite possible to structure a deal that requires nothing more than a very modest slowdown in the the future increase of benefit levels that (a) affects only those with fairly high incomes and (b) phases in over a period of decades. That's hardly Armageddon. On the second point, sure, Republicans will probably go after Social Security forever. But that's not what matters. What matters is that if the program is officially in balance then Republicans no longer have the traction to succeed. Benefit cuts are unpopular, after all, and conservatives by themselves don't have either the desire or the ability to buck the public on this unless they also have the support of the Washington Post/Pete Peterson Beltway elite. And they won't have that once the program is officially solvent. A deal on Social Security kicks the legs out of the centrist support they need in order to have any chance of reducing benefits in the future.

Now, again: maybe a deal isn't possible. There's only one way to find out. But if a deal is possible, it really would take Social Security off the table for a very long time. That would be good for the elderly, good for the country, and good for the liberal project in general. If there's any chance of doing a bipartisan deal over the next two years, Democrats should be open to it.

The Next War on EPA Regulations

| Mon Jan. 3, 2011 12:00 PM PST

The new Congress kicks off on Wednesday, and Rep. Fred Upton (R-Mich.), the incoming chair of the energy and commerce committee, has promised to put regulation of climate-changing emissions on the top of the docket—blocking it, that is. And he's indicated that he may use an obscure tactic to thwart the new EPA rules governing emissions from major sources of greenhouse gas pollution.

Upton recently suggested that he may seek to employ the rarely-used "resolution of disapproval" to block the EPA's regulations. "We are not going let this administration regulate what they have been unable to legislate," Upton said on Fox News Sunday (via The Hill), referring to the fact that the Senate did not pass a climate law last year. Upton told Fox a disapproval resolution might be one way they could block the EPA's carbon rules, which officially began phasing in on January 2.

The disapproval resolution was authorized by the Congressional Review Act of 1996 as part of Newt Gingrich's "Contract with America," and it allows Congress to overturn regulations from the executive branch within 60 days of their publication in the Federal Register. It is rarely invoked and even more rarely successful. Republicans did succeed in using it in 2001 to block new ergonomics rules from the Occupational Safety and Health Administration under the Clinton administration, but it hasn't been successfully employed since. (If Congress does succeed in blocking an administrative rule, the agency that issued it is also barred from creating any future rule that is substantially similar to the blocked one.)

With Republicans in control of the House and the majority of the caucus openly dismissive of the science on global warming, a disapproval resolution would probably pass in that chamber with ease. Of course, a disapproval resolution would likely be vetoed by the president, as Upton noted on Sunday. But as he also mentioned, there are a number of Democrats in favor of axing the EPA's new emissions rules. Six Senate Democrats voted for a disapproval resolution that Sen. Lisa Murkowski (R-Alaska) put forward last June that would have blocked the EPA's finding that greenhouse gases pose a threat to human health, a finding that led to the new regulations. Four of those Democrats will return to the Senate this year, and at least one freshman Democrat, Joe Manchin of West Virginia, has also pledged to shoot down EPA regulations. Because a disapproval resolution requires just 51 votes in the Senate—rather than the 60-vote hurdle most legislation needs to clear these days—it could actually go somewhere.