2011 - %3, March

Wall Street and the Public

| Thu Mar. 31, 2011 12:39 PM EDT

Matt Yglesias points us to today's Financial Times' report on Jamie Dimon's latest predictions of doom for big finance:

Jamie Dimon, chief executive of JPMorgan Chase, launched a broadside against financial regulation on Wednesday, warning that new capital rules could be “the nail in our coffin for big American banks”.

....Restrictions on debit card fees charged to retailers are also coming under attack in Congress....“It basically penalises us for having debit cards,” he said. “I think it was very unfairly done in the middle of the night with no facts and analysis whatsoever. This is not the way legislation should be done.”

Attacking another aspect of Dodd-Frank, Mr Dimon said rules requiring companies to put up collateral as they trade derivatives would “damage America”. Gesturing at the chief executive of Caterpillar, Mr Dimon predicted the industrial company would take its derivatives business to Singapore.

So Dimon doesn't like higher capital rules, doesn't like derivatives regulation, doesn't like debit card rules, and we already know what the entire industry thinks of the new Consumer Finance Protection Bureau. Long story short, he doesn't really think the financial industry needs any new regulations at all, thankyouverymuch.

Well, if I were him I suppose I wouldn't think so either. But guess what? It's only been two years since the Great Collapse, and finance industry profits have already rebounded to their bubble-era levels. That's a strong sign that finance industry leverage is also returning to its bubble-era levels, which in turn means the industry is about as dangerous as it's ever been. And Dodd-Frank is a notably weak piece of regulation, about as weak as any bill could be and still be called regulatory reform in the first place. Wall Street got off easy, and Dimon knows it.

The FT suggests that the growing pushback against regulation is coming as "anger at the financial industry subsides." Matt disagrees:

Personally, I see absolutely no reason to believe that anger at the financial industry has subsided. The Obama administration was softer on the financial industry than the public wanted, which played into the hands of the other political party. In an ideal world voters would have realized that the other political party wants to be even softer on the financial industry. But in the real world, that’s not how it worked. But I think most people are still pretty damn angry at the financial industry and don’t at all agree with Rep Bachus that the proper role of US public policy is to serve the bankers.

Unfortunately, I think the FT is right: the fact is that the public was never really all that angry at the financial industry in the first place. Tea party anger toward TARP has been mainly directed at the government, not at the financial industry. And the occasional protest against AIG bonuses aside, there's simply never been any real, concerted attack on the financial industry from either left or right. On a scale of 1 to 10, with the healthcare fight rating a 9, I'd say that anger toward banks rates about a 3. That's why Congress has been able to get away with doing so little about it.

Years ago I remember a lot of moderate liberals talking about how the Bush era radicalized them. For me, it was the economic collapse of 2008 that did it. The financial industry almost literally came within a hair's breadth of destroying the world, but even so it took only a few short months for them to close ranks with Republicans and the rich to prevent anything serious being done to rein them in. Profits are back up, new regulations are barely more than window dressing, nothing was done to help underwater homeowners, bonuses are as obscene as ever, unemployment remains sky high, and the public has somehow been convinced that this was all their own fault — or perhaps the fault of big government, or big deficits, or something. But the finance industry has escaped almost entirely unscathed. It's mind boggling. If this doesn't change your view of who really runs the world, I don't know what would.

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The Great Sharia Freakout

| Thu Mar. 31, 2011 12:08 PM EDT

We've reported pretty extensively on recent efforts by conservative politicans to turn Islamic law into a bogeyman (see: here, here, and here). In doing so, it's become pretty clear that much, if not all, of the anti-Sharia movement is based on just plain bad information. How else can you explain the suggestion that Afghan-style tribal courts could somehow be instituted in South Dakota, for instance, or that a judge in Florida crossed any sort of line when he ordered two Muslim parties to settle their matter (per the terms of their contract) through an Islamic arbitrator?

In that vein, Wajahat Ali and Matt Duss at the Center for American Progress have a new report out today that pretty systematically dismantles the basic premise, espoused by prominent conservatives like Newt Gingrich, that Sharia poses an existential threat to the United States. It specifically takes aim at Frank Gaffney's Center for Security Policy, a think tank that's deeply influential in Republican circles, and more or less provides the intellectual clout (such as it is) for the anti-Sharia movement. A sample:

The "Sharia threat" argument is based on an extreme type of scripturalism where one pulls out verses from a sacred text and argues that believers will behave according to that text. But this argument ignores how believers themselves understand and interpret that text over time.

The equivalent would be saying that Jews stone disobedient sons to death (Deut. 21:18-21) or that Christians slay all non-Christians (Luke 19:27). In a more secular context it is similar to arguing that the use of printed money in America is unconstitutional—ignoring the interpretative process of the Supreme Court.

The report (which you can read here) does not address the future scourge of secular atheist Islamists that Gingrich warns could someday lord over the continent. But if Gingrich's recent record is any indication, he'll likely offer his own rebuttal sometime next week.

Good News for Preemies

| Thu Mar. 31, 2011 11:51 AM EDT

Here's some good news for you. Remember a few weeks ago I wrote a post about a drug that helps prevent premature births? For years, a generic version was widely available from compounding pharmacies for about $10 per shot, but then, based largely on studies performed by the federal government, Hologic Inc. won approval of a branded version of the drug. It promptly sold the marketing rights to K-V Pharmaceutical, which jacked up the price overnight to about $1,500 per shot:

Then K-V sent letters to pharmacies threatening that the FDA would punish them if they compounded their own versions of the drug. On Wednesday, the FDA declared it would do no such thing.

In its statement, the FDA noted that the drug was important and K-V "received considerable assistance from the federal government in connection with the development of Makena by relying on research funded by the National Institutes of Health to demonstrate the drug's effectiveness."

...."In order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound [Makena] based on a valid prescription," the agency said in a statement.

That's from the Los Angeles Times. It's not the end of the story, since I assume that K-V will now bring its legal and lobbying muscle to bear in defense of its outrageous pricing. But it's a good start.

Paul Ryan's $1 Trillion Plan to Slash and Burn Medicaid

| Thu Mar. 31, 2011 10:35 AM EDT

Congressional Republicans have been making noises about gutting Medicaid for months, as it's become clear that—politically speaking—the health-care program for the poor is the easiest entitlement to cut. Now the shape of their plan is finally coming into view. Politico reports that Rep. Paul Ryan (R-Wisc.), chair of the House Budget Committee, is planning to slash $1 trillion from Medicaid in the House GOP's 2012 budget proposal. The details of the plan haven't leaked yet, but it's almost certain to include some sort of artificial spending "cap," which will reduce spending not by finding efficiencies but by slashing benefits, cutting payments to providers, and reducing access to the program.

Currently, the federal government reimburses states for a set percentage of their Medicaid costs. A spending cap-type plan would change that. There are already two such options on the table, both of which would fundamentally change the nature of the program. The first, which Ryan himself outlined last year, would turn Medicaid into a voucher program to "give Medicaid recipients $11,000 with which to purchase health insurance." Obviously, a program that gives people a set amount of money to pay for health insurance is a very different program from one that reimburses states for a percentage of the costs of insuring those people.

Ryan's voucher proposal hasn't won very many supporters. But Republicans in both houses of Congress are already united behind a push to convert Medicaid into a "block-grant" system that would give states the power to gut the program. Instead of giving individuals a set amount of money to buy insurance, like Ryan's voucher program, this plan would give states a set amount of money to provide insurance for poor people. Like the voucher program, this would represent a dramatic shift from the current percentage-based arrangement.

The House GOP's 2012 budget won't likely pass in its full form. But by putting draconian spending cuts on the table, House Republicans know they'll be able to move the policy goalposts further and further to the right—as they're already succeeding in doing.

When pressed, Hill Republicans will admit that Medicare, not Medicaid, is a bigger debt driver. But politically speaking, it's far easier to extract savings from the poor than from seniors. And when their opponents have supported Medicare spending reductions—as Democrats have successfully done through federal health reform—the supposedly fiscally conscious GOP turns around to accuse the Democratic Party of "an immediate 15 percent cut in [Medicare] benefits," as the National Republican Campaign Committee wrote in a press release on Wednesday. When it comes to entitlement cuts, the GOP rolls out its deficit hawkishness very selectively. 

Texas Bill Would Ban TSA From Touching Your Junk

| Thu Mar. 31, 2011 6:35 AM EDT

Texas state Rep. David Simpson, a Republican from Longview, has introduced a bill that would make it a Class A misdemeanor for TSA agents to touch your junk. The bill applies to anyone in Texas who, "as part of a search performed to grant access to a publicly accessible building or form of transportation, intentionally, knowingly, or recklessly:

(A) searches another person without probable cause to believe the person committed an offense; and

(B) touches the anus, sexual organ, or breasts of the other person, including touching through clothing, or touches the other person in a manner that would be offensive to a reasonable person.

The Don't Touch My Junk Act of 2011, as it really should be called, does not mince words. The terms "penetration," "anus," and "sexual organ" appear four, eight, and nine times, respectively. Of course, this hasn't stopped the bill from attracting dozens of cosponsors. The governing philosophy (and anti-littering campaign) known as "Don't Mess With Texas" easily finds its analogue in "Don't Touch My Junk."

And what's wrong with banning airport junk touching? Submitting to blatant penile groping surely isn't an indispensable part of getting from Houston to Amarillo. And yet. One libertarian tells the Texas Tribune that messing with the TSA might not be worth it:

Federal employees currently hold immunity for acts they carry out while on duty, he said, and state officials are likely to face criminal charges from impeding TSA agents from doing their job. "And then who pays?" he asked. "Ultimately taxpayers pay."

 In other words, don't touch my wallet.

Another Phony Planned Parenthood Sting

| Thu Mar. 31, 2011 6:00 AM EDT

In February, Lila Rose, a 22-year-old anti-abortion activist, made headlines with a series of undercover videos that purportedly showed Planned Parenthood employees assisting pimps with getting abortions and contraception for their underage sex slaves. It came out that PP had reported Rose's phony sex traffickers to the feds, but no matter. The hoax gave new fodder to the family-planning organization's congressional opponents, and Rose still cites it as evidence that PP has "conceal[ed] statutory rape and help[ed] child sex traffickers."

Yesterday, Rose, a protegé of video-sting provocateur James O'Keefe, released a new video that she claims catches the president of PP in a major lie. Here's what she says she uncovered: In an appearance on the Joy Behar Show, PP president Cecile Richards lied when she said the following about a proposal to cut federal funding to her group:

If this bill ever becomes law, millions of women in this country are gonna lose their health care access–not to abortion services–to basic family planning, you know, mammograms.

That statement, Rose asserts, is "blatantly false" because PP does not offer mammograms. To prove this, her "investigative team" called 30 PP clinics across the country and couldn't find one that provided breast cancer screenings. Based on those surreptitiously recorded calls, Rose concludes, "This is only the latest in Planned Parenthood's abusive and deceptive activity." Andrew Breitbart, who publishes posts by Rose on his Big Government site, has dubbed PP's allegedly false claims a "mammosham."

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We're Still at War: Photo of the Day for March 31, 2011

Thu Mar. 31, 2011 5:30 AM EDT

Capt. Christopher Bulson and Capt. Zachariah Gummert from Provincial Reconstruction Team Zabul step off a CH-47 Chinook in Daychopan, Afghanistan Mar. 29. U.S. Air Force photo/Staff Sgt. Brian Ferguson.

The Tea Party Allies' "Chinese Professor" Ad (Video)

| Thu Mar. 31, 2011 3:51 AM EDT

Though it's actually been on YouTube since last October, this tea-party-friendly ad by Citizens Against Government Waste, titled "Chinese Professor," has been quite the cyber-cultural lodestone for a couple of weeks:

First, some observations.

1) Critics have alleged that the ad is racist. Is it? CAGW calls the ad "Chinese Professor." But hey, I'll let you judge.

2) More important, the ad's argument exhibits all the logic of a purple-specked sea urchin trying to explain the relevance of Nash equilibria to international trade-regimes' behavior with some tin foil, a stick of spearmint gum, and an egg noodle. Let's think this one out: According to CGAW, Communist China...will take over the United States...after the latter has been weakened irreparably by...its universal health care coverage, stimulus spending, and "government takeovers of private industries." So we will lose to the commies by being too...commie. Eh?

Somewhere in Tallahassee, Florida, my International Relations Theory 101 professor is having an aneurysm.

Now, to be fair, CAGW has been around a lot longer than the tea partiers—since 1984. And the group seems more interested in helping Big Business than Joe Average, considering how much money it's raked in from the Tobacco Institute, Philip Morris, RJR Nabisco, ExxonMobil, and Merril Lynch, among others. (All-around fun-guy Republican and perennial presidential candidate Alan Keyes ran CAGW from 1989 to 1991.) And to hear the organization's president, Tom Schatz, tell it, the ad was supposed to be about the US's foreign debt, not Chinese people or political economy. "A 60-second ad cannot include all of the information needed to support its premise," he wrote on CAGW's blog last week. "The ad presents a possible, but preventable, future for the U.S." He adds:

The ad is not about China or its economy or its political  system; or any nation other than the United States.  If France held the largest portion of foreign-owned U.S. debt, the ad would be in French...Again, it's not about China, it's about Washington’s long-standing failure to take the steps necessary to prevent a national catastrophe.  All of the bloviating and cursing and wishing for our immediate and painful demise won't change anything; a more productive use of that energy would be to help prevent the "Chinese Professor" from being fact rather than fiction.

Okay, observations again: 

1) France? Really? Another great power that seems to be doing not so badly with universal health care and high taxes and spending? Dude.

2) It's not about China. But if we don't act, the Chinese takeover will be fact. Take that to your logic professor!

Further Evidence on the Crazification Factor

| Wed Mar. 30, 2011 10:09 PM EDT

The latest CNN poll says that unfavorable views of the tea party have surged by more than 20 percentage points over the past year:

Nearly half of all Americans have an unfavorable view of the tea party movement....A CNN/Opinion Research Corporation survey released Wednesday indicates that 32 percent of the public has a favorable view of the two year old anti-tax movement.

Hmmm. Unfavorables are up and favorables are down, but still, 32% of the country continues to have a positive view of the tea partiers. I wonder what the floor on that number is? I'm going to take a wild guess and say that it's 27%.

Is Obama Giving Up On Global Warming?

| Wed Mar. 30, 2011 9:43 PM EDT

AP is reporting that congressional leaders and the White House are working on a compromise budget plan that would cut $33 billion in spending. I'm a little surprised that John Boehner might be on board with this, since I figure he has to allow a government shutdown before eventually compromising if he wants to retain any credibility at all with the tea party wing of the GOP. But maybe he's decided that going through with the shutdown kabuki is pointless because the tea partiers are uncompromising zealots who can't be appeased no matter what. If that's the case, then the $33 billion figure is no big surprise.

But what's up with this?

A Democratic lawmaker familiar with a meeting Wednesday between Obama and members of the Congressional Black Caucus said the administration made it clear that some House GOP proposals restricting the Environmental Protection Agency's regulatory powers would have to make it into the final bill....It's not clear which proposals the White House might accept, but those backed by Republicans would block the government from carrying out regulations on greenhouse gases, putting in place a plan to clean up the Chesapeake Bay and from shutting down mountaintop mines it believes will cause too much water pollution.

These kinds of leaks often turn out to be mistaken in one way or another, so it's probably best not to panic yet. On the other hand, it's notable that Obama barely even mentioned climate change or greenhouse gases in his big energy speech today. This concession to Republicans on the EPA would jibe with that, and if it's true it would mean that Obama has essentially given up completely on anything other than token action to address global warming. That should sure get the base amped up for 2012, shouldn't it?