2011 - %3, March

Teachers and Credit Cards

| Tue Mar. 22, 2011 3:30 PM EDT

I'm basically a supporter of regulations limiting the amount that credit card companies can charge merchants in interchange fees. If there were real competition in the card market, I'd probably feel differently, but in reality there's an effective duopoly, and both members of that duopoly have conspired to require merchants to sign contracts that forbid them from engaging in price discrimination by charging more for credit card purchases if they want to. This has created a situation in which card companies and banks have an incentive to charge higher and higher fees, which are subsidized by everyone since everyone has to pay the same higher prices that merchants charge to cover the fees, and then rebate those fees to their most favored customers in the form of airline miles and other goodies. It's hardly the biggest outrage in the world, but it's still pretty ridiculous.

Now, I'm also a moderate supporter of teachers unions, and it turns out that the NEA is opposed to regulations limiting interchange fees. Matt Yglesias wonders if this changes my mind:

I don’t particularly think we should take the NEA’s word for it, but I wanted to call attention to this simply because I think confirmation bias is one of the biggest problems we have on the web. It occurs to me that several bloggers who I normally agree with but who had strong favorable views about the Durbin Amendment that contrasted with mine—Kevin Drum and Mike Konczal in particular—are also people who’ve really taken the lead in making the case that labor unions are a crucial “countervailing force” to advancing middle class economic interests. So I wonder if any of them are inclined to rethink their views of the swipe issue in light of this.

Hmmm. The NEA provides this explanation: "With educators and others of moderate income facing daily challenges to make ends meet, Congress and the Federal Reserve must tread lightly when considering proposals that could increase financial burdens on these families." And maybe so. But my first thought when I read this was, "Gee, I wonder if what they really care about are the interests of credit unions run for teachers?" Luckily, it turns out Mike Konczal had the exact same suspicion, which saves me the time of looking into it. You can read his thoughts here.

So for now, anyway, I haven't changed my mind. It's not as if I have to agree with every single stance ever taken by a labor union, after all. And as before, I stand ready to abandon regulations on interchange fees if card companies allow merchants to freely charge extra for card purchases if they want to. That would be the free market at work. Oddly enough, they don't seem very excited by that prospect.

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Oil Is Washing Up in Louisiana—Again

| Tue Mar. 22, 2011 2:54 PM EDT

For the last several days, oil from a 30-mile slick has been washing up in the highly appetizing forms of "emulsified oil, oil mousse, and tar balls" on beaches in southeastern Louisiana including Grand Isle, where I spent last summer covering the BP oil spill. Local officials and the Coast Guard are investigating the source. Meanwhile, yesterday the government approved the first deepwater exploration plan since BP's massive blowout last year. Earlier this month, it also approved the first deepwater drilling permit since the post-Deepwater moratorium. Both permits are for an area where there's already so much oil-production activity that when a 30-mile oil spill appears, no one can tell where it came from.

I'm headed back to Louisiana later this week to report the voices of spill victims a year after the BP disaster. Until then, you can get a feel for the sentiments my Southern friends have been expressing to me lately in a January video of Plaquemines Parish president Billy Nungesser swearing at a Coast Guard official. Even before this new spill started coming ashore, BP's oil was still recently making landfall without adequate protections in place. The famously outspoken Louisiana politician sums it up pretty well when he says, "That is BULLSHIT."

The "One-Time" Trap

| Tue Mar. 22, 2011 12:58 PM EDT

Should we institute a tax holiday on foreign earnings, a one-time deal that allows U.S. companies to bring home profits from their overseas operations at a low rate? Peter Coy and Jesse Drucker argue that it's a bad idea: we did it before in 2004, and companies all figured out that if it happened once, it would happen again. So they started piling up even more earnings overseas than before. Ezra Klein comments:

But if you read the piece, you’ll also realize that all the good arguments in the world might not be able to stop this bad idea from happening. There’s a lot of money riding on it, so there’s a lot of money behind it. “The pro-holiday coalition has quietly assembled an all-star lobbying and communications team,” report Coy and Drucker. The communications strategist is Anita Dunn, “who served as President Barack Obama’s interim communications director during his first year in office.” [Etc.]

Tax cuts for corporations and the rich always have a pretty good chance of passing, so this is hardly a surprise. But I have a question: I've read some seemingly persuasive arguments that taxing foreign earnings is a bad idea in the first place, and it's something that virtually no other rich country does. Here's a typical version of this argument from the CEO of Cisco:

The U.S. government's treatment of repatriated foreign earnings stands in marked contrast to the tax practices of almost every major developed economy, including Germany, Japan, the United Kingdom, France, Spain, Italy, Russia, Australia and Canada, to name a few. Companies headquartered in any of these countries can repatriate foreign earnings to their home countries at a tax rate of 0%-2%. That's because those countries realize that choking off foreign capital from their economies is decidedly against their national interests.

So how about it? Is there something to this, or is something important being left out? What's the liberal conventional wisdom here?

(Of course, in a more blue-sky vein, I'm in favor of phasing out the corporate income tax completely and replacing it with a carbon tax. That would be almost 100% beneficial to everyone, and yet, it will never happen. Strange, isn't it?)

UPDATE: Turns out Coy and Drucker addressed this issue in their piece. I shoulda clicked the link. Ezra sums it up here.

Pawlenty's Pastor: An Evangelical Powerbroker

| Tue Mar. 22, 2011 11:59 AM EDT

As you've probably heard, former GOP Minnesota Gov. Tim Pawlenty launched his presidential exploratory committee yesterday, with a characteristically flashy announcement video. To date, much of his national political exposure has focused more on his regular-guy credentials—he likes to fish and play hockey, and fancies himself as a "Sam's Club Republican" (as opposed to the country club sort). What tends to get overlooked, but probably shouldn't, is his faith. Here's Rose French:

"Pawlenty appeals to a younger evangelical, one who cares about issues beyond abortion and same-sex marriage like...the environment,'' Lindsey said. "He's seen as a fresher face. He's not a brash or harsh evangelical. He seems to embody this...authentic Christian faith. Evangelicals, if anything, have become well-trained on picking up on religious phonies."

To wit: Pawlenty's pastor at Minnesota's Wooddale Church is Leith Anderson, president of the National Association of Evangelicals and a member of President Obama's Advisory Council on Faith-Based and Neighborhood Partnerships. Anderson's no lefty—he's an author of the Manhattan Declaration, which called on Christian pastors to oppose abortion and same-sex marriage—but he's also pushed for amnesty for undocumented residents and supported greenhouse gas restrictions.

Going forward, this could be an asset for Pawlenty—the ability to speak sincerely to the party's conservative Christian base, without compromising his ordinary-guy image by coming off as a culture warrior. Leave that to Rick Santorum.

Cui Bono?

| Tue Mar. 22, 2011 11:37 AM EDT

AT&T's proposed acquisition of T-Mobile would make AT&T about a third bigger than it is now. Here's my prediction about how this will play out if the deal goes through: within five years, the compensation of AT&T's CEO will grow to be about a third bigger than it is now.

There's no especially compelling reason this should happen, but it will regardless. Keep that in mind in the midst of the coming blizzard of explanations for why this particular consolidation is good for the industry, good for the consumer, good for shareholders, and, well, just plain good for America, dammit. Industry consolidation over the past 30 years has produced a smaller but much higher paid class of corporate executives, and this one will too.

Chart of the Day: Why the Stimulus Didn't Work

| Tue Mar. 22, 2011 11:13 AM EDT

Why did the 2009 stimulus package produce such meager results? Partly because the recession turned out to be worse than Obama's team thought, and partly because they didn't press for a big enough package even for the recession they thought we had. But another reason is that at the same time the feds were spending more money, state governments were cutting back. The chart below from CBPP tells the story. They have data for all but six states, and on average for 2012, "those 44 states plan to spend 9.4 percent less than their states spent before the recession, adjusted for inflation." That's not just less than last year, it's less than 2008. That wiped out nearly the entire effect of the federal stimulus package.

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Griping About Libya

| Tue Mar. 22, 2011 10:50 AM EDT

I'm not likely to blog very much about Libya, but I have to say there's an air of unreality surrounding a lot of the commentary that's starting to get on my nerves. Criticizing Obama for not consulting Congress is one thing. It's not as if this is some kind of unprecedented break with past practice or anything, but still. I get it.

But the "dithering" complaint? Give me a break. When did it suddenly become a personality defect to decline to intervene in a foreign rebellion the instant it broke out? Isn't there anyone left who appreciates the fact that Obama still retains a few shreds of anti-interventionist instinct and moves in a deliberate fashion?

Then there's the "why did he change his mind?" nonsense. Answer: because when events on the ground are moving fast, presidents change their minds. How? Usually by first holding a meeting and getting lots of input. Obama changed his mind last Tuesday in exactly the same way that every president since George Washington has changed his mind.

And then the "following, not leading" complaint. Look: if the only thing you actually care about is showing just how manly the United States can be, this makes sense. But that's a pretty stupid justification. There's just no reason why America should be required to take the leadership role in every military action around the globe.

Finally, there's all the handwringing over why we're intervening in Libya but not Bahrain or the Congo or Yemen. Please. Muammar Qaddafi is a terrorist and thug who's been on practically everyone's shit list around the world for decades. He has no allies, no friends, and not much firepower. Getting rid of him looks like a doable mission, and there's no one really opposed. Other places either don't look very doable or else their autocrats happen to be U.S. allies. Maybe that's not the most honorable reason in the world for leaving them alone, but it's a reason followed by pretty much every national leader since the first nomad planted a wheat field in Ur and settled down. We shouldn't act quite so wide-eyed and shocked that the United States does too.

Look: I'm not really happy about the intervention in Libya. Like a lot of people, I'd like to know what our actual goals are. What's more, I'm not sure it'll be the cakewalk that Hillary Clinton and Nicolas Sarkozy seem to think, and I believe that for a variety of reasons the United States is best served by not giving anyone an excuse for thinking that the current round of rebellions in the Middle East are backed by American power and interests. It's better for us to keep a pretty low profile right now.

But an awful lot of the criticism is just so unremittingly juvenile that I can hardly stand listening to it anymore. Time to grow up, people.

Will Republicans' Budget-Cutting Mania Hurt Them In 2012?

| Tue Mar. 22, 2011 10:00 AM EDT

The budget debate is far from over, but the Democratic Party is already trying to use the GOP's most drastic proposals as a political bludgeon. The Democratic Congressional Campaign Committee launched an ad campaign on Tuesday against a handful of vulnerable House Republicans, tying them to the party's hatchet-wielding budget chair, Rep. Paul Ryan (R-Wisc.). Politico has the details:

The DCCC will target 10 Republican lawmakers - including eight freshmen - with newspaper ads, e-mails and automated and live phone calls, tying them to the House Budget chief's pledge to overhaul Social Security and Medicare. "Cutting retirement benefits but protecting big oil?" one newspaper ad reads. "Paul Gosar and his leaders want to CUT your hard-earned Social Security and Medicare benefits rather than cutting big tax breaks for big oil." 

Ryan has proposed some of the party's most aggressive cuts to discretionary spending and entitlement programs. The "roadmap" he unveiled last year would privatize Medicare by turning it into a voucher system and partially privatize Social Security, and he's expected to push for similar proposals early next month when the House GOP unveils its 2012 budget. Democrats like Senate Majority Leader Harry Reid (D-Nev.) have already vowed not to touch Social Security, and they're hoping that voters will be equally incensed about the GOP's proposals. 

The DCCC has also launched a website, www.stopbenefitcuts.com, to support their new campaign, Politico notes. The sites warns of "dangerous cuts or privatization" to Social Security and Medicare, exhorting visitors to sign a pledge that reads, "I WILL FIGHT ALL EFFORTS TO IMPOSE DANGEROUS CUTS ON SENIORS." 

Interestingly, the Democrats make no mention of Medicaid, which Ryan and his fellow Republicans have also vowed to overhaul through cuts and privatization. This will make it all the easier for the GOP to gut health care for the poor, as I've reported previously. For both Democrats and Republicans, it seems, seniors are a much more powerful voting block, leaving poor constituents all the more vulnerable to cuts.

On Second Thought, Maybe Reactors Near Cities Aren't a Great Idea

| Tue Mar. 22, 2011 8:00 AM EDT

I came across a news story from the Singapore-based Strait Times on a public lecture that Yukiya Amano, the director general of the International Atomic Energy Agency (IAEA), gave last August that he probably wouldn't deliver today.

The headline, "Nuclear plants 'need not be far from urban areas,'" offers a good sense of the main point of his comments. Amano goes on to highlight Japan as a key reason we should have confidence in locating plants near urban areas:

He gave two examples of nuclear power plants built close to urban areas in Japan to stress his point. One is the Shimane plant, located just 10km from built-up areas in the town of Kashima-chou in the Matsue city in Shimane prefecture. The other, Tokai No. 2, sits 15km from populated areas in the town of Tokai.
Addressing concerns about safety, Mr Amano said that while it was not possible to eliminate all risks of accident, these could be contained in three ways to give ‘credible assurance of safety’.
First, he said, the design of reactors is much more advanced now and much safer, reducing the risk of an accident like the one in Chernobyl, Ukraine, where the world’s worst nuclear power plant accident killed 56 people in 1986 and caused thousands more cancer deaths.
The second measure related to having well-trained people run the plants, and the third, to having good construction work. 'It is like a house: even though the design is nice, if the construction work is sloppy, then the plant is not good,’ he said.

In Japan's ongoing nuclear crisis, Japanese officials have called for the evacuated of those living up to 12 miles from the site and urged people to remain indoors if they live up to 19 miles from the site. The evacuation has affected up to 200,000 people—a figure  that would have been vastly higher if the plant were closer to a major city.

Japanese Nuclear Reactor Systems Drawn Like a NYC Subway Map

| Tue Mar. 22, 2011 5:00 AM EDT

Workers in Japan are still pouring seawater on overheating nuclear reactor rods at the Fukushima Daiichi Nuclear Power Station in an effort to decrease the risk of further meltdowns. (Read Mother Jones' detailed and regularly updated explainer on the current situation.) Here's what they're up against, as Kate Sheppard and Josh Harkinson explained shortly after the emergency began:

There are six boiling-water reactors on the site, though only three were in operation at the time of the earthquake. These systems, designed by General Electric, rely on an influx of water to cool the reactor core. But the water systems require electricity that was cut off by the earthquake. It also appears that something—the initial quake, the tsunami, or aftershocks—knocked the site's back-up generators offline. Without the cooling system bringing in water, the core of a reactor will start to overheat—which in turn heats up the water already in the system and causes more of it to turn to steam. Emergency responders have been forced to vent some of the steam, releasing radiation, in order to prevent the containment domes from exploding. They are in a race against the clock to bring in new water supplies before the reacting nuclear fuel heats up beyond control.

When I couldn't find a schematic that showed the Fukushima reactors' failed cooling systems in relation to their various other workings, I set out to remedy the problem in a visually accessible way. Think of the schematic diagram below like a New York City subway map. It shows the various components, connections, and relationships between the emergency water systems inside the Fukushima's five GE Mark I reactors. (A sixth reactor is a similar, though slightly newer, design.) It is based on the Nuclear Regulatory Commission's Boiling Water Reactor Systems Manual, which contains drawings of the various Mark I emergency systems. In places where the manual was unclear, I consulted Japanese news broadcasts. The drawings are not to scale and the layout of the pipes entirely my own (their location in relation to the various containment walls is based on the NRC manual).

Click here for an animated version of the diagram.

Mark I Reactor: Components of the Mark I ReactorMark I Reactor Components: (A) Uranium fuel rods; (B) Steam separator and dryer assemblies (C) Graphite control rods; (D) Vent and head spray; (E) Reactor vessel; (F) Feedwater inlet; (G) Low pressure coolant injection inlet; (H) Steam outlet; (I) Core spray inlet; (J) Jet pump; (K) Recirculation pump; (L) Concrete shell "drywell"; (M) Venting system; (N) Suppression pool; (O) Boron tank; (P) Condensate storage tank; (Q) High pressure coolant injection system; (R) HCIS turbine; (S) Automatic depressurization system; (T) Main turbine; (U) Connection to generator; (V) Condenser; (W) Circulating water; (X) Connection to outside service water; (Y) Concrete shield plug; (Z) Control rod drives. Illustrations by Joe Kloc.

Mark I Reactor Running Normally: TKTKTKTKMark I Reactor Running Normally: Recirculation loops (RED) keep pressurized water circulating through the uranium core of the reactor. When water is heated by the uranium core it turns to steam. It passes through the steam separator and dryer assemblies positioned above the core (ORANGE) and then moves through the steam pipe. The steam is used to turn a turbine connected (PURPLE) to an electrical generator. It is then turned back into liquid by a condenser and cooled by a pipe (GREY) of circulating cold water. The water is then pumped back into the reactor, where the process begins again.