2013 - %3, January

Democrats Need to Gear Up For a Tough 2014

| Wed Jan. 9, 2013 2:50 PM EST

Ed Kilgore warns liberals not to get complacent about demographic trends that seemingly favor Democrats for years to come:

There has been a lot of talk in both parties about the implications for future elections of the coalition-building strategies of both candidates, mainly revolving around the demographic trends that are likely to make the Obama Vote gradually more dominant in future presidential cycles.

But before we get to the next presidential election....the huge strategic challenge for Democrats is finding a way to win a midterm election where the turnout patterns inherently favor the opposition, thanks to the unusual alignment of the two parties with elements of the electorate that do (older white voters) and don't (younger and minority voters) tend to participate in midterms, for reasons that have little or nothing to do with the issues on the table. Over-enthusiastic assessments of the value of the Obama GOTV operation—even assuming it can be deployed by the party as a whole in a midterm—may underestimate the difficulty of a very different landscape, aside from the historical evidence about the exceptional difficulty of "sixth-year" elections for the party holding the White House.

As Ed says in another post, "Midterms always, always produce an electorate that is older and whiter than presidential cycles." And that's obviously a boost for Republicans, as is the "six-year itch" that generally favors the party not in control of the White House.

In other words, even if Obama's stunningly successful GOTV operation can be replicated by Democrats in the 2014 midterms, it's probably not enough. The next two years are going to be tough ones for Democrats.

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Flashback: Obama's Treasury Secretary Pick Claimed Deregulation Did Not Cause the Financial Crisis

| Wed Jan. 9, 2013 1:51 PM EST
Jack Lew.

President Barack Obama is expected to nominate Jack Lew, the wonky White House chief of staff and former director of the Office of Management and Budget, as the new secretary of the US Treasury. The current secretary, Tim Geithner, plans to step down soon.

Here's a crucial piece of information about Lew: He has said he doesn't believe financial deregulation was a major cause of the financial crisis. In 2010, Lew testified before Congress that the deregulation of Wall Street in the Clinton era—the repeal of Glass-Steagall, say, or the ending of real regulation of complex derivatives—wasn't a critical factor. "The problems in the financial industry preceded deregulation," Lew told members of the Senate budget committee in September 2010. He added that he didn't "personally know the extent to which deregulation drove it, but I don't believe that deregulation was the proximate cause."

Lew knows that period of deregulatory zeal well, having served as President Bill Clinton's director of the Office of Management and Budget from May 1998 to January 2001. Lew has spent much of his career in government, is a savvy negotiator and budget wonk, and is respected by Republicans and Democrats. Republicans, though, have been grumbling about him more recently—after all, in 2011, he outsmarted the congressional GOP in intense budget talks. And liberals have criticized Lew for his post-Clinton work for the mega-bank Citigroup, where he ran a unit that profited off shorting the housing market

Lew's 2010 claim that deregulation wasn't a major cause of the financial crisis is disputed by many experts as well as the government's own investigatory body, the Financial Crisis Inquiry Commission. In its final report (PDF), the commission stated that "widespread failures in financial regulation and supervision proved devastating to the stability of the nation's financial markets."

The commission went on to conclude, "More than 30 years of deregulation and reliance on self-regulation by financial institutions, championed by former Federal Reserve chairman Alan Greenspan and others, supported by successive administrations and Congresses, and actively pushed by the powerful financial industry at every turn, had stripped away key safeguards, which could have helped avoid catastrophe."

Obama, Lew's boss, has said before that deregulation played a major part of the financial meltdown. In October 2008, Obama, then the Democratic candidate for president, said "we know that it's because of deregulation that Wall Street was able to engage in the kind of irresponsible actions that have caused this financial crisis."

Upon signing the Dodd-Frank financial reform bill, which was chock-full of new regulations, in July 2010, Obama noted the failure of the regulators and the banks: "It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington. For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy."

It's clear Obama believes deregulation played a role in the crisis. Apparently, he's fine with a treasury secretary who's a former Clintonite not eager to acknowledge the Clinton era's mistakes.

Quote of the Day: The Scene That is Davos

| Wed Jan. 9, 2013 1:40 PM EST

From Felix Salmon on the Google party, formerly the biggest annual shindig at the Davos conference:

Every year, the scene is the same: late at night, when all the dinners are over, the world’s plutocrats converge into a narrow hallway, at the end of which are ID scanners telling bouncers whether you’re On The List or not. If you manage to get past them, you find yourself in an insanely hot and loud party, with lots of drinks, a little food, and seemingly infinite numbers of drunk men in dark suits. It’s essentially unbearable for more than a couple of minutes, and there’s absolutely nothing pleasurable about it.

I think he's just jealous. But do read the whole thing, which explains some of the sociology of Davos, and how Google has moved up the food chain. Today, instead of hosting the gigantic "must attend" party of the insecure upstart, they host the intimate "only a select few can attend" gourmet dinner of the confident global titan. I'm sure that no evil is ever conducted at these dinners.

Can the Treasury Department Create a Platinum T-Bill?

| Wed Jan. 9, 2013 1:28 PM EST

Here is Matt Yglesias on today's most pressing public policy topic:

The biggest and weirdest myth out there about the $1 trillion platinum coin is the idea that it would require a large quantity of platinum to make one....This is total nonsense....Saying that the government would need a lot of platinum is like saying a $100 bill needs to have 100 times as much cotton in it as a $1 bill....The metallic content of a coin is entirely irrelevant to its monetary value and has been for a long time. Even under the gold standard the value of coins was a pure legal convention.

This is true, of course. In a way, though, I wonder if this is yet another reason to think that the trillion dollar coin wouldn't be legal. Remember that its authorization comes in a sentence devoted to the minting of bullion coins. But as a lawyer friend emailed to me this morning, "bullion coins are generally understood by other statutes within the US Code to be coins with a value effectively equal to the market value of the precious metal bullion in them. The trillion dollar coin is not that."

This is one of the problems with the argument that the "plain text" of the law allows the Treasury Secretary to mint a platinum coin in any denomination, even a trillion dollars: it's only plain if you rip a single sentence out of the context of the rest of the statute. But I don't think that's how the Supreme Court looks at things. They routinely consider the meaning of individual parts of bills within the context of the entire statute (as well as other relevant statutes). And in this case, the rest of the statute, at the very least, makes that meaning unsettled. Certainly unsettled enough to give them the leeway to take on the case and consider the rather obvious real-world meaning of the platinum coin provision.

(Ironically, my recollection of the real-world motivation for giving Treasury the authorization to mint "any denomination" of platinum coin was to allow them to respond quickly to the desire of collectors for smaller denominations than a single ounce. Lots of people couldn't afford a one-ounce coin, and the idea was to give Treasury the ability to play around with smaller coins that might be more marketable.)

In any case, as long as we're all spitballing about this, here's something else to think about. There's no requirement that a treasury bond be printed on paper. If the government wanted to, I imagine that treasury bonds could be etched onto metal plates. In fact they could be etched onto small, round, metal plates. Round platinum plates, for example.

In other words, I wouldn't be surprised if you could make a case that a $1 trillion platinum coin is really just a $1 trillion treasury bond. It serves precisely the same purpose, after all. And if Treasury isn't allowed to deposit a $1 trillion bond at the Fed, why would they be allowed to deposit a $1 trillion coin?

POSTSCRIPT: I should note a bit of an irony here. There are several legal arguments about ways that Obama could evade the debt limit, and I'm actually pretty sympathetic to some of them. To me, the strongest is the simple argument that if the debt limit isn't raised, Congress is forcing Obama to do something illegal. He has to either withhold funds that he's obligated to spend (illegal) or he has to break through the debt limit (also illegal). Given that, he could simply decide that breaking through the debt limit is the least illegal of the options open to him, and order Treasury to continue issuing debt.

I have no idea how the courts would react to that, but it seems like a more plausible argument than the whole platinum coin weirdness.

Florida Gov. Rick Scott Wants A Favor—From Obama

| Wed Jan. 9, 2013 12:43 PM EST

Florida Gov. Rick Scott (R) was in Washington, DC on Monday to make a deal. Florida, along with a handful of other Republican-run states, is still trying to wage war against Obamacare by refusing to take the generous expansion of Medicaid provided for in the new law. The expansion would provide government insurance to around a million poor and lower-middle-class Floridians, and the federal government has promised to foot almost all of the bill.

Last June, after the Supreme Court decision making the Medicaid expansion optional for the states, Scott said he won't take the money. But when Florida hospitals realized Scott's decision could cost them about $650 million a year in other federal payments, they started lobbying furiously to get him to change his mind. So now, after two years suing, demonizing and otherwise attacking President Barack Obama and the Democrats' health care bill, Scott wants to negotiate. He came to Washington saying that he'd like to "work with the administration to reduce the cost of health care." But that doesn't mean he's changed his mind.

Instead, what Scott wants from Kathleen Sebelius, Obama's secretary of health and human services, is something that might actually make Florida’s dismal insurance situation—nearly 4 million Floridians are uninsured—even worse. Scott wants the Sebelius to give him official permission, called a waiver, to hand over the entire existing Medicaid program to private managed care companies. Don't count on that happening.

Here's why. Florida already has a small pilot project approved by George W. Bush's administration that shunts Medicaid participants into HMO-type organizations. Scott has hailed this as a genius innovation that keeps costs down. But a close look at the program reveals no such miracles. A study by the Georgetown University Health Policy Institute concluded that there was no evidence the pilot project was saving money—and even if it was, any savings could have been from denying people needed care. (Anecdotal reports suggested that was the case.)

The Georgetown group also found that it would be all but impossible to make Medicaid more efficient, especially compared with private insurance. Between 2007 and 2012, private sector family insurance premiums rose more than 31 percent, but Florida's per-person Medicaid costs actually fell by five percent. And the idea that Rick Scott is giving the federal government tips on making health care more efficient is interesting given that when he ran his own health care company, Columbia/HCA, it was systematically bilking the federal government of millions of dollars in what turned out to be the biggest health care fraud case the US has ever prosecuted.

So maybe it's not surprising that the Obama administration has so far refused to allow Scott to expand the Medicaid pilot project, much less add another million people to it. And that's not all Scott wants: He's also asked Sebelius to allow Florida to charge all Medicaid patients unprecedented co-pays, such as $100 for emergency room visits not deemed an emergency, plus $10 monthly premiums. The Georgetown Health Policy Institute concluded that such a change would prompt about 800,000 poor parents and children to leave the program, an outcome that flies in the face of the administration's goal of extending Medicaid in the first place. After Monday's meeting with Sebelius, Scott said he was optimistic that he'd get what he wanted, or at least another meeting. Given his track record, he probably shouldn't hold his breath.

Learning About Policy Not on Radar for New Members of Congress

| Wed Jan. 9, 2013 12:08 PM EST

Ryan Grim and Sabrina Siddiqui of the Huffington Post got hold of a PowerPoint presentation for incoming members of Congress. It comes from the Democratic Congressional Campaign Committee and lays out, as the authors says, "the dreary existence awaiting these new back-benchers." In particular note that they expect five hours out of every day to be devoted to fundraising (call time + strategic outreach).

That's no surprise, really. What's also no surprise, I suppose, is the number of hours they expect new members to engage in studying up on the issues. That number would be zero. I guess that's what staffers are for. No need to fill their beautiful minds with tedious policy stuff when there's money to be raised, after all.

This is why I don't understand the bipartisan opposition to publicly funded elections. I mean, every member of Congress hates this stuff:

It's miserable business. "What’s my experience with it? You might as well be putting bamboo shoots under my fingernails," said Rep. John Larson (D-Conn.), a high-ranking Democrat.

....On Capitol Hill, call time evokes a rare bipartisan accord. "An hour and a half is about as much as I can tolerate. There's no way to make it enjoyable," Rep. Reid Ribble (R-Wis.) told HuffPost....Former Rep. Tom Perriello (D-Va.), now a top official at the Center for American Progress, said that the four hours allocated to fundraising may even be "low-balling the figure so as not to scare the new Members too much."

Right. So for purely selfish reasons, why not relieve themselves of this nasty business and agree to 100% publicly funded elections? Are they masochists?

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Donald Berwick: The Next Elizabeth Warren?

| Wed Jan. 9, 2013 11:36 AM EST
Donald Berwick.

Stop me if you've heard this one: Harvard professor goes to Washington and becomes a policy wonk. Harvard professor is nominated for a top agency position. Harvard professor becomes conservative bogeyman. Harvard professor returns to Massachusetts and runs for office.

Elizabeth Warren? Nope, Donald Berwick. The Boston Globe reported on Wednesday that the former head of the Centers for Medicare & Medicaid Services is mulling a run for governor when term-limited Democrat Deval Patrick retires in 2014:

Berwick ran the Centers for Medicare & Medicaid Services and is one of the nation’s leading ­experts on health cost and quality. Obama installed him using a ­recess appointment in 2010, but Berwick resigned in late 2011 when Republicans made clear they would strongly oppose his confirmation. At the time, the height of the national debate over Obama’s health care overhaul, Republicans accused ­Berwick of wanting to ration services, a charge he called a mischaracterization.

Berwick, a Newton pediatrician and longtime Harvard faculty member whose wife is the chairwoman of the department of public utilities in the administration of Governor Deval ­Patrick, said he has been contemplating a run for the past two or three months, meeting with 40 or 50 people, including political veterans and consultants. He did not give a time frame for a final decision, but said it would be soon, after he meets with more people.

If Republicans thought blocking their appointments would keep Berwick and Warren out of public policy, they may have miscalculated.

We're Still at War: Photo of the Day for January 9, 2013

Wed Jan. 9, 2013 11:31 AM EST
 During Exercise Amitie, elements from the 15th Marine Expeditionary Unit participated in a three-day mounted patrol, land and water obstacle courses, aviation-related evolutions and joint planning in Djibouti.
U.S. Marine Corps photo by Cpl. John Robbart III.

5 Ways to Prepare NYC for the Next Hurricane Sandy

| Wed Jan. 9, 2013 7:06 AM EST

As New York City and state dried out in the wake of Hurricane Sandy, Gov. Andrew Cuomo called together a special commission to draw up, in the face of climate change, a plan for how to prepare for the next Big One. Last month, Judith Rodin, the group's co-chair, said no idea would be too big or too small to take up. This week, after only a month of deliberations by the commission, the New York Times obtained a leaked early draft of its recommendations; an official release is expected today with the governor's State of the State address. Here's a look at a few of the big ideas guiding the commission's vision for a climate-adapted New York.

1. Protect the old stuff:

downed tree
circulating/Flickr

What Does Biofuel Have to Do With the Price of Tortillas in Guatemala?

| Wed Jan. 9, 2013 7:06 AM EST
Corn gushes from the back of a truck into an ethanol plant in Iowa.

I used to write about biofuels a lot. The idea of devoting large swaths of prime farmland and annual gushers of agrichemicals to grow "fuel" crops—not to be eaten but to be set aflame in automobile engines—struck me as so nakedly stupid, so willfully ignorant, that surely pointing it out could help change policy. And so point it out I did, in dozens of blog posts and articles per year starting in 2006. (Here, here, here, here, and here are a few highlights). But the US and EU governments brushed off my verbal assault, maintaining their escalating biofuel mandates. Long about 2011, I realized that some blogger's crusade was never going to affect policy, so I largely stopped writing about the topic out of discouragement and, yes, boredom.

Elisabeth Rosenthal's excellent New York Times article on the effect of US/EU biofuel policy in Guatemala has knocked me out of my torpor. Rosenthal lucidly explains the double pinch the biofuel craze puts on citizens of developing nations. For urban residents, the US biofuel mandates—now sending 40 percent of the US corn crop into ethanol production—are pushing up the price of corn, a staple food in Guatemala. Rosenthal points to an Iowa State University study estimating that US biofuel policy added about 17 percent to global corn prices in 2011—bad news for people who rely on tortillas as a staple. "Just three years ago, one quetzal—about 15 cents—bought eight tortillas; today it buys only four. And eggs have tripled in price because chickens eat corn feed," she writes. The result is dire: