2013 - %3, January

How Does Obama Plan to Not Negotiate Over the Debt Ceiling?

| Fri Jan. 4, 2013 2:07 PM EST

I've spent the past couple of months trying not to get fully assimilated by the fiscal cliff Borg. Nor more than one post a day! That's what I told myself. There simply didn't seem to be any point in obsessing over every little back-and-forth and every little Beltway nuance of who was up and who was down. Besides, it bored me.

I think I was mostly successful in that, but now I have a new challenge: not getting fully assimilated by the debt ceiling Borg. Two months to go on this! But I haven't done even one post about this yet today, so let's take on a question that's perplexed me about this whole thing. Greg Sargent notes that President Obama has vowed that he flatly won't negotiate over the debt ceiling. Other stuff, sure, but not the debt ceiling. Congress just needs to raise it, full stop:

But it’s unclear to me how this will work in practical terms. Unless Obama is prepared to go into default — or to pull some other ace out of his back pocket, such as the 14th amendment or “platinum coin” options — he will inevitably be negotiating over the debt ceiling. And he doesn’t appear prepared to do any of those things.

My question is a little different. We already know that Obama will be negotiating over the sequestration cuts. And once that's happening, there's just no way to pretend that he's not also negotiating over the debt ceiling. If Republicans keep saying that they'll only raise the ceiling if the sequester is dealt with, then you're negotiating over the debt ceiling whether you admit it or not.

At a practical level, then, I'm curious about how Obama plans to pull off this "no negotiation" stance. Any ideas?

On a related note, I also recommend Alec MacGillis's take on how hostage-taking over the debt ceiling has gone almost overnight from a reckless new tactic to merely the way things are in Washington DC. I know there's a limit to how much reporters can call out this stuff in straight news accounts, but somehow they need to figure out a way. This isn't just business as usual. It's a willful band of radical Republicans refusing to pay bills they've already run up. It's really inexcusable.

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A Hidden Climate Win in the Fiscal Deal

| Fri Jan. 4, 2013 1:10 PM EST

In the midst of this week's fiscal cliff hullabaloo, with tax hikes for many Americans, tax breaks for Big Oil, and a superstorm of righteous outrage over withheld storm aid, you'd be forgiven for not noticing the climate win that slipped in at the eleventh hour: a long-awaited extension of the wind energy Production Tax Credit, a federal incentive that has for many years been the bread and butter of the wind industry, providing $1 billion each year to keep wind competitive against heavily-subsidized fossil fuels.

Despite being a record-setting year for wind installations, 2012 was a nail-biter for many in the industry, who feared Congress would axe the credit and send the industry from boom to bust, as has happened several times in the past when the credit has not been extended. The industry's trade group was a clearinghouse for grim prognostications: Some 35,000 jobs lost and up to a ninety-percent drop in wind projects, should the credit not be passed. Even with the extension, the industry's financial backers were so spooked by last year's uncertainty that investments are almost sure to fall in 2013.

"We've effectively killed 2013 by waiting this long to extend [the PTC]," Jacob Susman, CEO of wind installer OwnEnergy, told me a few months ago.

And while the extension was an excuse for wind folks from Colorado to Iowa to Boston to pop an extra bottle of champagne, the industry ain't out of the woods yet: The recent extension is only for one year, which means the battle to wring money from Congress will need to be fought all over again in just a few months. Indeed, the complaint one hears most often from industry leaders is that the constant political kowtowing necessary to secure this essential tax credit makes it nearly impossible for the industry to secure long-term growth. That's very different from fossil fuels, whose benefits, as my colleague Andy Kroll points out, are "baked into the tax code."

But this extension comes with at least one big improvement: In the past, to secure the credit, wind projects had to be delivering power to the grid before the credit's expiration date at year's end. That led to a huge push to get projects up and running in the final months of 2012, but also threw up a barrier to any projects that got started too late. This version sets a lower bar: The credit is now available to any projects that break ground in 2013, giving everyone from turbine manufactorers to installers to investors much more breathing room on a realistic timescale, which David Roberts at Grist says is equivalent to extending the old version for two or three years.

The challenge for Big Wind this year will be to work with Congress to find ways to keep the industry competitive in the long term, while unleashing it from year-to-year political turmoil.

"The extension is a very important piece of legislation," industry researcher Matt Kaplan told the Financial Times. "The big question, though, is what comes next."

More Pot, Less Booze?

| Fri Jan. 4, 2013 12:46 PM EST

One of the interesting questions about marijuana legalization is the effect it might have on alcohol consumption. On one theory, pot and alcohol are substitutes. That is, there's a certain amount of total demand for psychoactive drugs, so if pot use goes up, alcohol use will go down. That would be a big win, since alcohol use is generally a lot more dangerous than marijuana use.

But if pot and alcohol aren't substitutes, then you don't get this benefit. You get the same amount of drunk driving and, since legal pot would be cheaper and more widely used, more stoned driving too. It's a net negative.

So which is it? No one knows for sure, because marijuana isn't cheap enough to be a genuine substitute for alcohol anywhere in the country. However, that might change in Colorado if the feds don't interfere with their marijuana legalization initiative. John Ingold of the Denver Post alerts us to a couple of new pieces of research:

Two studies out of the University of Colorado Denver provide hints about what might happen. In a paper soon to be published in the Journal of Law and Economics, professor Daniel Rees finds that traffic fatalities drop when states pass medical-marijuana laws. Rees also reports a drop in alcohol consumed by people ages 20-29 in medical-marijuana states.

Professor Benjamin Crost finds a similar relationship in a paper that argues marijuana use decreases and alcohol use increases after young people hit the legal drinking age. "We should expect that the higher availability of marijuana in Colorado will lead to a decrease in alcohol use among young people," Crost wrote in an e-mail.

That's encouraging, but there's nothing like a real-world test to find out for sure. We may get that soon in Colorado and Washington.

Via Mark Kleiman, whose book, Marijuana Legalization: What Everyone Needs to Know, is a must read if you want to understand more about the pros, cons, and fine points of marijuana use and abuse.

Crime in the Windy City

| Fri Jan. 4, 2013 12:11 PM EST

I've gotten several emails similar to this one in response to my story about lead and crime:

I am curious on your take on the soaring violence in Chicago, which is primarily located in a few small areas. It is all very weird. I live just west of the city and the Downtown is great. Even Hyde Park, where I was only last week is fine. And then we have the West and South Sides that are more akin to Baghdad, then North Michigan Ave.

There are several things to say about this. First, crime can spike up or down in particular regions for a lot of reasons. Lead merely provides a sort of background level. Likewise, a car with a big engine will generally go faster than one with a small engine, but traffic and weather and other factors can change that in particular times and places.

That said, there's no question that lead concentrations are different in different neighborhoods. During the big crime wave of the 60s through the 80s, gasoline lead was generally a bigger problem in places where cars were densest, which was the inner cores of large cities. It was also a bigger problem in housing projects built next to expressways, which a lot of them were. And lead paint, of course, was a scourge in older housing stock. Suburban neighborhoods and newer neighborhoods had lower lead levels and, not coincidentally, lower crime levels than inner cities.

For more on neighborhood densities of lead, take a look at my magazine piece, which includes some lead maps of New Orleans put together by Howard Mielke of Tulane University. Mielke shared his maps with the local police and the association popped right out. "When they overlay them with crime maps," he told me, "they realize they match up." For more on Chicago in particular, Megan Cottrell had a nice piece a few months ago in the Chicago Reader.

However, even with that said, the big picture in Chicago is similar to the big picture in every other big city in America: violent crime is down. A lot. The chart on the right shows rates for various violent crimes tracked in the FBI's Uniform Crime Reporting statistics, and over the past two decades they're down by half or more. Occasional blips aside, Chicago is a lot safer than it was 20 years ago.

We're Still at War: Photo of the Day for January 4, 2013

Fri Jan. 4, 2013 12:01 PM EST
Supplies drop to U.S. Soldiers deployed to the mountainous Paktya province on Forward Operating Base Lightning, Afghanistan, Dec. 23, 2012. Military leaders coordinated the air drop to resupply the base when adverse weather made roads through mountainous areas too difficult to traverse. Photo by U.S. Army Sgt. Aaron Ricca.

Does Lead Paint Produce More Crime Too?

| Fri Jan. 4, 2013 11:26 AM EST

One obvious question about my story on the link between lead poisoning and violent crime is why I focus so heavily on gasoline lead. What about lead paint in old housing stock? Isn't that just as important?

The answer is simple. My focus was on the rise and fall of crime in the era after World War II, and lead paint didn't play a big role in that. During that era, exposure to lead from paint was fairly stable, possibly declining a bit over time as lead paint was phased out, and it probably contributed to a generally elevated level of crime during the entire period. But because it was fairly stable, it didn't contribute to either a dramatic rise or fall in crime.

But what about earlier? Use of lead paint did rise substantially in the early 20th century, so why not look at that? Again, the answer is simple: we don't have reliable crime statistics going back that far, so it's hard to draw any firm conclusions about the effect of lead paint on crime.

But here's one of those interesting tidbits I mentioned yesterday that I didn't have room for in the main article. It turns out that there's one crime we do have good long-term data for: murder. Murder has always been pretty easy to define and it's always been fairly reliably reported. It's only one data point, but does it fit the lead hypothesis?

Here's what we'd expect. Lead paint use rose in the early 20th century, peaking in the teens and then dropping. Then, in the late 40s, gasoline lead started to rise, peaking in the 70s and then dropping. Since lead primarily affects small children, you'd expect that kids exposed to lead paint would grow up and become more violent in the 30s, then taper off, and then become more violent again in the 60s. It should be a double-humped curve.

And guess what? That's exactly what we see in the data:

As usual, I want to caution everyone about trying to infer too much from this. Lead isn't the only cause of crime, and getting rid of it won't necessarily return us to the crime rates of a century ago. Crime is driven by culture, by guns, by poverty, by race, by drug use, by demographics, by policing tactics, by incarceration, and more. Nevertheless, the close match between two unusual curves like this is striking. We don't have much data going back before World War II, but what data we do have offers yet more confirmation of the link between lead and crime.

Needless to say, this also confirms the importance of cleaning up lead paint as well as lead-impregnated soil. Lead paint isn't a big part of the postwar crime wave story, but lead is lead, and higher levels produce more crime, more learning disabilities, lower IQs, and lower lifetime earnings. Wherever it is, we need to clean it up.

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Conservative Blather Should Not Be Taken Too Seriously

| Fri Jan. 4, 2013 10:42 AM EST

Andrew Sprung kind of likes the idea that conservatives are so unnerved by Obama's success in the fiscal cliff negotiations:

To his enemies, he now bestrides Capitol Hill like a colossus while the GOP leadership walks under his huge legs and peeps about to find themselves dishonorable graves. I don't think they're right. But I find it refreshing. Bracing. You might almost say exhilarating. Start with Charles Krauthammer....

What follows is a typically hysterical reaction from Krauthammer toward the prospect of millionaires seeing their effective tax rates go up by a few percentage points. But for what it's worth, I wouldn't take this too seriously. Does this mean that Krauthammer really thinks Obama has won a world historical victory? I doubt it. He's simply doing what pundits and politicians always do: portraying events in a way most likely to rally the troops for the next battle. Krauthammer wants to scare conservatives into holding firm in the next round of negotiations, and the best way to do that is by pretending that Round 1 was a loss of brobdingnagian proportions. One more like that and liberals will have routed us completely!

This is just blather. In broad terms, the fiscal cliff deal was peanuts. The sequestration negotiations will probably turn into peanuts too. The plain fact is that although both sides talk a good game, Democrats are afraid to raise taxes very much and Republicans are afraid to cut entitlements very much. That's why Dems won't even consider things like carbon taxes or financial transaction taxes, and why Republicans generally refuse to offer concrete entitlement cuts. Even Paul Ryan's famous budget punts on Social Security completely, doesn't touch Medicare in the medium term, and does its level best to painstakingly obscure the fact that it would cut Medicare in the long term.

The next few years are going to be trench warfare. No one is likely to win or lose in any big way.

Chart of the Day: Net New Jobs in December

| Fri Jan. 4, 2013 10:03 AM EST

The American economy added 155,000 new jobs last month, but about 90,000 of those jobs were needed just to keep up with population growth, so net job growth was closer to 65,000 jobs. This was about the same as November. The headline unemployment number remained steady at 7.8 percent, the same as November's revised estimate.

For reasons that remain obscure—and might just be a coincidence—the American economy is now in its third straight years of growing modestly except during the summer, when it stagnates for a few months. As a result, I'd say we're now living in the worst of all possible worlds: growth isn't high enough to really kick the economy into high gear, but it's not low enough to scare Congress into doing something serious about it. Instead, they just obsess over the deficit. That might be appropriate if we were consistently adding 200,000 net new jobs a month, but it's just plain dumb right now.

Everything is Hunky-Dory at Google

| Fri Jan. 4, 2013 9:43 AM EST

Last month, after Robert Bork died, there was a brief spate of articles about his influence on antitrust law. In a nutshell, antitrust law used to be about preventing companies from getting too big, but Bork convinced the legal community that antitrust law should really be about consumer welfare. If a company is providing good value to consumers, then it's OK regardless of how big it is or how large its market share is.

Today brings a concrete example of this principle in action. The Justice Department has been investigating Google for the past couple of years, but on Thursday they wrapped up their investigation and backed off their case almost entirely. Google won an almost total victory:

“The way they managed to escape it is through a barrage of not only political officials but also academics aligned against doing very much in this particular case,” said Herbert Hovenkamp, a professor of antitrust law at the University of Iowa who has worked as a paid adviser to Google in the past. “The first sign of a bad antitrust case is lack of consumer harm, and there just was not any consumer harm emerging in this very long investigation.”

....The main thrust of the investigation was into how Google’s search results had changed since it expanded into new search verticals, like local business listings and comparison shopping. A search for pizza or jeans, for instance, now shows results with photos and maps from Google’s own local business service and its shopping product more prominently than links to other Web sites, which has enraged competing sites.

But while the F.T.C. said that Google’s actions might have hurt individual competitors, over all it found that the search engine helped consumers, as evidenced by Google users’ clicking on the products that Google highlighted and competing search engines’ adopting similar approaches.

Google made a number of arguments in its own defense, and consumer welfare was only one of them. Still, it was almost certainly the main reason they won, and it's still not clear to me that this is really what's best for consumers in the long run. Did Google users click on the products they highlighted? Sure. Did they buy some of the stuff? Sure. Were they happy with their purchases? Sure. Is that, ipso facto, evidence that there's no long-run harm from a single company dominating the entire search space? I doubt it. After all, John D. Rockefeller could have argued that consumers bought his oil and were pretty happy with it, so what was the harm in his controlling the entire market?

The tech industry moves fast enough that antitrust might genuinely not be a big issue there. In the end, it wasn't antitrust that hurt IBM and Microsoft. It was the fact that the industry moved rapidly toward smaller computers and then the internet, and neither company was really able to react fast enough to dominate these new spaces. Nonetheless, I'm skeptical of the tautology at the heart of the consumer welfare argument. If a company is successful, then by definition people must be buying its stuff. On this basis, bigness is simply unassailable anymore. That has broad societal implications that I suspect we're not taking seriously enough.

Fiscal Cliff Drama Produces an Awful Farm Bill Extension

| Fri Jan. 4, 2013 6:02 AM EST

Remember the farm bill, that once-in-five-years legislation that sets the nation's agriculture and hunger policy? Due for reauthorization in 2012, it lurched through both the Senate and the House ag committee. But then it floundered on the floor of the House—whose GOP leadership refused to bring it to a vote, in an attempt to avoid conflict with tea party stalwarts seeking draconian cuts in anti-hunger programs.

But everything changed on New Year's Day, when the fiscal-cliff deal between Congress and the White House included a fast-and-dirty, stop-gap farm bill compromise that will be in place only until September—meaning that Congress will have to start from scratch on a new five-year bill this year.

Thus like the fiscal-cliff deal itself, the farm bill extension amounts to a feeble kick of the can down the road. And as you might expect from something hastily slapped together behind closed doors, it's a policy hodgepodge, and mostly a dismal one. The National Sustainable Agriculture Coalition, the main progressive ag lobbying group, minced no words in its assessment: "a disaster for farmers and the American people."

I got Ferd Hoefner, NSAC's policy director and a longtime farm bill observer, to explain what's in the deal. Here are the main points: