Kevin Drum

Employment Update

| Fri Apr. 3, 2009 12:04 PM EDT
In short: it's bad.  We're losing lots of jobs and we're losing them fast.  Jonathan Stein parses the numbers.  Calculated Risk provides the chart below.  Brad DeLong says we need a bigger stimulus.

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Obama's Deal

| Fri Apr. 3, 2009 11:53 AM EDT
I note for the record that every major paper — the LA Times, New York Times, Washington Post, Wall Street Journal, and McClatchy — has a front page story today mentioning Barack Obama's diplomatic coup in brokering a deal to "take note" of tax havens instead of directly recognizing them.  The White House must really be anxious to make sure everyone knows about this.

Making Money the Old Fashioned Way

| Fri Apr. 3, 2009 11:22 AM EDT

Suppose Congress passed a bill that gave you a tax credit if you mixed in some alternative fuels — ethanol or biodiesel, say — with your ordinary gasoline.  That's actually a dumb idea, probably, but at least it's pretty understandable.  In theory, the alternative fuel is greener than the fossil stuff, so creating the mixture is good for the environment and the government should encourage its use.

But what if there were an industry that already used a 100% alternative biofuel?  Could they qualify for the tax credit by mixing in some fossil fuel?  Obviously that's not what Congress intended, but hey — a mixture is a mixture.  The law doesn't say how you have to get there because it never occurred to lawmakers that anyone would do it this way.

But this is America!  Of course there's someone who will do this.  The paper industry, it turns out, depends on an elegant process in which wood pulp is separated into cellulose fiber and a sludge called "black liquor," which is then used to generate energy for the process.  Neat.  Chris Hayes explains what happened next:

By adding diesel fuel to the black liquor, paper companies produce a mixture that qualifies for the mixed-fuel tax credit, allowing them to burn "black liquor into gold," as a JPMorgan report put it....In fact, the money to be gained from exploiting the tax credit so dwarfs the money to be made in making paper — IP lost $452 million in the fourth quarter of 2008 alone — that the ultimate result of the credit will likely be to push paper prices down as mills churn at full capacity in order to grab as much money from the IRS as it can.

If there's a cloud hanging over the elation in the industry, it's the sneaking suspicion that once Congress gets wind of this racket, it will shut it down. "The one comment I do get from people [in the paper industry]," says [Brian] McClay, "is whether it's going to be rescinded or redrawn before the end game.

....So far, though, to the surprise of McClay and others, there's been not a peep from Capitol Hill.

This is American ingenuity at work.  You'd only be making a mistake if you thought it was anything unusual.  In fact, this kind of tax engineering is so commonplace that the spokesperson for International Paper doesn't even see the need to defend it.  "It is what it is," she shrugged when Chris called for comment.  And indeed it is.

CEO Blues

| Fri Apr. 3, 2009 1:58 AM EDT
The Wall Street Journal reports that CEO pay was down a whopping 3.4% last year.  But wait!

CEO compensation decreased more sharply at banks and brokerages, long the source of some of the biggest paychecks. Median annual cash compensation for CEOs in the financial industry fell 43%, to $976,000. Total direct compensation fell 14.2%, to a median $7.6 million.

So that's what happens when you destroy the global financial system: your pay goes down 14% to a mere $7.6 million per year.  I guess we showed them, didn't we?

Having the Right Enemies

| Thu Apr. 2, 2009 9:13 PM EDT
Richard Scott is rich, conservative, and hates universal healthcare.  He's all about "patients' rights," you see, and intends to spend a big chunk of his fortune making sure people know it.  But if he intends to play the role of shady financier to the anti-reform crowd — well, that's fine by me:

Once lauded for building Columbia/HCA into the largest health care company in the world, Mr. Scott was ousted by his own board of directors in 1997 amid the nation’s biggest health care fraud scandal.

....“He’s a great symbol from our point of view,” said Richard J. Kirsch, the national campaign manager for Health Care for America Now. “We cannot have a better first person to attack health care reform than someone who ran a company that ripped off the government of hundreds of millions of dollars.”

Conservative health care activists, while glad to have a potential ally willing to spend $5 million out of his own pocket, are not fully embracing Mr. Scott....“I just don’t understand why he would be a messenger people would listen to,” said Charles N. Kahn III, who was a senior executive with the insurance industry group that ran the “Harry & Louise” advertisements credited with helping to kill the Clinton plan 15 years ago but who is working for a deal now. “I don’t think people are waiting to hear from him.”

....Mr. Scott has said his sole policy interest is to see to it that whatever overhaul Mr. Obama and Congress consider does not move the country toward a socialized system and away from what he calls his four pillars of reform: “choice, competition, accountability and personal responsibility.”

Ah, yes: competition and accountability.  Let's talk about that, shall we?  Or, rather, let's outsource it to our very own Blue Girl, who just happens to have worked at HCA back when they were bilking the taxpayers out of millions of dollars.  If you want to know how they did it, she's got the story right here.  It was simple!  And it'll remind you of Enron, IndyMac, AIG, and all the other bright lights of competition and accountability in corporate America that we've come to know and hate.

And for a real zeitgeist blast, there's also this: Scott steadfastly maintains that he did nothing wrong, and for his current venture he's hired the same PR firm that represented Swift Boat Veterans for Truth in 2004.  Central casting could hardly do better.  The wingers really know how to pick 'em, don't they?

Great Moments in Diplomacy

| Thu Apr. 2, 2009 5:52 PM EDT
McClatchy's Steven Thomma reports that things were tense at the G-20 meeting until Barack Obama stepped in to save the day.  Listen and learn, grasshopper:

Heading into the summit's final hour [] it appeared that the group would fail to reach a consensus, as French President Nicolas Sarkozy pushed to have the G-20 spotlight offending tax havens based on a list published Thursday by the Organization for Economic Cooperation and Development, and China objected, largely because it doesn't belong to the OECD.

That was when Obama, long a champion of ending or curbing tax havens, decided to float a compromise and pulled Sarkozy aside....Obama proposed that the G-20 merely "take note" of the OECD list, thus opening the door to implicit but not direct endorsement of that list.

....Obama then met with Chinese President Hu Jintao and Sarkozy in a corner of the summit meeting room, as the other world leaders waited. Upon the trio's reaching agreement, the G-20 summit then agreed to note the list of tax havens.

I guess I shouldn't make fun of this stuff.  The world is what it is.  But seriously: today's big ruckus was about whether to "spotlight" tax havens or to merely "take note" of them?  Jeebus.

Of course, this is all based on the word of an anonymous White House official who's got a vested interest in making Obama look like a diplomatic powerhouse.  And this business of China objecting to an OECD list because it doesn't belong to the OECD is almost certainly bogus.  (More likely it's because Macao and Hong Kong are tax havens and China isn't keen on having them cleaned up.)  So who knows if this story is even true?

But it sounds disturbingly plausible.  Of such stuff are diplomatic communiqués made.

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Quote of the Day - 4.2.09

| Thu Apr. 2, 2009 2:43 PM EDT
From the Pew News IQ survey, on partisan differences in knowledge of current events:

Across the 12 knowledge items tested, the biggest gap between Democrats and Republicans comes over awareness of the current level of the Dow.

That's a shocker, isn't it?

In fairness, Pew reports that Republicans, men, old people, college graduates, and the upper middle class are more knowledgable in general than Democrats, women, young people, high school dropouts, and poor people.  So it's not just the Dow.  But lest you get too impressed with the overall scores on this multiple choice survey, Steve Benen points out that "the same Pew Research Center report found that 11% of Americans still think President Obama is a Muslim, which is practically unchanged since the presidential campaign. About one-fifth of all white evangelical Protestants continue to buy into this obvious falsehood."

Take the test here if you dare.  I expect all my readers to score 100%.

G-20 Review

| Thu Apr. 2, 2009 1:22 PM EDT
The draft G-20 communiqué is here.  The final communiqué is here.  Looking solely at the section on financial regulation, it's hard to see too many huge differences.  Regulation of hedge funds, which Obama was said to be resisting, is still there.  However, Obama was also said to be opposed to a greater role for international regulatory bodies, and he appears to have won that round.  The draft section that called for regulators "to supervise cross-border institutions and to complete the establishment of colleges of supervisors for all significant cross-border financial firms" is gone.

What else?  The section on tax havens got beefed up rhetorically with a single sentence: "The era of banking secrecy is over."  That's nice.

I haven't looked at the rest in any detail, but it includes about a trillion dollars in loan pledges and IMF support, but no specific targets for domestic stimulus.  That number could have been higher, and probably should have been higher, but reality being what it is, that's not bad.

And the big losers in all this?  Protesters.  The street wars were a big deal in Seattle, guys, but with every passing year your schtick just looks more and more pro forma.  Time to give it a rest.

Blood Sport

| Thu Apr. 2, 2009 12:17 PM EDT
Dahlia Lithwick writes in Slate about the insane smear campaign being waged by the wingnut right against Harold Koh, Obama's nominee for legal adviser to the State Department:

Every one of the anti-Koh rants dutifully repeats a canard that first appeared in a hatchet piece in the New York Post by former Bush administration speechwriter Meghan Clyne. She asserts that Koh believes "Sharia law could apply to disputes in US courts." The evidence for her claim? "A New York lawyer, Steven Stein, says that, in addressing the Yale Club of Greenwich in 2007, Koh claimed that 'in an appropriate case, he didn't see any reason why Sharia law would not be applied to govern a case in the United States.' "

....But, of course, Koh believes nothing of the sort. And the only real revelation here is that truth can't be measured in Google hit counts or partisan hysteria.

....Clyne's gross distortions of Koh's views have gone completely unanswered in the mainstream press. You can certainly argue that ignoring the whole story signals that it's beneath notice....[But] when moderate Americans and the mainstream media allow a handful of right-wing zealots to occupy the field in the public discussions of an Obama nominee, they become complicit in a character assassination.

The right-wing nutcase machine really does seem to have picked up from its Clinton-era follies without missing a beat.  But although Lithwick right about the moral dimensions of this kind of smear campaign, there's also a practical aspect: it's yet another part of the increasingly dismal Senate kabuki show that makes it harder and harder to fill high-level administration positions. It's one thing to go through this kind of harangue to become Secretary of State, but it's quite another to go through it to become merely a high-level aide, and as this stuff gets more and more rabid, fewer and fewer people are willing to put up with it.

So let's knock it off.  We can't stop the wingnuts, but we can take the wind out of their sails by taking away their platform.  After all, is there really any reason why the Senate needs to confirm the legal advisor to the State Deparment in the first place?  No?  I didn't think so.

More G-20 Gossip, Please

| Thu Apr. 2, 2009 1:53 AM EDT
I think I've now read about a dozen stories telling me that America is seriously at odds with France and Germany at the G-20 meeting because Obama isn't as serious about financial regulatory reform as Nicolas Sarkozy and Angela Merkel are.  The phrase "non-negotiable red lines" and the quote "The crisis didn't actually spontaneously erupt in Europe, did it?"show up in pretty much all of these stories, but there's always one thing missing: an explanation of exactly what the disagreement is about.  Is the global financial press really so lame that they haven't been able to ferret this out yet?  Better gossip, please.