Kevin Drum

What's Next for South Carolina?

| Wed Jul. 1, 2009 9:19 AM PDT

As Mark Sanford's increasingly bizarre effort to turn the South Carolina governor's office into an extension of the Oprah Winfrey show barrels toward its seemingly inevitable conclusion, the Washington Post introduces us to André Bauer, the lieutenant governor who will take over if Sanford resigns:

Bauer, 40, has made a career of running against South Carolina's establishment — and winning. Elected to the state legislature at age 26, he became known as an ambitious politician, rising quickly and winning the state's No. 2 position in 2002.

Yet as lieutenant governor, he has become known as much for his personal behavior as for his political record. In 2003, he was charged with driving 60 mph and running two red lights in downtown Columbia. When pulled over, Bauer was so aggressive that a police officer pulled a gun on him.

In 2006, Bauer was stopped by a state trooper who clocked him driving 101 mph on an interstate highway. He used his state-issued radio to tell the officer he was "S.C. 2" — the code for lieutenant governor — and was not ticketed. Then, weeks later, Bauer was injured when the single-engine airplane he was piloting crashed and burned.

....Over the years, Bauer's romantic life has stirred rumors, the latest bubbling up in recent days. In an interview Monday with the State, a Columbia newspaper, Bauer voluntarily brought up the subject of his sexual orientation. "Is André Bauer gay? That is now the story," the lieutenant governor was quoted as saying, adding his answer: "One word, two letters. 'No.' Let's go ahead and dispel that now."

I live in California, so I can hardly throw stones at another state's dysfunctional politics.  But I can still throw pebbles.  The Palmetto State really knows how to pick 'em, doesn't it?

Advertise on MotherJones.com

Time Zone Blues

| Wed Jul. 1, 2009 8:59 AM PDT

There are pros and cons to living in the Pacific time zone.  Today, it's all downside.  Apparently Sarah Palin's PAC put out a truly bizarre video on YouTube, but by the time I woke up and got around to watching it, it had already been taken down.  Boo! I want my Sarah!

Descriptions are here, here, and here.  If anyone knows where I can see a bootlegged copy or something, let me know.

UPDATE: Apparently it wasn't SarahPAC that created this video after all.  Just some weird Palin supporter.  More here.

The Politics of Healthcare

| Wed Jul. 1, 2009 8:44 AM PDT

Jonathan Cohn takes a look at the many compromises Barack Obama is making in order to get a healthcare reform bill passed:

Put aside, for a moment, the policy merits of these moves. The politics are lousy. Obama would be in danger of producing legislation that seems to offer little up-front benefit, particularly for the electorally vital middle class. And if some of these people end up paying even modestly higher taxes to help finance reform they're not likely to be happy about it. It's hard to imagine such legislation provoking a backlash that could produce total repeal. It's not so hard to imagine such legislation creating bad political feelings, the kind that linger around until the next Election Day and pave the way for legislative retrenchment later on.

The key to healthcare reform is that it be popular with the public.  The Medicare prescription bill, for example, was generally popular because it provided a clear and concrete benefit.  Broader healthcare reform, however, is going to have a harder time.  If there's no public option, for example, and most people simply keep the employer-based healthcare they already have, then what's the selling point?  Most people will just see higher taxes funding better coverage for the poor, and you don't have to be the world's biggest cynic to understand that this isn't going to be overwhelmingly popular.  Helping the poor is all well and good, but like it or not, most of us want to know what's in it for ourselves if our taxes are going up.  That's just life.

Right now, we're running the risk that the answer is "not much."  Healthcare reform needs a little more obvious sizzle if it's going to survive the coming tsunami of conservative agitprop, and the bills wending their way through Congress don't have much of that left.  Jon is right: it's lousy politics.

Fighting over Sarah

| Wed Jul. 1, 2009 7:58 AM PDT

Sarah Palin is the gift that keeps on giving and giving and giving.  Todd Purdum's profile in this month's Vanity Fair was a fairly ordinary takedown with only a little in the way of new revelations, but even so it's managed to spark a breathtaking amount of vitriol among Republican operatives.  Jonathan Martin reports on what happened after Bill Kristol accused McCain aide Steve Schmidt of speculating during the campaign that Palin's strange behavior was due to post-partum depression:

Asked about the accusation, Schmidt fired back in an e-mail: “I'm sure John McCain would be president today if only Bill Kristol had been in charge of the campaign.”

“After all, his management of [former Vice President] Dan Quayle’s public image as his chief of staff is still something that takes your breath away,” Schmidt continued. “His attack on me is categorically false.”

Asked directly in a telephone interview if he brought up the prospect of Palin suffering from post-partum depression, Schmidt said: “His allegation that I was defaming Palin by alleging post-partum depression at the campaign headquarters is categorically untrue. In fact, I think it rises to the level of a slander because it’s about the worst thing you can say about somebody who does what I do for a living.”

But Kristol’s charge was seconded by Randy Scheunemann, a longtime foreign policy adviser to McCain who is also close to the Standard editor and was thought to be a Palin ally within the campaign. “Steve Schmidt has a congenital aversion to the truth,” Scheunemann said.

....Responding to Schmidt’s counterattack, Kristol directly fingered Schmidt: “It’s simply a fact that when the going got tough, Steve Schmidt trashed Sarah Palin, both within the campaign and (on background) to journalists. This was after Steve took credit for the Palin pick when, at first, he thought it made him look good. John McCain deserved better.”

At this, Schmidt unloaded in a lengthy telephone interview, suggesting that Kristol was carrying out a personal vendetta based out of anger over the attempt to fire Scheunemann in the final days of the campaign.

There's only one proper response to this: Palin/Sanford 2012!  Drill baby drill!

Chart of the Day

| Tue Jun. 30, 2009 4:16 PM PDT

Today's economic green shoot is the latest Case-Shiller report, which shows that although house prices are still declining, they're declining at a slower rate than before.  Hooray!

But Henry Blodget is right about this:

We're still talking about an astonishing rate of collapse....So the folks who use this slight moderation in the rate of decline to spin tales of a "bottom" or, worse, a "recovery" are smoking something.  Prices have at least another 10%-15% to fall, and they'll likely be falling for at least another year or two.

To show this graphically, I've helpfully extended the S&P chart Blodget includes in his post.  It's this simple: as long as the line is below zero, house prices are dropping.  And if price declines slow down at about the same rate they accelerated, it means we won't get back to zero until sometime in 2011.  Put even more simply: the price decline between 2007-2009 — which started slowly and then picked up steam — will probably be mirrored by the price decline between 2009-2011 — which started with a head of steam and will end up dropping ever more slowly until it finally flattens out.  And that price drop was about 25%.

So if anything, Blodget might be too optimistic.  We might still have 25% to go.

Leverage

| Tue Jun. 30, 2009 3:16 PM PDT

In last week's column, Martin Wolf warned that bushels of new regulations won't save us from another banking crisis.  The problem, he said, is that in a highly leveraged business it makes perfect sense for shareholders (and therefore management) to take enormous risks, and nibbling around the regulatory edges won't change that.  But what will?  He didn't really say, prompting me to comment, "Perhaps this column was a season finale cliffhanger and we have to wait until next week for the mind blowing conclusion?"

I guess it really was, after all, because this week we get Wolf's answer:

If institutions are too big and interconnected to fail, and no neat structural solution can be identified, alternatives must be found: much higher capital requirements and greater attention to liquidity are the obvious ones. At present, big financial institutions operate with next to no capital: in the US, the median leverage ratio of commercial banks was 35 to 1 in 2007; in Europe, it was 45 to 1 (see chart). As I noted last week, this makes it rational for shareholders to “go for broke”, with the results we have seen. Allowing institutions to be operated in the interests of shareholders, who supply just 3 per cent of their loanable funds, is insane. Trying to align the interests of management with those of shareholders is then even crazier. With their current capital structure, big financial institutions are a licence to gamble taxpayers’ money.

So how much capital makes sense for systemically significant institutions? “Much more than today” is the answer. Moreover, the required capital must also not be risk-weighted on the basis of banks’ models, which are not to be trusted. Shareholders’ funds should make up a minimum of 10 per cent of capital. In the US, it used to be far higher.

....Within a far better capitalised financial system, it would also be relatively easy to operate a “macroprudential” regime, with the required capital rising during booms and falling during busts. Again, the bigger the stake of shareholders, the less one would worry if the rewards of managers were aligned with them.

Well, that turned out to be distinctly non-mind blowing, didn't it?  Regulate leverage wherever, whenever, and in whatever form it appears.  But though Wolf's answer may have been a bit anticlimactic, at least it has the virtue of being right.

The big remaining question, though, is: how?  How do you mandate higher capital requirements in a way that's likely to be robust?  As Wolf says earlier in the column, "'Never again' might be too much to ask. But 'not for a generation' is essential."  So how do we build a system of stronger capital requirements likely to persist around the globe for at least a generation?  I haven't yet heard a really persuasive answer to this, and unfortunately, at this point it's not clear that anyone is even trying very hard to figure it out.  There are just too many people who want to believe that the crisis is over and we can go back to business as usual with just a bit of minor deck chair rearranging.  Ten years from now we'll pay the price for this.

Advertise on MotherJones.com

Senator Al Franken (D–Minn.)

| Tue Jun. 30, 2009 2:36 PM PDT

Norm Coleman has finally conceded the 2008 Minnesota Senate race.  Al Franken will be sworn in soon (probably next week) and Democrats will finally have a majority of 60 in the Senate.

Which will, of course, make approximately no difference at all.  The corruption of the filibuster into a routine requirement for 60 votes in the Senate (an arguably unconstitutional evolution, IMHO) combined with the continuing presence of half a dozen non-liberals in the Democratic caucus combined with an almost iron self-discipline within the Republican caucus — well, all that combined means that liberals now have the illusion of control of Congress but not the reality.  In a way, it's almost the worst of all possible worlds.  Dem vs. Dem is now practically the only narrative that anyone will pay attention to, and since unanimous agreement is the only way for that narrative to play out well, this means it's almost always going to play out badly.

Still, that's a glass-half-empty point of view.  So let's be more positive: one more vote is one more vote.  And unless events are massively unfavorable, the ground still looks favorable to pick up two or three more seats in 2010.  And Franken will probably be a pretty good senator, someone who knows how to talk in plain language and get himself on the talk shows.  As long as he keeps his sense of humor and shows it to us once in a while, I'm looking forward to seeing more of him.

Quote of the Day

| Tue Jun. 30, 2009 12:14 PM PDT

From Malcolm Gladwell, responding to yet another book length treatise from one of the information-wants-to-be-free (Free, I tell you, Free!) diehards:

So how does YouTube bring in revenue? Well, it tries to sell advertisements alongside its videos. The problem is that the videos attracted by psychological Free—pirated material, cat videos, and other forms of user-generated content—are not the sort of thing that advertisers want to be associated with. In order to sell advertising, YouTube has had to buy the rights to professionally produced content, such as television shows and movies. Credit Suisse put the cost of those licenses in 2009 at roughly two hundred and sixty million dollars. For [Chris] Anderson, YouTube illustrates the principle that Free removes the necessity of aesthetic judgment. (As he puts it, YouTube proves that “crap is in the eye of the beholder.”) But, in order to make money, YouTube has been obliged to pay for programs that aren’t crap. To recap: YouTube is a great example of Free, except that Free technology ends up not being Free because of the way consumers respond to Free, fatally compromising YouTube’s ability to make money around Free, and forcing it to retreat from the “abundance thinking” that lies at the heart of Free. Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds.

That might not make much sense to you.  Read the whole thing and it will.

The Power of Coal

| Tue Jun. 30, 2009 10:59 AM PDT

Ezra Klein notes that coal state Democrats voted against the Waxman-Markey climate bill at a higher rate than non-coal state Dems, but not that much higher.  About one-in-four of the coal state Democrats voted no, compared to only a little over one-in-10 of everyone else:

Even so, that means only one-in-four of the coal state Democrats voted no. I'd like to see those results drilled down to coal-dependent districts, but still, that's quite a bit less parochial defection than one might imagine.

....Another way of putting this is that the evidence suggests that this vote was less about parochial interests than partisanship and ideology. Plenty of Democrats from coal states made the judgment that they could defend this legislation to their constituents.

I think I'd look at this a little differently.  Sure, partisan politics was the main divide, but that's the main divide on everything.  What's more interesting is that a quarter of the coal state Dems voted against the bill even though it had already been massively watered down to reflect coal state interests. In its current state, Waxman-Markey has very little effect on coal state interests for at least the next decade, and possibly for more like 20 years.  But even so, lots of coal state Dems voted against it despite the fact that passage is a major goal of the party leadership, it's a major goal of the president, and it's the right thing to do.  I'd call that pretty damn parochial.

Green Dam Spouts a Leak

| Tue Jun. 30, 2009 9:41 AM PDT

For years the Chinese government has relied on the "Great Firewall" to censor its citizens' access to the internet, primarily by filtering packets based on keyword detection and blocking IP addresses of sites the government dislikes (Falun Gong, pro-democracy sites, etc.).  But the firewall has never been as watertight as the government would like, and the next phase was supposed to be the mandatory installation of a piece of software called "Green Dam" on every new computer sold in China.  Interestingly, Chinese computer users are fighting back and apparently winning:

In a last-minute climbdown, the Chinese government announced today that it will delay the launch of censorship software that was supposed to have been sold in every computer from tomorrow.

....The Guardian struggled to find a single retailer who had Green Dam either installed or bundled with computers. Adding to the mystery, Lenovo, Sony, Dell and Hewlett Packard refused to comment on whether their PCs are now being shipped with the software, as the government ordered them to do last month.

....A group of bandit hackers, known as Anonymous, declared "war" on Green Dam and threatened to attack it tomorrow.

According to a source close to the group, they plan to create a remote computer 'bot' that pummels Baidu, Kaixin and other mainland websites with data requests containing forbidden or sensitive terms, such as expletives, Falun Gong, Dalai Lama and "Fifty-cent party member" (the derogatory name given to people paid to post pro-government comments online). They hope the volume of dirty traffic will clog up the keyword filters.

I don't have any special comment about this.  It seemed like a quixotic plan from the start, and I'm not all that surprised that it's been delayed at the least, and possibly abandoned.  It's just hard to see how it can work in the long term.  Still, as with the twittering in Iran, it's interesting to see yet another case of how technology can be simultaneously both servant and bane of autocratic governments.