2012 - %3, December

The GOP Thinks You Don't Know Shit From Shinola

| Tue Dec. 4, 2012 11:56 PM PST

Chris Frates reports that Republicans are frustrated that everyone is misinterpreting their opposition to raising tax rates on the wealthy. So on Monday, a group of K Street's "top GOP communicators" got together to discuss how they can change the narrative that they're the ones getting in the way of a fiscal cliff deal:

"How can we fight back against that and how can we make that point and how can we message that we're the party of small business owners and we're not defending the rich?" asked a meeting participant.

It's sort of fascinating to read this kind of thing. The obvious problem Republicans have is that their single-minded opposition to raising tax rates on the rich is, in fact, employed in defense of the rich. Even the fabled low-information voter knows this perfectly well, and mounting a messaging campaign to convince the public that Republicans are actually defending small businesses is an exercise in futility. It will just convince people that Republicans are unusually shameless hucksters who think their constituents can't distinguish fecal matter from shoe polish.

But reading stories like this, I wonder if the GOP brain trust understands this? Have they drunk their own Kool-Aid so deeply that they truly think they're not defending the rich? Or is stuff like this purely for public consumption, and they just haven't figured out yet that it has no chance of working? It's a mystery.

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Conservatives Hate Treaties, and They Always Have

| Tue Dec. 4, 2012 9:34 PM PST

Today, Republicans blocked ratification of the United Nations Convention on the Rights of Persons with Disabilities, a treaty negotiated by George W. Bush that basically codifies U.S. law as a model for the rest of the world. "It's a treaty to change the world to be more like America," John Kerry pleaded during the Senate's debate, but that cut no ice with its detractors. Dan Drezner comments:

I've blogged on occasion about the development of a sovereigntist lobby that reflexively opposes all treaties because they erode U.S. sovereignty. For these people, any infringement on American sovereignty is a death blow to freedom, regardless of the benefits from joining.

Well, yeah....except I'm not so sure about the idea that this is something that's developed recently. Movement conservatives have been paranoid about treaties at least since FDR's treachery capitulation treason agreement with Stalin at Yalta, and for all I know, maybe even long before that. Hell, the Bricker Amendment, which would have dramatically restricted the ability of presidents to negotiate treaties at all, only failed by one vote in 1954, back when memories of Yalta were fresh. Just for laughs, let's compare and contrast 1954 with 2012. Here is Senator Walter George on the Bricker Amendment:

I do not want a president of the U.S. to conclude an executive agreement which will make it unlawful for me to kill a cat in the back alley of my lot at night, and I do not want the President of the U.S. to make a treaty with India which would preclude me from butchering a cow in my own pasture.

Does that sound eerily, tea party-ishly familiar? It should. Here is Senator Jim Inhofe on UNCRPD:

Unelected bureaucratic bodies would implement the treaty and pass so-called recommendations that would be forced upon the United Nations and the U.S....This would especially affect those parents who home-school their children....The unelected foreign bureaucrats, not parents, would decide what is in the best interests of the disabled child, even in the home.

Movement conservatives tend to tolerate trade treaties, but that's about it. They went ballistic over the Panama Canal treaty. They screamed blue murder over the Law of the Sea treaty. They opposed establishment of the International Criminal Court. They've fought pretty much every arms control treaty ever. They don't like treaties, they've never liked treaties, and if there's nothing obviously wrong with one they'll invent a bunch of bizarre conspiracy theories in order to get themselves worked into a frenzy about it. Dan says opposition to UNCRPD is "dumber than a bag of hammers," and it is. But that's par for the course. The more things change, the more they stay the same.

Yet More Evidence That High-Frequency Trading is Bad For Us

| Tue Dec. 4, 2012 6:29 PM PST

Is high-frequency trading a net negative or a net positive? Obviously, if HFTs make money, they're making it from other investors. That's a negative. On the other hand, they provide market liquidity, which is a positive. So how do things net out?

John Carney suggests a natural experiment that tells us. Back in August of 2007, quant hedge funds took a bath when markets started moving in weird ways. But that was only at the micro level, where quants make their bets. Overall, the S&P 500 went up and down pretty normally during the week the quants were losing their shirts:

Tellingly, the S&P rose on the days that were supposedly the worst for the quants. The reason why that is significant is that we've since learned that one of the things that made the situation so bad for the quants was a sudden loss of market liquidity.

And what caused the loss of liquidity? Well, it appears that one big factor was the flight of high-frequency traders from the market. The algos of the quants just didn't work well when the HFTs refused to provide liquidity.

The point here, however, is not about the quants versus the HFTs. It's about what a rising market in the absence of HFTs may indicate. If high-frequency traders are a net benefit to investors, their exit should cause valuations of stocks to fall. If stocks rise while they exit, this at least suggests they may be a net cost.

Carney takes this as tentative evidence that HFTs are a net negative. But I'd add two other points. First: the problem with HFTs is that they produce liquidity precisely when nobody needs it (i.e., normal times) and withdraw it precisely when everyone does need it (panicky times). But this isn't liquidity at all. Almost by definition, a market is only truly liquid if you can buy and sell even when times are tough. After all, even crappy markets have pretty good liquidity during good times. The faux liquidity that HFTs provides is the worst kind of liquidity in the world: you're better off having limited liquidity all the time than having it suddenly cut off just at the time when it's most important.

Second: nobody really understands how HFTs work. Even the HFT gurus don't really understand it. That's why the quants got blindsided, and that's what makes HFTs so dangerous. They're almost certainly introducing a lot of extra tail risk, and they're doing it primarily by spamming the financial system.

Put all this together, and allowing HFTs to continue their merry little algobot wars is just monumentally stupid. A tiny financial transaction tax would put an end to it, and would probably improve the operation of the rest of the financial industry too, all while raising a bit of much-needed money. Fiscal cliffsters, take note.

Here's How to Clean Up Dirty, Old Power Plants

| Tue Dec. 4, 2012 4:39 PM PST

The Natural Resources Defense Council thinks it has the perfect solution to regulating planet-warming emissions from existing power plants. But can the group sell the Obama administration Environmental Protection Agency on it?

NRDC's plan, released on Tuesday, outlines a framework for using the Clean Air Act (Section 111d, to be exact) to set new regulations on the country's 1,500 existing coal plants. Rather than a straightforward limit on emissions—which would likely require major retrofits or shutting the plants down altogether—NRDC's plan is somewhat more flexible. For starters, each state would have targets based on current emissions—so states that get most of their power from coal would have lower, more realistic targets than states that get their power from, say, hydropower. The state would work toward lowering its average across all power plants to meet the targets. Ambitious states like California could still adopt tougher targets for themselves that require deeper emission cuts than the federal rules.

The plan also builds in some flexibility for how states meet the standards. An older plant could make pollution-reducing retrofits to meet the goal. Or it could switch to lower-emission fuel, like natural gas. Or the state could increase its use of renewable energy, make improvements on energy-efficiency so that they need to burn less fuel in the first place, or roll out programs to reduce the demand for electricity.

The EPA announced limits on greenhouse gas pollution from new power plants last March. The comment period on the new rule ended in June, but the EPA has not yet finalized the rule. But even when it does, the rules still won't address the oldest, dirtiest power plants. When the rules for new plants were unveiled, the EPA said it had "no plans" to start working on rules for old plants. The NRDC hopes this plan will offer some good ideas on how to do that.

NRDC says the plan would cut greenhouse gas emissions 26 percent below 2005 by 2020 and 34 percent by 2025. (That's more than the 17 percent reduction by 2020 that the US has pledged in international negotiations thus far.) The group projects that the plan would cost about $4 billion annually by 2020, but would save lives and healthcare costs by reducing other harmful emissions like nitrous and sulfur dioxide. The plan "overturns conventional wisdom that relying on the Clean Air Act has to be expensive and won't make much difference," said Dan Lashof, director of NRDC's climate and clean air program.

That's a key point, because EPA administrator Lisa Jackson has long said that the Clean Air Act is not an "ideal tool" for cutting emissions. This is why so many environmental groups threw all their weight into trying to pass a climate bill back in 2009, thinking it would be a way to build a better, more flexible set of regulations. But, as you well know, Congress didn't pass the bill in 2009 and doesn't look likely to do anything like that anytime soon. So, we're back to the Clean Air Act as the main vehicle for action on climate.

"For America's health and welfare, for the nation's economy, and for the health of our planet," said Lashof, "we can't afford not to produce strong emission reductions from existing power plants."

Public Service Announcement: Sometimes a Higher Deficit is Good. Like, For Example, Right Now.

| Tue Dec. 4, 2012 4:09 PM PST

More polling fun: Business Insider conducted an internet survey that asked people what would happen to the deficit if we go over the fiscal cliff. Nearly half thought the deficit would increase. The correct answer, of course, is that the fiscal cliff involves tax increases and spending cuts, which would dramatically reduce the deficit.

My initial reaction to this was pretty meh. I figure most people have only a vague idea what the fiscal cliff is, but they know it's bad. They also think that deficits are bad. Ergo, the fiscal cliff must produce higher deficits. This is wrong, but pretty understandable for the large majority of the population that doesn't really follow this stuff closely.

But Paul Krugman points out a related but different interpretation:

In a way, I understand this: the VSPs have been pounding the drum over and over again about how deficits are bad, evil; now they are warning about a fiscal something-or-other, so how are people supposed to know that they’re suddenly worried that we’ll reduce the deficit too much?

Right. Given the current level of discourse, it's inconceivable to a lot of people that reducing the deficit could be bad. That being the case, it's inconceivable that anything that would cause a deficit reduction could be bad. Therefore the fiscal cliff must not do that. It must cause a deficit increase.

This makes perfect sense even if you do follow this stuff fairly closely. As long as the media continues to treat the federal deficit as a self-evident apocalypse, what else would most people think?

Chemical Dispersant Made BP Oilspill 52 Times More Toxic

| Tue Dec. 4, 2012 3:37 PM PST

Female rotifer, Brachionus manjavacas, with eggs: R. Ric-Martinez et al. Invironmental Pollution. http://dx.doi.org/10.1016/j.envpol.2012.09.024

Female rotifer, Brachionus manjavacas, with eggs: R. Rico-Martinez et al. Environmental Pollution. http://dx.doi.org/10.1016/j.envpol.2012.09.024 

A new study finds that adding Corexit 9500A to Macondo oil—as BP did in the course of trying to disperse its 2010 oilspill disaster—made the mixture 52 times more toxic than oil alone. The results are from toxicology tests in the lab and appear in the scientific journal Environmental Pollution.

Using oil from the Deepwater Horizon blowout and Corexit the researchers tested the toxicity of oil, dispersant, and a mixture of oil and dispersant on five strains of rotifers—the lab rats of marine toxicology testing. Among the results:

  • The oil-dispersant mixture killed adult rotifers
  • As little as 2.6 percent of the mixture inhibited egg hatching by 50 percent  

The inhibition of egg hatching in bottom sediments is particularly ominous because rotifer eggs hatch each spring to live as adults in the water column where they are important food sources for larval and juvenile fish, for shrimp, crabs and other marine life in estuarine and shoreline ecosystems—including fisheries humans depend on.

"Dispersants are preapproved to help clean up oil spills and are widely used during disasters," said lead author Roberto-Rico Martinez currently at the Universidad Autonoma de Aguascalientes, Mexico. "But we have a poor understanding of their toxicity. Our study indicates the increase in toxicity may have been greatly underestimated following the Macondo well explosion."

I wrote here about the dramatic decline in microscopic life on BP's dispersed oil beaches and here about how using dispersant allowed oil to penetrate much more deeply into beaches possibly extending the toxic lifespan of the mix. I wrote here about how BP's oilspill has hammered Gulf fish.

 

 

The paper:

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The GOP Channels Romney on Latest Debt Deal Offer

| Tue Dec. 4, 2012 2:11 PM PST

Republicans have apparently taken a cue from presidential loser Mitt Romney on how to put together a budget plan: Explain nothing. House Speaker John Boehner's latest offer, issued Monday, proposes serious reductions in spending, but fails to specify exactly how those cuts would play out in reality, according to the non-partisan Center on Budget and Policy Priorities.

Exhibit A: The plan proposes $600 billion in mystery healthcare cuts, way more than the widely-touted Bowles-Simpson deficit proposal (which backers say is centrist, and critics say favors business and the wealthy), and way more than Obama's proposal.

CBPP did the wonk work for Boehner, and concluded "the health care cuts in the Republican offer will likely be draconian":

For months, we have studied options to generate savings in this part of the budget, and we can’t get close to $600 billion...with items that wouldn’t seriously hurt low-income and vulnerable individuals.... Some news accounts report the House Republican leaders would raise the Medicare eligibility age to 67 and increase Medicare premiums for more affluent beneficiaries, although those items are not mentioned anywhere in the new offer. But if so, those measures would raise only about one quarter of the $600 billion.

Republicans' most recent budget offer also includes $300 billion in blanket cuts to "non-health mandatory programs," which includes things like disability benefits and Food Stamps. There are no specifics there, either.

"The proposal is an exercise in 'look Ma, no hands' budgeting," CBPP director Robert Greenstein said in a statement.

An additional $300 billion is slashed from discretionary spending, including education, childcare, and research. Here the CBPP says they can better assess what the damage will be. As the CBPP's James Horney explains, since Republicans aren't going to make any more defense cuts, low-income programs will inevitably be on the table. Conclusion: "Adding large further cuts on top of the steep cuts that [last year's deficit reduction pact] requires would be most unwise," according to Greenstein.

So why the reluctance to include the nuts and bolts on how spending cuts will work out? Math. The CBPP says there isn't enough revenue in Boehner's plan to cover all the spending—not even the cost of keeping Bush tax cuts for the rich and keeping estate taxes low. As a middle-school pre-Algebra teacher might say, "Show your work."

George W. Bush Instructs GOP: "Immigrants Invigorate Our Soul" (Video)

| Tue Dec. 4, 2012 2:11 PM PST

Since the election, some Republicans have begun backing away from the self-deportation rhetoric of folks like Kansas Secretary of State Kris Kobach and are getting on board with comprehensive immigration reform. Others in the party are sticking with the hard line. Enter former President George W. Bush with a dose of good ol' compassionate conservative advice for his fellow Republicans: "Not only do immigrants help build our economy, they invigorate our soul," he said, reprising his role as immigration reformer at a Dallas conference on Tuesday. "America can be a lawful society—and a welcoming society—at the same time. As our nation debates the proper course of action relating to immigration, I hope we do so with a benevolent spirit and keep in mind the contribution of immigrants." 

Watch his conference-opening comments below:

 

The Fox News Effect: Republicans Still Think ACORN is Alive and Stealing Elections

| Tue Dec. 4, 2012 1:25 PM PST

Here is PPP on their finding that 49 percent of Republicans think ACORN stole the election for Obama, a drop from the 52 percent who thought ACORN stole the election in 2008:

This is a modest decline, but perhaps smaller than might have been expected given that ACORN doesn't exist anymore.

I'd call this a dry British sense of humor if PPP were British. In other news, they found that 39 percent of Americans claim to have an opinion about the Simpson-Bowles deficit plan, while 25 percent claim to have an opinion about the Panetta-Burns plan, which they just made up. Fun times.

Quote of the Day: Obama Not Budging on Higher Tax Rates for the Rich

| Tue Dec. 4, 2012 1:01 PM PST

From President Obama, asked about John Boehner's deficit proposal yesterday:

He talks, for example, about $800 billion worth of revenues, but he says he’s going to do that by lowering rates. And when you look at the math, it doesn’t work....If we're going to raise revenues that are sufficient to balance with the very tough cuts that we've already made, and the further reforms in entitlements that I'm prepared to make, we’re going to have to see the rates on the top two percent go up. And we’re not going to be able to get a deal without it.

Well, that's pretty definitive. Obama didn't explicitly say that rates had to go all the way back up to pre-Bush levels, so there's still a bit of wiggle room here. But not much.