Kevin Drum - June 2009

Mick Jagger and the Climate Change Bill

| Wed Jun. 24, 2009 10:31 AM EDT

It's not a big surprise that John Podesta, who heads the Center for American Progress and who ran President Barack Obama's transition, has endorsed the imperfect Waxman-Markey climate change legislation. Podesta, who has long worked on climate change, writes

Once again, Mick Jagger is right: “You can’t always get what you want/ But if you try, sometimes you just might find/ You get what you need.” The House of Representatives is poised for its first ever floor debate on legislation to reduce global warming pollution. This landmark bill is revolutionary in its intent and, while imperfect in its means, deserves the support of progressives.

Podesta is a smart fellow, but he has this Rolling Stones reference backward. If you believe the scientists—and I believe them—then we need a greater and faster reduction in greenhouse gas emissions than we would get from this bill. Unlike, say, the public health plan option, this is not a matter of obtaining merely what progressives want.

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Best in Blog: 24 June 2009

| Wed Jun. 24, 2009 9:00 AM EDT

Today's three MoJo picks:

1) Can Michelle Obama Save Health Care Reform?

David Corn: On a day when the politerati focused on President Obama's press conference (Iran, health care, Iran, health care, the economy, smoking, Iran), Chris Matthews, Richard Wolffe, and I went off-topic to discuss whether Michelle Obama can help her husband sell the health care bill now under construction in Congress. Watch the video.

 

2) Barney Frank to F-22: Drop Dead

Rachel Morris: Rep. Barney Frank has authored an amendment that would remove funding for the extra F-22s that the House Armed Services committee slipped into the defense budget authorization bill last week. Here's the story so far.

 

3) Will Europe Out-Whale Japan?

Jen Phillips: The International Whaling Commmission is meeting in Portugal this week, and there's a small Japanese fishing town that gives dead whales Buddhist names. Really! Read more.

Jake Tapper, Mensch

| Wed Jun. 24, 2009 7:25 AM EDT

Kevin's gone for a few days. He says he's in NYC, but I wonder if he's off hiking with South Carolina Republican Governor Mark Sanford. During this brief sabbatical, I will be filling in. Feel free to let me know how you think I'm doing in the comments section. By the way, I should let you know this: I'm allergic to cats. -- David Corn

An event happened yesterday at the White House that warrants notice and a hat tip to Jake Tapper of ABC News.

I know, bloggers are usually supposed to hold MSMers in disdain—especially White House correspondents. But during the presidential press conference, Tapper did what few White House reporters do: when President Barack Obama didn't answer another reporter's question, Tapper held him accountable.

Vacation Time

| Wed Jun. 24, 2009 1:01 AM EDT

Remember I said a few weeks ago that I'd be taking a short vacation in New York City in a few weeks?  Well, the future is now, and that means I'm officially on vacation.  David Corn will be guest blogging here during my absence, and other folks from our DC bureau may chime in from time to time as well.  Be nice to 'em.  I'll be back next Tuesday.

Climate Change Hobbles Forward

| Wed Jun. 24, 2009 12:55 AM EDT

Jay Newton-Small reports that Rep. Collin Peterson (D–Minn.) has finally managed to insert enough rapacious farm welfare language into the Waxman-Markey climate bill to satisfy himself and has now agreed to let the bill come to a vote on the House floor.  Then there's this:

Peterson, who said he represents the voting power of 45 Blue Dogs and House Agriculture Committee Democrats, told reporters late Tuesday that he didn't think they'd get a deal. “It was touch and go,” he said, shaking his head. Strikingly, Peterson said he dealt little with the Administration in the negotiations — speaking instead with Waxman and House Speaker Nancy Pelosi. Obama pushed for the legislation in remarks Tuesday, but the Administration has been markedly less involved in the climate change bill than in the stimulus, budget or health care reform. Once the global warming bill clears the House, though, it faces a far from certain future in the Senate where Obama's support will be more keenly needed.

Ugly, ugly, ugly.  Still, if that last part is true, let's hope Obama decides to get a little more involved in things going forward.  The Senate is not exactly the place were mediocre bills are sent to get better, after all, and this one really can't afford to get much worse.

And while we're on the subject of legislation, if you're the kind of person who contributes money to Democratic candidates and fundraising groups, Jonathan Zasloff has some pretty good advice for you.  Click here to read it.

Obama and the Press

| Tue Jun. 23, 2009 8:56 PM EDT

Walter Shapiro, after watching Barack Obama reply sharply to a couple of questions at today's press conference, offers up a theory:

In response to the next question — about the potential consequences if Iran continued to suppress demonstrations — Obama said with a sharp edge in his voice, "We don't know yet how this thing is going to play out. I know everybody here is on a 24-hour news cycle. I'm not. Okay?"

Now I am not going to claim that the First Amendment requires presidents always to wear smiley faces when taking questions from reporters. Nor am I going to deny that occasionally — very occasionally — the short-term mindset of the press pack can be irritating for presidents with a more transcendent view of global events.

Instead, I am bringing this up because I want to tentatively advance a larger theory about the president's public moods. Obama tends to drop his cool veneer and sound exasperated when he knows that he is in the wrong.

Hmmm.  I suppose there might be something to this, but I have a different theory: the press only really gets disturbed by Obama's occasional acid tongue when it's aimed at the press.  On a later question about Obama's struggle to quit smoking, Shapiro says, "Words alone cannot convey Obama's mocking tone and his obvious disdain for this 'human-interest story,'" but I watched that part of the press conference and it seemed like a pretty mild dig to me.  You can judge for yourself above.

There's a convention in American politics that says politicians can manipulate the press behind the scenes as much as they like, and for the most part no grumbling is allowed.  It's all part of the game.  On camera, the rules are supposed to be same: the president is expected to pretend that every reporter is serious and well-briefed and every question is smart and penetrating.  But Obama doesn't always like to play by those rules.  He's occasionally willing to pull back the curtain on the media's inanity and to call a dumb question a dumb question.  Unsurprisingly, reporters don't like this much.

Shapiro headlined his post, "Pushing the President's Buttons."  But I think it might have been the other way around: the president was pushing his.

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Catching Up To My Brain

| Tue Jun. 23, 2009 6:16 PM EDT

Over at The Opinionator they round up some blog reaction to Barack Obama's increasingly tough talk on Iran and then say this:

At Mother Jones, Kevin Drum remarked on the shift in tone on Iran without being so fazed by it.

Reading this reminded me of one of the dangers of blogging: it's such a conversational medium that you sometimes forget which parts you've said aloud and which parts you haven't.  I've been emailing and chatting (and just thinking) about Iran the same as everyone else, and one of the things I've been emailing and chatting and thinking about is the strong likelihood that the Iranian regime is going to crack down ever harder as the protests continue, producing ever greater brutality and ever greater bloodshed.  So far, for good and sound reasons, Obama has taken a restrained tone toward this, but if it continues he's obviously going to react ever more strongly and more concretely.  And he'll have to do it without either overpromising or actively making things worse for the protesters.  It's already a tough tightrope to walk, and it's going to get tougher.

So the reason I wasn't fazed by Obama's statement today is because I've been expecting it all along.  And unless the opposition has already fizzled, I expect Obama's position to get even more difficult.  I haven't actually said any of that on the blog, however, which might make my reaction today seem a little jaded.  Really, though, it wasn't: it was just the natural endpoint of a conversation I've been having for the past week outside the blog.  Now, with this post, I'm letting the blog catch up to my brain.  Finally.

Getting Incentives Right

| Tue Jun. 23, 2009 5:36 PM EDT

Martin Wolf has a bit of an odd column today.  His basic point is that financial bubbles are generally caused by too much borrowed money:

At the heart of the financial industry are highly leveraged businesses....In a highly leveraged limited liability business, shareholders will rationally take excessive risks, since they enjoy all the upside but their downside is capped: they cannot lose more than their equity stake, however much the bank loses. In contemporary banks, leverage of 30 to one is normal. Higher leverage is not rare.

....A solution seems evident: let creditors lose. Rational creditors would then charge a premium for lending to higher-risk operations, leading to lower levels of leverage. One objection is that creditors may be ill-informed about the risks being run by banks they are lending to. But there is a more forceful objection: many creditors are protected by insurance backed by governments. Such insurance is motivated by the importance of financial institutions as sources of credit, on the asset side, and suppliers of money, on the liability side. As a result, creditors have little interest in the quality of a bank’s assets or in its strategy. They appear to have lent to a bank. In reality, they have lent to the state.

So far, so good. Even rational managers and shareholders have a big incentive to take outsize advantage of cheap money if it produces many years of great returns and only occasional big losses.  Ditto for lenders — especially if, in the case of catastrophe, they can expect to be protected by central bank guarantees of various sorts.  But then the column ends with this:

The unpleasant truth is that, today, the incentive to behave in this risky way is, if anything, even bigger than it was before the crisis. [Yikes! –ed.]

Regulatory reform cannot end with incentives. But it has to start from incentives. A business that is too big to fail cannot be run in the interests of shareholders, since it is no longer part of the market. Either it must be possible to close it down or it has to be run in a different way. It is as simple — and brutal — as that.

Wolf's focus on abuse of leverage is right on target, as is his observation that regulation by itself isn't enough to stop it.  Regulators will inevitably become captured, banks will figure out ways to get around them, and politicians will do nothing to stop it since that would run the risk of hurting the economy with an election coming up.  (And there's always an election coming up.)

So what's the answer?  The academic paper that inspired the column suggests that reforming executive compensation in the financial sector is part of the answer, but Wolf himself doesn't really follow that up.  So we're not left with much.  Saying that big banks "cannot be run in the interests of shareholders" is a provocative statement, but following that up by suggesting only that they need to be "run in a different way" isn't a very provocative response.  Perhaps this column was a season finale cliffhanger and we have to wait until next week for the mind blowing conclusion?

Quote of the Day

| Tue Jun. 23, 2009 1:48 PM EDT

From Barack Obama, asked why he won't spell out the consequences of further violence in Iran right now:

"I know everybody here is on a 24-hour news cycle. I'm not. OK?"

Good for him.  Obama was noticeably tougher toward the Iranian regime in his press conference today ("The United States and the international community have been appalled and outraged by the threats, the beatings and imprisonments of the last few days"), but he remained firm in his refusal to say anything that would allow the regime to pretend that the protesters are in any way tools of Western powers:

The Iranian people are trying to have a debate about their future. Some in Iran — some in the Iranian government, in particular, are trying to avoid that debate by accusing the United States and others in the West of instigating protests over the elections.

These accusations are patently false. They're an obvious attempt to distract people from what is truly taking place within Iran's borders.

This tired strategy of using old tensions to scapegoat other countries won't work anymore in Iran. This is not about the United States or the West; this is about the people of Iran and the future that they — and only they — will choose.

This is obviously becoming a harder line to walk as events progress in Iran, and I expect it to become harder still over the next few days.  So far, though, Obama has done pretty well.

Best in Blog: 23 June 2009

| Tue Jun. 23, 2009 1:28 PM EDT

Three MoJo stories we're liking today:

1) Shock and Audit: The Hidden Defense Budget

Mother Jones dissected the defense budget so you don't have to. You thought $600 toilet seats were bad? Here's how the Pentagon really spends money. Read more.

2) China Corners the Keffiyeh Market

How did a pro-Palestine American hipster trend force the last Palestinian keffiyeh maker to shutter his business? Read more.

3) 98% of Eco Products Not Eco

A study of 4,000 "eco-friendly" consumer products found rampant greenwashing among almost all of them. Will Congress clamp down on misleading claims? Read more.

Plus: Check out the comments on Kevin's "Obama Derangement Syndrome Watch" post.