Kevin Drum - December 2009

A Bold Stand from the Journal

| Tue Dec. 29, 2009 12:20 PM EST

As a wise man once said, you could devote your entire life to debunking inane Wall Street Journal editorials once you let yourself get sucked into their gaping maw. But via Ezra Klein, today's editorial is a gem, not pretending to even a germ of reason or sanity:

The White House is now floating a bipartisan commission to reduce federal borrowing, and much of the political class is all for it. We only hope Republicans aren't foolish enough to fall down this trap door....Republicans should respond with their own choice: They'll agree to a deficit commission only if it takes tax increases off the table....

Yeah, I'm sure Democrats will jump at that deal. And I can't wait for the Journal's detailed fiscal plan for cutting federal spending by 30% — especially since they simultaneously seem to think that Medicare should be cut and that it should be preserved as is. Should be a crowd pleaser.

In fairness, plenty of liberals agree with the Journal in a mirror image sort of way: a commission would be nothing but a facade for Pete Peterson to gut Social Security and Medicare and probably throw in a few tax cuts for the rich for good measure. It looks like bipartisanship has as bleak a future in 2010 as it did in 2009.

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Miscellany

| Tue Dec. 29, 2009 12:20 AM EST

Three quick items:

  • Yes, the filibuster sucks, but I agree with both Ezra Klein and Bruce Bartlett that the tradition of Senate holds is even more odious. But if it's not possible even to do away with holds, I'll reiterate my suggestion that the Senate scale way, way back on the number of officials that it has to confirm. Maybe the top two officers in each executive department, appellate judges and above, and a few others of similar rank. The rest should just be straight presidential appointments.
  • Can we all, please, chill out about the failed plane bombing, chill out about Janet Napolitano's "the system worked" gaffe, and chill out about Obama remaining in Hawaii? Just. Chill. Out. We don't have to go completely cuckoo every time something like this happens. Instead, let's find out where the system failed instead of hysterically guessing about it, and then figure out what we ought to do about it.
  • For decades now, the initiative process in California has primarily been a tool of the rich and powerful, not the grassroots. Here's the latest outrage.

That is all. You may now return to Monday Night Football.

Iran's Economy

| Mon Dec. 28, 2009 1:18 PM EST

Conventional wisdom says that the Democratic Party's chances in next year's midterm election will mostly depend not on terrorism, not on healthcare, but on simple economics. If the economy is improving, they'll do OK.  If it's not, they'll get hammered.

Juan Cole suggests this dynamic may be playing out in Iran as well, where this weekend's demonstrations have grown ever bigger and more violent. Ideology may seem to be at the forefront, but the economy is probably playing a big role in the background:

Richard Spencer of the Independent reports from Dubai on the darker side of Sunday's events, as crowds went on rampages, setting fire to banks, government buildings and even a local police station....

The report of attacks on banks makes me think that there is an economic dimension to this uprising. President Mahmoud Ahmadinejad's profligate spending had provoked very high inflation last year, up to nearly 30%. Although the government maintains that inflation is now running 15%, that is still a hit that average families are taking, on top of the high prices of last year.

....Moreover, as as Robert Worth recently reported, the government has been threatening to remove subsidies from staples. I was in Egypt in January of 1977 when President Anwar El Sadat stopped subsidies under pressure from the IMF, and it threw the country into 3 days of turmoil from Aswan to Alexandria. Iranians have been upset by this talk of no more subsidies and it may have fed economic anxieties already inflamed by the high inflation (in fact, removal of subsidies is essentially a form of price inflation for consumers).

More at the link.

Modern Conservativism

| Mon Dec. 28, 2009 12:57 PM EST

Here's the last two weeks in a nutshell:

Conservative response to a guy setting his underwear on fire on an airplane: It's Obama's fault! We should declare war on Yemen! We should stop allowing Muslims on our airplanes! We need to connect the dots! We're all going to die!

Conservative response to providing healthcare to 30 million Americans: It's socialism! It's going to bankrupt America! It's Chicago thug politics! It's going to kill grandma! It's going to turn our healthcare system into an abattoir!

Conservative response to regulating the financial industry that almost destroyed America's banking system: It's Marxism! It's going to cause hyperinflation! It's Uncle Sam's jackboot on the commerce of the country! It's the end of innovation! Buy gold!

Conservative response to catastrophic climate change: It's a hoax from the liberal media. Pay no attention to it.

Feel free to add your own observations in comments.

Quote of the Day: Fiscal Conservatism

| Mon Dec. 28, 2009 12:18 PM EST

From Sen Orrin Hatch (R-Utah), on his dedication to fiscal prudence:

Six years ago, "it was standard practice not to pay for things," said Sen. Orrin Hatch, R-Utah. "We were concerned about it, because it certainly added to the deficit, no question."

Note to Hatch: It has never been "standard practice" not to pay for things. It was a short-lived innovation of the Bush/Rove White House not to pay for things. And no, you showed no serious concern about it at the time. Other than that, you're right.

No Drama Obama

| Sat Dec. 26, 2009 4:51 PM EST

Adam Nagourney yesterday:

As much as Mr. Obama presented himself as an outsider during his campaign, a lesson of this battle is that this is a president who would rather work within the system than seek to upend it. He is not the ideologue ready to stage a symbolic fight that could end in defeat; he is a former senator comfortable in dealing with the arcane rules of the Senate and prepared to accept compromise in search of a larger goal. For the most part, Democrats on Capitol Hill have stuck with him.

And Ross Douthat:

Obama baffles observers, I suspect, because he’s an ideologue and a pragmatist all at once. He’s a doctrinaire liberal who’s always willing to cut a deal and grab for half the loaf. He has the policy preferences of a progressive blogger, but the governing style of a seasoned Beltway wheeler-dealer.

....In hindsight, the most prescient sentence penned during the presidential campaign belongs to Ryan Lizza of The New Yorker. “Perhaps the greatest misconception about Barack Obama,” he wrote in July 2008, “is that he is some sort of anti-establishment revolutionary. Rather, every stage of his political career has been marked by an eagerness to accommodate himself to existing institutions rather than tear them down or replace them.”

I think the thing that surprises me is that anyone ever thought otherwise. Among low-information voters I understand the disconnect: they heard hopey-changiness, haven't really gotten it, and are disappointed. But even some very high-information voters seem to be disappointed the same way, and it's baffling. Obama's entire career has been one of low-key, pragmatic leadership. He's clearly a mainstream liberal, but during the Democratic primaries he was famously the least progressive (by a small margin) of the three major candidates on domestic issues. He did everything he could to avoid taking dangerously inflammatory stands on hot-button social issues. His advisors during the campaign were nearly all members in good standing of the center left. His nickname was "No Drama Obama," and his temperament was plainly cautious, sober, and businesslike.

This was all pretty obvious during the campaign, and everybody understood it perfectly well when Republicans went crazy and started tarring him a radical socialist and a bomb-throwing revolutionary. Remember how we mocked all that stuff? But I guess that deep down, an awful lot of people were hoping that he was just play acting during the campaign, pretending to be a solid citizen while the real Obama was plotting to turn us into Sweden.

Personally, I wish Obama would articulate the liberal agenda more full-throatedly, and I wish he'd take a few more risks and push his own caucus a little harder. I've thought that ever since the 2008 campaign. But the fact that he hasn't hardly comes as a surprise. He's as liberal a president as we've had in 40 years, but he's no starry-eyed idealist. Why would anyone ever have thought differently?

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Security Madness

| Sat Dec. 26, 2009 2:28 PM EST

You have got to be kidding me. Here's the reaction to our latest Osama wannabe's ludicrously failed terrorist plot:

According to a statement posted Saturday morning on Air Canada’s Web site, the Transportation Security Administration will severely limit the behavior of both passengers and crew during flights in United States airspace — restricting movement in the final hour of flight. Late Saturday morning, the T.S.A. had not yet included this new information on its own Web site.

“Among other things,” the statement in Air Canada’s Web site read, “during the final hour of flight customers must remain seated, will not be allowed to access carry-on baggage, or have personal belongings or other items on their laps.”

I'll refrain from further comment until TSA makes this official. Hopefully Air Canada just jumped the gun here. Because if this is true, it means our government has finally and irrevocably gone insane.

UPDATE: Plus there's this from an accompanying story:

In effect, that means passengers on flights of about 90 minutes or less will not be able to get out of their seats, since they are not allowed to move about while an airplane is climbing to its cruising altitude.

Air Canada also told its United States bound customers that they would be limited to a single carry-on item and that they would be subjected to personal and baggage searches at security check points and in the gate area. It said this would result in significant delays, canceled flights and missed connections. Air Canada said it would waive the baggage fee for the first checked bag as a result of the new policy.

Aaron Potter comments: "If this is true, So much for flying with kids." And it means the end of carry-on baggage entirely for anyone who also has a purse or a briefcase.

Apparently al-Qaeda doesn't need to bother with real terrorism anymore: just light off a firecracker on a plane and the U.S. government will react as if a major city had been leveled. Why not just ban air flight entirely and be done with it?

The Pink Pussycat

| Sat Dec. 26, 2009 1:26 PM EST

Alice Schiller, once the owner (with her husband Harry) of the Pink Pussycat nightclub on Santa Monica Boulevard, has died. This is from the LA Times obituary:

Opened in 1961, it was pink through and through, just like the inside of Schiller's house and her entire wardrobe....Schiller and her husband drove a pink Cadillac and a pink Rolls-Royce, which bore the words "Follow Us to the Pink Pussycat.

I thought you might all like to see a picture of that Rolls before it was painted pink. That's it, parked in front of our little stucco house in Orange County around 1960 or so. That's my sister standing in front of it, ever so fashionable in her yellow raingear and red boots.

Somewhere I have a picture of the Rolls being unloaded off a ship in Long Beach before my father took possession of it. As you can imagine, this purchase was a boondoggle of the highest order, the car's chief claim to fame being the fact that my brother was almost born in its back seat in 1961. But say this for it: it got everyone to St. Mary's hospital just in time for a happy ending. The next year, we sold it to the Schillers, who painted it pink and eventually installed it in front of the nightclub.

At least, that's my recollection of the story. My mother isn't home right now, so I can't swear to every detail. But that's my connection to today's news. Just thought I'd share.

Real Financial Regulation

| Sat Dec. 26, 2009 12:56 PM EST

Nicole Gelinas writes in the LA Times that the proposed new Financial Services Oversight Council wouldn't work:

Such an "omniscient" regulator could not have prevented our current crisis. Five years ago, such a regulator likely would have declared triple-A-rated mortgage-related securities safe, allowing financial firms to borrow more liberally against them than they could against seemingly riskier securities. The bankrupting losses that eventually occurred from such borrowing seemed impossible back then.

Well, she's got a point. They probably would have looked kindly on financial "innovation" back in 2004. Still, it's possible that a regulator independent from the Fed would have at least a fighting chance of not being completely captured by the banking industry and therefore applying a little bit of pushback against the swelling tide of the finance lobby. Besides, does Gelinas have a better idea?

Oh wait, she does:

Congress should instead follow the regulatory philosophy that served the nation well for 50 years after the Depression: Set consistent limits on borrowing across similar financial instruments, no matter what their perceived risks.

....In 2000, for example, the Federal Reserve counseled Congress to prohibit borrowing limits and requirements to disclose trading activity on some new financial instruments, including credit-default swaps. Regulators believed that they, and financial industry executives, had already done what today's proposed systemic risk regulator would do: identify and erase the potential for error.

What if regulators had instead allowed innovation to flourish within some reasonable rules? AIG, for example, would have had to put a consistent cash percentage down behind the $500 billion in promises — a form of borrowing — that it made through credit-default swaps. And it would have had to execute those promises on public exchanges, making them transparent.

AIG might have gone under anyway — failure is a healthy part of capitalism — but it would not have threatened to take the economy with it, necessitating a government bailout that set a dangerous precedent....Borrowing limits in the housing market would have protected the economy too. As the bubble expanded, people would not have been able to keep up with a requirement for, say, a consistent 20% down payment, thus dampening demand. And when the bubble burst, it would not have left behind so much unpaid debt.

I'd make that trade. In fact, with a few exceptions, I'd trade virtually all of the proposed financial regulations for a single set of new standards that placed clear, simple, and direct limits on financial leverage everywhere in the system. Banks, hedge funds, consumers, you name it. If it's leverage, there's a limit to it.

Anyway, it's the day after Christmas and I don't suppose anyone cares about this. But I do! And besides, Nicole Gelinas had the misfortune to have her op-ed run on Christmas Day itself, probably the single most ignored day of the year on the op-ed pages. (There are no ads for after-Christmas sales on the editorial pages, after all.) So I figured she could use a little break.

Holiday Catblogging Extravaganza

| Fri Dec. 25, 2009 12:00 PM EST

I asked for festive cats, I got festive cats.  So here they are.  Here on the front page we have the usual suspects: Domino on the left, sporting a festive Yuletide ribbon, and Inkblot on the right, hanging out under the Christmas tree waiting for Santa to deliver a case of cat food. But there are loads more cats below the fold. Just click here to see them all.