Kevin Drum - May 2010

"Los Suns" Protest AZ Immigration Law

| Wed May 5, 2010 3:53 PM EDT

The Phoenix Suns will be "Los Suns" tonight in protest against Arizona's new immigration law. But James Joyner harshes all over their protest by noting that they've done this before without needing bad laws as an excuse:

Amusingly, while this move is getting a lot of attention because of the present controversy, this isn’t anything new. The NBA has been celebrating Noche Latina the last four seasons, and at least eight teams — including the Suns — have worn Spanish variant jerseys in commemoration of that. And the Suns have apparently worn these jerseys twice previously this season without the fanfare.

So we have Los Suns, Los Mavs, Los Bulls, etc. Needless to say, though, Los Angeles has been way ahead of everyone on this front. Go Lakers!

UPDATE: Hmmm. Maybe I spoke too soon about the Lakers.

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A Scene From the War on Drugs

| Wed May 5, 2010 1:06 PM EDT

Radley Balko has posted video of the SWAT raid on a Missouri home that he wrote about last February. This is the one where the Columbia Police Department busted in, fired seven shots at the family's dogs, and ended up recovering a small amount of marijuana:

It's horrifying, but I'd urge you to watch it, and to send it to the drug warriors in your life. This is the blunt-end result of all the war imagery and militaristic rhetoric politicians have been spewing for the last 30 years — cops dressed like soldiers, barreling through the front door middle of the night, slaughtering the family pets, filling the house with bullets in the presence of children, then having the audacity to charge the parents with endangering their own kid. There are 100-150 of these raids every day in America, the vast, vast majority like this one, to serve a warrant for a consensual crime.

But they did prevent Jonathan Whitworth from smoking the pot they found in his possession. So I guess this mission was a success.

CPD Internal Affairs continues to investigate whether this was an appropriate response to the "tip" they received that started all this.

How Derivatives Lost the Game

| Wed May 5, 2010 11:40 AM EDT

Dan Drezner points out that the fight over financial regulation has gone a little oddly. Normally, interest groups manage to water down legislation over time, but in this case it's actually gotten tougher in some ways. This makes sense if the public is united in outrage and can swamp interest group power, but Dan is skeptical about that:

This is pretty surprising, because financial regulation is so friggin' arcane. Quick, what's a credit default swap? A collateralized debt obligation? Are they examples of derivatives or not? Sure, readers of this blog likely know the answers to those questions, but I guarantee you that 99% of registered voters do not know the answer. The fact that public pressure and attention is still mobilized on this issue is unusual.

I think it's tied into the one part of the story that [Noam] Scheiber failed to mention — the SEC indictment of Goldman Sachs. Whether what Goldman did or not was actually illegal is not the issue. There was a lot of reporting about what Goldman actually did — and it seems like they weren't acting like just a couple of bookies. The indictment changed the political optics of financial regulation and dramatically reduced the utility of lobbying from the financial sector.

The Goldman indictment might have something to do with this, but I'd personally give it about as much credit as Anthem's 39% insurance rate hike gets for helping pass healthcare reform: not that much. (Not zero. A little push when things are already going your way is always helpful. But in the great scheme of things, not a lot more than zero.)

I'd make a few points. First, Blanche Lincoln's surprisingly tough derivatives proposal came before the Goldman indictment. Second, 60 Minutes and other popular outlets have been banging the derivatives drum pretty hard for a while — and always with an intensely negative spin. This stuff isn't quite as arcane as it used to be. Third, the fact that it's still mostly arcane is a feature, not a bug.

That last requires a little explanation. If you propose an agency that's going to regulate consumer credit, it's entirely possible to get the citizenry riled up about it. You make some arguments about how it will make it harder to get a home loan or qualify for a credit card or something like that. People get that. If you pitch your argument right, they'll respond. Ditto for resolution authority. It's a little harder, but still, people sort of understand bankruptcy and they sort of understand the proposition that a $50 billion pool is a "bailout fund." It doesn't matter if the argument is bogus, just that it makes some kind of sense at a visceral level.

But derivatives? It's the fact that they're arcane that makes them such a great target. Think about it. It's almost impossible to explain them at all, and completely impossible to explain them in a way that makes them sound like a good thing to the average joe. The best you can do is make an argument about, say, airline companies hedging fuel prices, but even that's pretty arcane and only applies to huge corporations. The average guy just can't be convinced that there's any upside to allowing Wall Street free rein with these things. Conversely, they're really easy to demonize. If you were looking for a poster child for Wall Street tycoons ripping off ordinary folks with pure paper shuffling, derivatives would be it.

I'm not talking about substance here. Derivatives reform is important, but there are two or three things I'd rank above it. (1. Leverage. 2. Leverage. 3. Leverage) But from a pure PR perspective, the very fact that derivatives are (a) arcane and (b) solely the preserve of gigantic Wall Street firms make them a perfect target. The fact that the White House has figured this out — and that the business lobby can't figure out how to fight back against it — doesn't surprise me a bit.

Can Congress Be Trusted With Financial Regs?

| Wed May 5, 2010 10:56 AM EDT

James Pethokoukis writes today that Congress shares some of the blame for the financial crisis. His bill of particulars, taken from a paper by Ross Levine of Brown University, includes poor regulation of (a) ratings agencies, (b) credit default swaps, (c) investment banks, and (d) Fannie Mae and Freddie Mac. This has become a steady drumbeat over the past few weeks: sure, Wall Street screwed up, but federal regulation of the industry sucked too. So how can we trust these clowns to do the job right this time?

If conservatives hadn't waited until now to make this argument, I might think it was one of those brilliant Rovian strategies, going straight after your opponents' strong point and then turning it around on them. You liberals say that Congress was a slave to Wall Street interests? You're right! So there's no point in letting them pretend to regulate Wall Street yet again.

But now? This long after the regulation train has left the station, this argument sounds so dumb it barely even needs rebutting. Is the point truly to pretend that no regulation will work? Or that the current proposed regs are actually favors to Wall Street? (A few people have tried to suggest exactly that.) Or to goad Democrats into beefing up their bill so much that it has no chance of passing? Or what? The fact that Republicans and Democrats both bought into the deregulatory fervor of the past three decades doesn't mean they can't both unbuy into it if they work up the gumption. And while nothing lasts forever, a decent set of finance regs will improve things for a few decades anyway. If the point of this particular critique were truly to lobby for tighter regs, it would be great. As it is, it's just juvenile.

UPDATE: Mike Konczal has a more sophisticated take on this game of three card monte here.

Some Times Square Perspective

| Wed May 5, 2010 10:21 AM EDT

You know, I get that questioning authority is a good thing and skepticism of the system can be a virtue. But Jeez. The Times Square bomber was caught within 48 hours, placed into custody, and is providing us with tons of information. Not bad! What's more, if I remember right, pretty much everything we thought we knew about the Christmas bomber in the week after his terror attempt turned out to be wrong. I know there are elections to win and all that, but maybe this time we should all calm down just a hair and wait to piece together the entire story before deciding that everything was a complete clusterfuck?

Chart of the Day: The Party of the Rich

| Wed May 5, 2010 12:29 AM EDT

In the Weekly Standard, Christopher Caldwell adopts the populist lefty position on financial reform (break up the banks, sow their smoking ruins with salt, and if they fail again just let them die) and then wonders why Republicans are fighting this. Is it because they're the party of the rich? That's surprisingly unclear. Exit polls show that, with the exeption of the most recent election, the moderately well-off (those with $200,000+ incomes) have voted pretty reliably for Republicans for decades, and Andrew Gelman has shown that this pattern is especially pronounced in poor states. But the really rich seem to support Democrats in pretty sizeable numbers. This chart shows the pattern of political contributions in the richest zip codes in America:

Now, this isn't bulletproof evidence of who the really rich support. Apparently there isn't any. But it's pretty suggestive. And Caldwell is disgusted with the conclusion he draws:

Republicans have been paying a high price in both public opinion and political coherence to defend the prerogatives of a class that despises them. It was to cosset just these people with tax cuts that George W. Bush destroyed the balanced budget. It would seem that Republicans are either an exceptionally idealistic political party (pursuing their ideology to the point of self-destruction) or an exceptionally foolish one (convinced that anyone with a great big pile of money is their friend). There may be another explanation. To paraphrase something Clinton aide David Dreyer said many years ago, Republicans have done Lord Acton one better — they’ve been corrupted by power they don’t even have.

There's actually an interesting question here: why do Republicans support the preferred policies of the rich so reliably, when that support isn't reciprocated? I can think of a few possibilities:

  • Inertia. The rich did support Republicans in the past and old habits die hard. Although party leaders seem to understand that ever since Nixon their base has been primarily among the white working class, they still haven't really internalized what this means. So they just keep on supporting the rich.
  • Why not? Republicans appeal to the working class mainly via social policies. So even if it won't get them overwhelming support, why not get whatever support they can from the rich by supporting economic policies they like?
  • Coincidence. The GOP is the party of big business, and the interests of big business mostly coincide with the interests of the rich.
  • Bad data. Actually, the rich do support Republicans more than Democrats. The top 20 zip codes are heavily urban and Jewish, which are traditional Democratic constituencies, so this isn't good evidence of their overall habits. A better survey of the rich might show that, in fact, they support Republicans pretty heavily.
  • Something else I haven't thought of. That should cover all the remaining possibilities.

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Should Felons Be Allowed to Vote?

| Tue May 4, 2010 10:03 PM EDT

Over at The Corner, Roger Clegg writes:

The Supreme Court has asked the Obama administration for its views on whether to grant review in a case that challenges felon disenfranchisement as a violation of the Voting Rights Act. It will be interesting to see what the solicitor general does. The Left does not like it when felons are not allowed to vote, but the Justice Department in years past has defended these laws, and a partisan volte-face will, or at least should be, embarrassing.

Help me out here. Why should it be embarrassing for the Obama administration to take a different position than previous administrations? Don't presidential administrations do that all the time?

Woody Allen on God and Life

| Tue May 4, 2010 8:25 PM EDT

This is, I guess, Woody Allen's version of Pascal's wager:

I was with Billy Graham once, and he said that even if it turned out in the end that there is no God and the universe is empty, he would still have had a better life than me. I understand that. If you can delude yourself by believing that there is some kind of Santa Claus out there who is going to bail you out in the end, then it will help you get through. Even if you are proven wrong in the end, you would have had a better life.

It's from an interview with Robert Lauder, and this is actually one of the more cheerful parts.

What the Coast Thinks of BP

| Tue May 4, 2010 5:33 PM EDT

Erica Grieder has been reporting from the Gulf Coast and passes along this bit of commentary about the blowout at British Petroleum's Deepwater Horizon oil rig:

National public sentiment is running very high against the oil industry in general, and BP in particular. But the closer you get to the coast the more moderate the feeling becomes. I've talked to oilfield workers who were shocked that this happened on a BP rig, because in their experience BP is more stringent about safety measures than any other firm.

....It's not cheerleading — everyone is very clear that they want BP to take full responsibility. And feelings will change if the crisis worsens, if the joint command doesn't quickly get the leak and the spill under control, or if BP tries to shirk its responsibility now or in the years to come. To my ears, it sounds oxymoronic to describe BP as "a very responsible spiller" (Mary Landry, a rear admiral in the Coast Guard), but it's been an interesting perspective to see how differently offshore drilling and BP are perceived down here.

Of course, this isn't an unusual reaction. Loggers have a different attitude toward old growth forests and miners toward mountain top removal than outsiders do. When it's your job on the line, you have a lot more sympathy toward dangerous/polluting industries than your average urban white collar worker.

Still, it's an interesting note about BP. Just thought I'd pass it along as food for thought. The other side of the story is ably told by James Ridgeway here and Kate Sheppard here.

Public Workers Paid Less Than Private

| Tue May 4, 2010 3:40 PM EDT

A friend sent me a link to a new study that follows up on a question I asked a few weeks ago: are public sector employees paid more than comparable private sector employees? According to Keith Bender and John Heywood, who did a study for the Center for State and Local Government Excellence, the answer is no. In the chart on the right, the zero line (at the top) indicates parity. Anything below that indicates lower pay than the private sector. As you can see, pay for state employees crept up to near parity with the private sector in the late 80s, but ever since the late 90s the differential has been about -12%. If you add in the richer benefits that public sector employees get, the pay differential is about -7%.

I'm offering this as a data point only. There are loads of caveats. For starters, the authors use broad averages from the Current Population Survey and then adjust for things like education, age, gender, and so forth. However, this quite likely masks a considerable skew in the data. The very top jobs in the public sector — lawyers, doctors, executives — are paid quite a bit less than in the private sector. So if the average pay difference is -7%, it's quite possible that the majority of mid-range workers are paid more than their private sector counterparts. It would be interesting to see them do a similar comparison that excludes, say, the top 10-20% of earners.

It's also possible that this research underestimates the future value of public sector pensions, which appear to be badly underfunded right now. Data for current years may not capture this. And overall averages might not capture differences in specific job categories.

What's more, I don't know anything about Center for State and Local Government Excellence, so I don't know what kind of axe they may or may not have to grind.

Still, even with all those caveats, aggregate data is still worthwhile. What we're mainly interested in, after all, is the total payroll expense of state and local governments compared to a demographically similar private sector organization, and this data suggests that the difference is small but negative. The report also contains data for individual states, which shows, for example, that California workers are paid just slightly less than their private sector equivalents while Texas pays their workers nearly 15% less. Overall, I don't think this report settles the public-private question for all time or anything, but it's interesting data.