Kevin Drum - August 2010

Who You Calling Racist?

| Mon Aug. 30, 2010 11:19 AM PDT

Is the Tea Party movement fundamentally bigoted? Ditto for modern Republicanism, which increasingly takes its cues from the tea partiers. Bob Somerby has been unhappy with sweeping liberal charges of racism against the entire movement for some time, and today, responding to a Digby post about Glenn Beck's rally this weekend, he says so again:

Obviously, it wasn’t an all-white audience, but it felt good to say so (or something). Most people weren’t in lawn chairs, but that conveys an image....That said, we were most struck by Digby’s focus on skin color, a mocking focus which then extended into her readers’ comments. (Along with mocking comments about the age and clothing of the people who attended Beck’s event, including some first-hand observations.)....The people at the event were pink skinned; they are also “dumb as dirt,” we were told in an earlier post. Sorry, but this is the type of language adopted by haters worldwide, language which will be aimed at hundreds of thousands or millions of folk at a time.

Calling broad swathes of the electorate dumb and bigoted is probably not a great vote-getting strategy. But is it true? Here is Christopher Hitchens for the defense:

One crucial element of the American subconscious is about to become salient and explicit and highly volatile. It is the realization that white America is within thinkable distance of a moment when it will no longer be the majority.

....This summer [] has been the perfect register of the new anxiety, beginning with the fracas over Arizona's immigration law, gaining in intensity with the proposal by some Republicans to amend the 14th Amendment so as to de-naturalize "anchor babies," cresting with the continuing row over the so-called "Ground Zero" mosque, and culminating, at least symbolically, with a quasi-educated Mormon broadcaster calling for a Christian religious revival from the steps of the Lincoln Memorial.

What is the right way to talk about this? I think Bob has a point: calling people stupid racists just isn't very bright. For the most part it probably isn't true, and even to the extent it is, it's bad electoral politics to harp on it. Calling an individual person racist for some particular action is fine if it's justified. Ditto for specific groups with overtly racist agendas. But entire movements? Probably not.

On the other hand, can we talk? You'd have to literally be blind not to notice that the Fox/Rush/Drudge axis has been pushing racial hot buttons with abandon all summer. There's all the stuff Hitchens mentions, and you can add to that the Shirley Sherrod affair, the continuing salience of the birther conspiracy theories, the New Black Panthers, and Beck's obsession with Barack Obama's supposed sympathy with "liberation theology." Are we supposed to simply pretend that it's just a coincidence that virtually every week brings another new faux controversy that just happens to appeal to the widespread, inchoate fear of a non-white country that Hitchens writes about?

For what it's worth, I think this is a genuinely hard question. I don't feel like putting my head in the sand and pretending that the leaders of the conservative movement don't know exactly what they're doing. On the other hand, like Bob, I'm not really on board with dismissing half the country as bozos and racists either.

So how do you thread this needle? How do you talk honestly about all the racially charged paranoia oozing out from conservative leaders without also implicating half the country as willing racists? I'm not sure.

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A Liberal Version of Social Security Private Accounts

| Mon Aug. 30, 2010 10:21 AM PDT

Andrew Biggs, a conservative who served on George W. Bush's Social Security commission, has gotten some attention for writing a piece in National Review today explaining that privatization is no cure-all for Social Security's problems:

Personal accounts are a valid choice, and one I’ve supported in the past and continue to support. But accounts aren’t exclusive to tax increases or benefit cuts; they don’t, as I’ll explain, reduce the need for these other choices. One problem for the Bush administration’s reform drive in 2005 was that many congressional Republicans had bought into the idea that accounts reduce or eliminate the need for tax increases or benefit cuts. Finding out they don’t may have taken some wind out of their sails. Because of this, combined with some pretty shameless demagoguery from the left, Bush’s reform ideas didn’t even come up for a vote.

Shameless demagoguery? Hold on a second. The left was indeed opposed to Bush's plan, but a lot of the opposition was based on the fact that it was sold as a costless panacea, exactly the problem that Biggs himself identifies. My own position was (and is) that Social Security should simply be left alone for the time being, but that there are also some legitimate reasons to bite the bullet and shore up its financial position now — and if we do, "there's nothing wrong with private accounts in theory as long as they're properly accounted for, tightly regulated, and honestly funded."

Don't believe it? Click the link and my proposal for Social Security reform with private accounts is right there. Would liberals accept this if it were presented honestly? I don't know, because no one has ever tried it that way. But they might. The problem is that "honestly" almost unavoidably includes some tax increases, and that kind of honesty just isn't acceptable to current Republican dogma. So we're stuck. There's the dishonest approach, which Democrats won't accept because it's dishonest, and there's the honest approach, which Republicans won't accept because it's honest. It's hard to see the middle ground here.

Meg's Millions

| Mon Aug. 30, 2010 9:27 AM PDT

Ed Kilgore writes that eBay zillionaire Meg Whitman, currently running for governor of California, can present herself to voters as a moderate without suffering the wrath of the state's famously rabid Republican right wing:

Whitman has an advantage over most Republicans in choosing her general election strategy in this year of conservative vengeance against moderation: her virtually limitless money, which will bankroll not only her own campaign, but the get-out-the-vote efforts crucial to the entire GOP ticket. This has put something of a damper on right-wing demands on the former eBay exec at the Republican confab.

....Uniquely in the Republican politics of 2010, Meg Whitman has the freedom to swing towards the center if she wishes, so long as she keeps her checkbook open and meets the easy test of being more orthodox than Arnold Schwarzenegger. Conservatives may grouse and pine for a mighty warrior to smite the anchor babies and the tree-huggers and the abortionists of the Golden State, but they are signed on to eMeg’s wild money-fueled ride, wherever her cold-blooded pollsters take them.

That's true. But Meg has another advantage too: the virtual invisibility so far of her Democratic opponent. Here's longtime state watcher George Skelton:

There was a blond sitting at a Lake Tahoe waterfront bar recently who had Jerry Brown's problem nailed. "Millions of Democrats are waiting for a reason to vote for Jerry Brown and he isn't giving them one," she said, interrupting the tortured analyses spewing from me and some other political junkies.

The woman didn't want to be identified by name. But, OK, she's my wife. And she's usually right about these things, largely because she has a normal life outside politics and punditry.

I'd amend her assessment to include not only Democrats but also independents and moderate Republicans. They're all waiting for the Democratic candidate to get a move on and finally tell them why he'd be a better governor than Republican political novice Meg Whitman.

This is the damnedest campaign I've seen in a long time. Granted, Labor Day isn't until next week, and Brown simply doesn't have the kind of money that Whitman does. But so far I've barely heard a peep out of him, and the peeps I have heard have been nothing more than the most soporific kinds of generalities. It's almost as if he's decided he's too tired to bother campaigning at all, and that's really not the image a 72-year-old career politician wants to send out. I sure hope there's some kind of deep strategy here that I'm not privy to. Whitman is a deeply cynical campaigner, but she has enough money to keep most of the public from seeing that. If Brown doesn't start beating her up soon, it's going to be too late.

Financial Journalism

| Mon Aug. 30, 2010 9:05 AM PDT

Ryan Avent on the role of financial journalists:

There is a growing sense of despair among some economic writers that policymakers will not do much more to bolster the flagging global recovery. And critics who note the limits of policy intervention have a bit of a point—not all of the shortfall in demand and employment can be fixed by government intervention. But much of it can be and should be. And if it isn't, that's not because we lack the ability to conceive of helpful policies. It's because policymakers are unwilling to do what they should be doing.

It's not the job of the economics journalist to take that as a given and declare that America will have to muddle through. It's their job to correctly identify the problem, and name the names of those causing it.

By "economic writers," I assume Ryan is talking mostly about columnists and pundits here. And he's right that it does, in fact, look as though political realities will prevent any serious additional government intervention to stimulate the economy. Those political realities include White House advisors who seem unsure what to do, a president who's unwilling to speak up forthrightly about the mess we're in, and a Republican Party that's either deep in the ditch of 19th century economic principles or else figures its best chance to regain power is to make sure the economy stays in the tank. Or both. It's hard to say without being able to read minds.

But while columnists certainly have a responsibility to explain political realities to their readers, they have an even stronger responsibility to explain the economic realities as they see them. If they legitimately think there's nothing more that can be done, fine. But if they don't, they shouldn't use politics as a cover for throwing up their hands. The federal government can't wave a magic wand and make everything OK, but there are still plenty of things left in its armory. We don't have to accept 8-10% unemployment for the next four years if we don't want to.

What Should Obama Do?

| Sun Aug. 29, 2010 9:25 PM PDT

Paul Krugman writes today that if Republicans win control of Congress in November, they're going to party like it's 1994:

So what will happen if, as expected, Republicans win control of the House? We already know part of the answer: Politico reports that they’re gearing up for a repeat performance of the 1990s, with a “wave of committee investigations” — several of them over supposed scandals that we already know are completely phony. We can expect the G.O.P. to play chicken over the federal budget, too; I’d put even odds on a 1995-type government shutdown sometime over the next couple of years.

....If I were President Obama, I’d be doing all I could to head off this prospect, offering some major new initiatives on the economic front in particular, if only to shake up the political dynamic. But my guess is that the president will continue to play it safe, all the way into catastrophe.

Consider this an open thread regarding Krugman's final paragraph. What could Obama do to help galvanize his base? Or shake up the political dynamic? Anything? Or is it all about the economy and Democrats are just doomed this year? What advice do you have for the White House?

Did Uncle Sam Cause the Housing Bubble?

| Sun Aug. 29, 2010 1:11 PM PDT

Matt Steinglass is arguing with his "Hayek-inflected" colleague W.W. about the origins and causes of the housing bubble. Roughly speaking, the two sides take the following positions:

(a) Federal government policies played a strong role in promoting the housing bubble.

(b) No, it was primarily the excesses of the private sector that powered the housing bubble.

Just to be clear: by position (a) I don't mean the kind of childish Fox News dimwittery that blames everything on the CRA and Fannie Mae. I mean the grown-up critique that more generally blames federal encouragement of homeownership, Fed monetary policy, federal tax policy, and various kinds of federal regulation of the financial industry. What's interesting here is that these two positions can collapse into each other pretty quickly. Let's rephrase them like this:

(a) Government regulations encouraged the private sector to lever up and make lots of bad loans in the housing sector.

(b) The financial industry used its enormous influence to lobby for deregulatory legislation, which allowed the private sector to lever up and make lots of bad loans in the housing sector.

Both of these statements are more or less accurate. And of course, deregulation is merely shorthand for a different set of regulations and policies, so our two positions can collapse even further if we like:

(a) Changes in government policy encouraged home buyers to borrow too much and encouraged the financial industry to lever up and make too many bad loans.

(b) Changes in government policy encouraged home buyers to borrow too much and encouraged the financial industry to lever up and make too many bad loans.

The difference here becomes more one of inflection than anything else. If the federal government created policies that allowed the financial sector to behave recklessly, whose fault was this? The government qua government? Or was it a specific and remediable failure of government caused by its capture by the financial industry? There's a sense in which it doesn't matter: government policy is government policy, and if federal regulations were too lax, that means the government was at fault.

But in another sense, it makes all the difference in the world. If we use government in its traditional civics class sense, where policy changes are driven by politicians of different parties responding to different swathes of public opinion, that leads us to one set of possible fixes. But if we use government in the sense of a political institution that primarily responds to lobbying by the rich and powerful — which is my preferred sense — that leads us to quite a different set of possible fixes. In both cases, it's quite accurate to say that "the government" played a big role in the problem, but they could hardly be more different in the kinds of solutions they suggest. The problem, then, is that when someone says this you have to listen more to the accent in which they talk than to the words themselves, and that can be pretty tricky. Caveat emptor.

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Customer Service Blues

| Sun Aug. 29, 2010 10:18 AM PDT

Keith Humphreys says that dealing with the DMV is one of the most common ways that Americans interact with their government, and the fact that DMV performance is generally horrible makes people hate the entire enterprise of representative democracy. "DMVs undermine our faith that the public sector can do anything right or that it even cares if it does," he writes, "and that undermines a basis for a democratic society." Even granted that Keith was having a bad day (at the DMV, in case that's not clear), Mark Kleiman has a question:

If poor DMV performance threatens democracy, does the equally unhelpful attitude and operational design I’ve encountered in dealing with cable companies, power companies, health insurance companies, credit card companies, and USAir and United Airlines threaten capitalism?

Excellent question! Here's my best guess at an answer. People complain about customer service from big, faceless corporations all the time. But when they do, they complain about a specific corporation: "Time-Warner sucks," "I hate Verizon," "I'm never flying Delta again," etc. In their minds, these are separate companies that have performed badly, but they don't necessarily reflect badly on the entire enterprise of capitalism. Besides, in many of these cases there's at least theoretically the possibility of taking your business elsewhere.

In the case of governments, people don't distinguish as well. If they have run-ins with the IRS (federal government), the DMV (state government), the zoning commission (city government), their trash pickup (county government), and the municipal water company (an independent agency), these are all "the gummint." And, of course, in all these cases there's not even a theoretical chance of dealing with anyone else. If you need a business license, the only place you can get it is the county clerk, and if their hours happen to be 9-5 on weekdays and they require you to show up in person and wait in a long line — well, that's what you have to do.

But it's still a bit of a quandary. If I had to guess, I'd say that the average joe actually gets more grief from dealing with big corporations (cell phone provider, cable company, airlines, etc.) than from all levels of government combined. Most of us, after all, don't interact with the government all that much aside from mailing them checks now and again. What's more, there are institutional reasons that explain lousy customer service in both cases — though, ironically, they're mirror images: lack of competition in the case of government (so they don't have a lot of incentive to improve) and too much competition in the case of corporations (which forces them to cut service to the bone in order to stay price competitive on their main products).

So which is worse? My mother was complaining last night about the LA Times' inability to deliver her paper correctly. "How long has this been happening?" I asked. "About fifty years." And recently it got even worse because they've installed a new payment system that's shot full of bugs, leading to missed deliveries and bad billing. But then there's my sister, who owns a condo and has spent the last several months fighting the County of Los Angeles, which recently decided to update its property records and determined that her garage (which is attached to the main building, not a separate structure) didn't belong to her anymore and auctioned it off. That was after she'd called several times and was assured it was just a mistake and not to worry about it.1 So now her association has had to hire a lawyer of its own to straighten this out.

Which is worse? My sister's problem is certainly more severe, though it will eventually get cleared up. My mother's is merely annoying, but chances are her service from the Times will stay terrible forever. Take your pick.

1Quick hint for life improvement: whenever anyone tells you something is just a mistake and "not to worry about it," start worrying. This is almost a certain sign that you should immediately panic and start burning up the telephone wires demanding a resolution in writing at the earliest possible time.

Quote of the Day: Glenn Beck, Scholar

| Sat Aug. 28, 2010 10:07 AM PDT

From Dick Armey, PhD University of Oklahoma, former economics professor at the University of North Texas, and former Republican majority leader in the House of Representatives:

One of the things that we see as we look at Glenn Beck's work that's been fascinating to me, is we see a more true and accurate history of the United States, and we see it documented at levels of rigor that, in fact, one would expect out of Ph.D. dissertations — it is serious, scholarly work....[Liberal critics] don’t have to argue with Glenn Beck. They have to argue with his documentation and they can’t match that level of rigor.

Somebody just shoot me now.

Friday Cat Blogging - 27 August 2010

| Fri Aug. 27, 2010 12:07 PM PDT

Today we have twin cats. In fact, until I put these side by side, I didn't quite realize just how identical they were. And yes, for the nerd watchers among you, these are lids to comic book boxes. They are, apparently, much preferred as cat snoozing spots than the actual boxes themselves. And with that, I'm off to lunch. Have a good weekend, all.

The Tale of Fannie and Freddie

| Fri Aug. 27, 2010 12:02 PM PDT

Karl Smith has read the just-released Conservator’s Report on Fannie and Freddie and has a detailed post summarizing it. His conclusion:

The wave of housing price increases was kicked off by changes in private label securitization. These changes left Fannie and Freddie with a smaller market share and lower absolute level of securitizations. Fannie and Freddie attempted to adjust their basic business practices to stay competitive in bubble markets and among aggressive borrowers.

These adjustment left Fannie and Freddie exposed to a large decline in housing prices. This is exactly what happened and Fannie and Freddie reaped enormous losses because of their exposure.

Had Fannie and Freddie stuck to their traditional role of guaranteeing low value traditional loans rather than trying to stay competitive in bubble areas their losses would have been substantially less.

In short, attempting to subsidize the American dream for low and moderate income families may be a fundamentally bad policy. However, it does not appear to be either the origin of the housing bubble or the source of Fannie and Freddie’s trouble.

Read the whole thing for the full story. Overall, it really does seem like the right take to me. Fannie and Freddie obviously made huge mistakes that are going to cost the taxpayers a boatload of money, but the evidence just doesn't support the idea that they helped provoke the housing bubble. They were followers, not leaders. It was Wall Street that lit the fuse, not Fannie and Freddie.