Kevin Drum - August 2010

Credit Reports and Employers: A Story From the Trenches

| Tue Aug. 10, 2010 5:22 PM EDT

Normally I omit names when I publish email from readers. But this one comes from Michael David Smith, and as you'll see, knowing his name is an important part of the story. So, with his permission, here's his email:

I hope you'll keep hammering away at the credit reporting agencies. Several years ago my then-boss mentioned to me off-handed, "We hired you even though you have terrible credit." I was rather stunned and said, "What are you talking about? I have perfect credit, and even if I didn't, how would you know?" He then informed me that they did a background check on me before hiring me, got a report saying I had terrible credit, but decided I was their best candidate anyway. I asked to see the report they had for me, and my boss dug it out of the HR files. It listed my name (which is a very common name shared by thousands of Americans), four different social security numbers, and about two dozen different credit cards I had allegedly fallen behind on.

So I called the credit reporting agency (I think it was Experian). It took forever to actually get a person on the phone who knew who knew what he was talking about, but when I finally did, the guy said, "Oh, yeah, that happens all the time with people who have common names. Your credit got mixed up with other people who have the same name as you. There's really nothing we can do about it."

Eventually, I filled out all sorts of forms contesting all the bad credit they had attributed for me and got them to send me a clean credit report that didn't mix me up with other Michael Smiths. But it was a long, painful process.

I think this is about par for the course for credit reporting agencies. Basically, they don't really give a shit if their information is correct. It's always seemed to me that you should be able to sue them for libel if they distribute false information about you, but outside my own personal fantasyland I assume that's impossible.

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Tread Boldly

| Tue Aug. 10, 2010 4:53 PM EDT

Hot diggity. The GOP leadership has released "Tread Boldly," a guidebook for Republican members of Congress during the summer recess, and it includes a whole section called "Spending Restraint Solutions for Discussion." Finally, we'll get some details! So here they are:

Canceling unspent “stimulus” funds, saving up to $266 billion....Canceling excessive spending increases already in the pipeline....Cap Discretionary Spending....Freeze Congress’ Budget....Eliminate Unnecessary and Duplicative Federal Programs....Audit the Government for Ways to Save.

That's fairly underwhelming, no? I'll give them credit for the business about canceling unspent stimulus funds. That's actual money. But a spending cap? Attacking waste'n'fraud? Freezing the minuscule legislative budget? "Auditing" the government? These are the hoariest tropes imaginable for anyone who wants to sound tough on spending but avoid any actual, real-life spending cuts. Where's Social Security? Medicare? Medicaid? The Pentagon? Farm subsidies? Or any other actual, named program? Nowhere.

But there is support for extending the Bush tax cuts at a cost of $3.1 trillion over ten years. There's no problem being specific about that. For some reason, it's only spending they have trouble getting serious about.

(Via Hit & Run)

POSTSCRIPT: The cover is sort of....odd, too, isn't it? I guess all parties do the nostalgia thing now and again, but Ike and Churchill and Maggie and Reagan and Lech (what? no John Paul II?) and TR and Jack? Seriously? Two British prime ministers, and pride of place to two Republicans who modern party members wouldn't be caught dead endorsing?

And "Tread Boldly"? Not to get too ridiculous here, but when you think of "treading," is "boldly" really the first word that comes to mind?

Employers and Credit Scores: An Update

| Tue Aug. 10, 2010 3:32 PM EDT

A couple of weeks ago I blogged about an uptick in employers using credit scores as part of their background checks for new employees. Greg Fisher of creditscoring.com, who's no fan of credit scores, emails to say that "consumer reporting agencies all state that they do not provide credit scores for employment screening" and suggests I make a clarification.

Done! But let's dig a little deeper. According to a post on Fisher's site, "TransUnion does not provide a credit score for employment screening purposes." Another agency concurs: "ChoicePoint does not offer credit scores for purposes of employment-related background checks." Excellent. But wait. It turns out this doesn't mean that agencies don't provide credit checking services to employers. Lester S. Rosen, a lawyer and president of Employment Screening Resources, clarifies:

Even though credit reports are utilized by some employers for particular positions, a “credit score” is not a tool used for pre-employment screening. For pre-employment credit reports, the credit bureaus use a special reporting format that leaves out the credit score, along with actual credit card account numbers, and age.

Sure enough, Experian says its report "enhances traditional employment decision making tools by providing credit information which would not normally appear on an application, but may have an impact on job performance....The report includes the applicant's credit history, providing an objective overview of how financial obligations are handled over a period of time." And TransUnion touts its reports as "a completely unbiased account of a potential candidate’s financial background information....PEER traces the person’s credit history. PEER can then help you identify those applicants who are potentially financially overextended or on the brink of problems that could adversely affect their performance on the job."

So I stand corrected. Credit reporting agencies don't pass along your credit scores to prospective employers. They do pass along your entire credit history and specifically promote it as a way of weeding out problem candidates, but there's no credit score. Just your entire credit history.

Fed Meets, Does (Almost) Nothing

| Tue Aug. 10, 2010 2:43 PM EDT

The Federal Reserve met today and issued this forecast:

Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract.

That doesn't sound good. So what do they plan to do about this?

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions [...] are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.

Before he left on vacation, Scott Sumner took a guess at four possible actions the Fed might take in today's meeting, and the good news is that they avoided his "Very Bad" scenario. Instead, we got this:

Bad: The Fed does something minor. Perhaps it promises to maintain the monetary base at current levels by purchasing T-bonds as the more unconventional assets are gradually sold off. The Dow falls slightly. (Actually, people are now so discouraged that this might be viewed as good news.)

Yep, that's what the Fed did. Still: it's better than very bad! The one-sixth of you who continue to be out of work or underemployed will surely take solace in that.

Obama and the Base

| Tue Aug. 10, 2010 2:27 PM EDT

Earlier this morning, after Robert Gibbs took to The Hill to diss the "professional left" for being too whiny, I suggested that this kind of thing was inevitable. Since only 20% of the country self-IDs as liberal, Democrats have to pander to centrists and this is one way they do it. It's not pretty, but it's hardly surprising. I then went on to further annoy some fellow libs by tweeting, "Lefties used to talk about how WH could attack them in order to make its liberalism look more centrist. Doesn't seem so appealing now."

Now, this is all wildly inside baseball kind of stuff, and I'm about as far outside the ballpark as you can get and still talk about this stuff at all. So I wasn't going to defend my points any further — especially since I think Gibbs was pretty gratuitously insulting. But then I got to emailing with Matt Yglesias about this, and I figure our exchange might advance the arguments a bit. Or not. You decide:

MY: I think you're right about this in general, but not in particular. You don't do an interview with The Hill to communicate with a mass public of squeamish centrists. Talking smack about your base in an inside baseball publication just seems like a straight fuck-up to me.

KD: I agree. Gibbs is a smart enough guy not to do this, though, and I wonder what he intended? Must have been something. I don't think he just suddenly lost his temper in the middle of a sleepy interview with The Hill.

Just to be argumentative, though, maybe The Hill is a fine place to do this because Gibbs knows everyone will go berserk and it will get wider play? It's certainly safer than doing it on CNN, where it would be completely uncontainable if it went badly awry.

MY: I think they're genuinely pissed. There's a real dialogue of the deaf happening inside DC between issue advocates and the Obama administration. I sympathize with a lot of the White House's analytical view of the situation, but they really need to consider the emotional state of organizations that pulled out all the stops to get Obama elected and are now facing the reality that he's not going to deliver cap and trade or labor law reform or immigration reform. You need to be able to tell people "if you go do this and that, then the following policy results you want will happen." Right now they're not offering any credible path forward.

KD: You're more plugged into this stuff than I am, but I think I only half agree. Even activists are well aware that political realities interfere in ways that a president can't always control. So I don't think they demand results on every single issue (though certainly some do). My sense, though, is that Obama doesn't even give them the rhetoric they want, even in private. If they felt like he was really on their side, but stymied by the Senate, maybe they'd cut him more slack. For some reason, though, he doesn't seem willing to do this.

MY: I think we're basically agreeing. I think people do generally understand the idea of objective political constraints. But activists want political leaders to articulate some kind of theory of how to get from Point A to Point B. I don't think the White House is offering that.

So yeah: everyone agrees there are political constraints, but Obama seems unwilling — even in private — to do a little easy pandering to liberal interest groups. I don't get it. As Joan McCarter twittered to me, "They need base in a midterm. Pro lefties are also door-knockers, phoners, donors." This is obviously something that Team Obama is keenly aware of, and their unwillingness to do much to fire up the base is indeed puzzling.

Who's To Blame For the Pension Crisis?

| Tue Aug. 10, 2010 2:04 PM EDT

So who's really to blame for the underfunding crisis in state and local pensions? Dean Baker, no fan of his fellow economists, says they need to man up and shoulder the responsibility:

The real culprits of the underfunded pension funds are the country's leading economists. Economists from across the political spectrum told the country that we could assume that stocks would provide an average return of 10 percent a year even when the stock bubble was at its peak in 2000. This consensus included the center-left economists in the Clinton administration as well conservative economists. It was treated as absolute gospel in all the plans to privatize Social Security. Both the Congressional Budget Office and the Social Security Administration assumed that the market would give an average of 10 percent nominal returns in their analysis of Social Security privatization proposals.

Given the consensus within the economics profession, who could blame the managers of state and local pension funds for using the same assumption? After all, were they supposed to question the assessments of economists teaching at Harvard and M.I.T.?

And, it does make a difference. If the economists' projections had been right, $1 billion held in the stock market in 2000 would be worth about $2.5 billion today. Instead, it is worth about $1 billion. In short, if the economists had been right, most of the troubled pension funds would be just fine today.

I don't think this gets politicians off the hook entirely, but it's a good point. Economists largely missed the dotcom bust, missed the housing bust, and were wildly wrong about the long-term growth of the bond and equity markets. Maybe we should make up the pension shortfall with a tax on economists?

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Should Liberals Compromise on Birthright Citizenship?

| Tue Aug. 10, 2010 1:08 PM EDT

Will Wilkinson argues that if liberals gave in on birthright citizenship, it might take some of the steam out of the anti-immigration movement:

I believe the international evidence supports the idea that ending pure jus soli [that's Latin for "birthright citizenship" –ed] softens opposition to immigration. Even if nativists and xenophobes shift to another argument with undiminished energy, the evidence suggests that worries about the fairness and distributive consequences of birthright citizenship harbored by more moderate voters would weaken, shifting the position of the median voter toward greater openness to immigration.

At first, this seems persuasive. But international evidence aside, how about U.S. evidence? I remember back in the thumbsucking years of the blogosphere we had a similar argument about gun control. The argument went like this: gun nuts are all afraid that the government is going to come and take away their guns. Sure, this is crazy, but it's what they think. So what if the Supreme Court ruled that gun ownership is an individual right under the Second Amendment? That would assure the gun folks that no one could take away their guns and might make them more amenable to some of the softer forms of firearm regulation that liberals support.

I hardly need to tell you that this didn't happen. In fact, I'm not sure you can find any example of that happening among either liberals or conservatives. Roe v. Wade didn't settle the abortion issue, the passage of Medicare didn't settle the healthcare issue, Reagan's tax cuts didn't satisfy the supply siders, etc. etc. Likewise, I don't think the end of birthright citizenship would slow down the immigration brawl even slightly, especially since I've long been convinced that the real hot button issue is cultural resentment and language angst, not anchor babies or low paid field workers. Beyond that, though, Tim Lee offers a positive case for birthright citizenship here and Jason Kuznicki agrees with him here:

I’d give the nod to Tim, because I don’t imagine that anti-immigration activists are going to be bought off so easily. Instead, a permanent, multi-generational class of non-citizens would just be fuel for the fire. Twenty years on, immigration foes will look at all the second- and third-generation non-citizens we’ve created, and the mass arrests and deportations will really begin in earnest. Not a problem I’d want to create.

Worse, by then the anti- side may even have a point. A permanently alienated underclass isn’t going to be so loyal or so invested in the American polity. They wouldn’t have any reason or need to be. The genius of birthright citizenship is that it changes the incentives for everyone involved. It says to all populations: You’ve got roughly twenty years to figure out how to live with one another, as citizens. Now get to work.

One of the things that always astonishes me about immigration hardliners is their blindness to the fact that, partly by chance and partly by design, the U.S. has been one of the most successful countries in history at assimilating immigrants. Jason is right: birthright citizenship, regardless of whether or not the framers of the 14th Amendment intended it to operate the way it does, works. The American version of immigration works. Mexican immigrants have kids who speak English, Muslim immigrants build mosques and hate Osama bin Laden, and Vietnamese immigrants settle down in the middle of Orange County and build prosperous businesses. Sure, it's messy. Life is messy. But what country does it better? I'll take our version over the European version any day.

I'm all in favor of immigration reform that makes it easier to get in legally and harder to get in illegally. That includes crackdowns on employers who knowingly employ undocumented workers and support for E-Verify, imperfect though it is. Beyond that, though, count me out. We need to regulate, not demonize, and a large, permanent class of resentful noncitizens is something nobody should be pining for.

Pandering to the Center

| Tue Aug. 10, 2010 11:39 AM EDT

The liberal twittersphere is all atwitter over the latest outburst against liberal critics from White House press secretary Robert Gibbs:

“I hear these people saying he’s like George Bush. Those people ought to be drug tested,” Gibbs said. “I mean, it’s crazy.” The press secretary dismissed the “professional left” in terms very similar to those used by their opponents on the ideological right, saying, “They will be satisfied when we have Canadian healthcare and we’ve eliminated the Pentagon. That’s not reality.”

....Gibbs said the professional left is not representative of the progressives who organized, campaigned, raised money and ultimately voted for Obama. Progressives, Gibbs said, are the liberals outside of Washington “in America,” and they are grateful for what Obama has accomplished in a shattered economy with uniform Republican opposition and a short amount of time.

Once again, we see the fundamental difference between left and right when it comes to practical politics. A third of the country self-identifies as conservative, so it makes sense for Republicans to pander to them at all times. Conversely, only about 20% of the country self-identifies as liberal, so Democrats are better off pandering to the center — and one way to do that is to make sure that centrists understand in no uncertain terms that Democrats aren't part of the fringe left.

It's a bitch. And lefties are right to be pissed off at Gibbs for talking like this. But it's not likely to change until the number of self-identified liberals goes up a lot. So far, there's not really any sign of that happening.

The Ground Zero Gay Bar

| Tue Aug. 10, 2010 11:02 AM EDT

Conservative humorist/provocateur Greg Gutfeld has announced that he intends to build a gay bar next door to the planned Islamic center on Manhattan's Park Place that's become known as the Ground Zero mosque. "This is not a joke," he says mockingly. "I’ve already spoken to a number of investors, who have pledged their support in this bipartisan bid for understanding and tolerance." James Joyner calls it "an inspired idea" and Megan McArdle says:

I am hoping that at least one person will attempt to explain why we should support the mosque near Ground Zero, but not the gay bar next to the mosque near Ground Zero. I would find that very entertaining.

Well, it's a big country. There's bound to be someone who will give it a try. But I doubt there are going to be any serious takers, and I'm willing to bet that mosques and churches all over Manhattan have long since reconciled themselves to being within a stone's throw of all sorts of establishments they consider less than savory. They'll take this in stride.

At the same time, we're grownups around here, right? We do understand the difference between something that genuinely isn't meant as a provocation and something that is, don't we? The law might not take that into account, but as ordinary human beings surely we can. The campaign against the Park Place mosque has been a demagogic nightmare from the start, and I think it's safe to say that a few years from now the conservative movement is not going to look back at this as one of their finest hours. After all, we're supposed to be fighting violent Islamic radicals like Osama bin Laden, not helping their cause.

UPDATE: From comments:

actor212: There's already a bar next door. I think it's called "Dakota North" or something like that. Anyway, my recollection is, it's not exactly the, um, most hetero place in TriBeCa anyways. Hope Gutfeld's got a marketing budget.

TrustNoOne: Dakota Roadhouse. Total dive. My co-workers love the place.

And from one of Andrew Sullivan's readers:

You are aware that there is already a New York Dolls strip club on 55 Murray Street (which will be just around the corner from the Cordoba Institute)? So haven’t we already crossed the bridge of allowing Ground Zero ‘gentlemens’ entertainment? And if we’re OK with adult entertainment of the heterosexual variety we can’t then reject entertainment of the homosexual nature in the same area.

OK then. Glad we got that settled.

Data Point of the Day

| Tue Aug. 10, 2010 1:17 AM EDT

From McClatchy's Warren Strobel, reporting on the State Department's 2009 Country Reports on Terrorism:

There were just 25 U.S. noncombatant fatalities from terrorism worldwide. (The US government definition of terrorism excludes attacks on U.S. military personnel). While we don't have the figures at hand, undoubtedly more American citizens died overseas from traffic accidents or intestinal illnesses than from terrorism.

Make of that what you will.