Kevin Drum - September 2010

Wage Equality State By State

| Tue Sep. 28, 2010 12:20 PM EDT

According to the Census Bureau, median household income fell by $1,500 last year, a drop of 2.9%. However, if you're lucky enough to still be working full time, your earnings went up slightly, and women's earnings went up more than men's:

For full-time, year-round workers, the 2009 ACS median earnings for women were 78.2 percent of men’s earnings [...] and the ratio of women’s earnings to men’s earnings was up from 77.7 percent....At 88.2 percent, the District of Columbia was among the highest ratios of women’s to men’s earnings. Wyoming, at 65.5 percent, was among the lowest.

The map below shows how each state fares when it comes to gender equality in wages.

Advertise on MotherJones.com

Obama's Defense

| Tue Sep. 28, 2010 11:11 AM EDT

Jann Wenner reports in Rolling Stone today that after his recent interview with President Obama was over, Obama returned briefly to the Oval Office and tacked on a coda, speaking "with intensity and passion, repeatedly stabbing the air with his finger":

It is inexcusable for any Democrat or progressive right now to stand on the sidelines in this midterm election. There may be complaints about us not having gotten certain things done, not fast enough, making certain legislative compromises. But right now, we've got a choice between a Republican Party that has moved to the right of George Bush and is looking to lock in the same policies that got us into these disasters in the first place, versus an administration that, with some admitted warts, has been the most successful administration in a generation in moving progressive agendas forward.

....If we want the kind of country that respects civil rights and civil liberties, we'd better fight in this election. And right now, we are getting outspent eight to one by these 527s that the Roberts court says can spend with impunity without disclosing where their money's coming from. In every single one of these congressional districts, you are seeing these independent organizations outspend political parties and the candidates by, as I said, factors of four to one, five to one, eight to one, 10 to one.

We have to get folks off the sidelines. People need to shake off this lethargy, people need to buck up. Bringing about change is hard — that's what I said during the campaign. It has been hard, and we've got some lumps to show for it. But if people now want to take their ball and go home, that tells me folks weren't serious in the first place.

If you're serious, now's exactly the time that people have to step up.

Well, that's not going to be popular with Obama's lefty critics, though obviously you'd expect a mushy sellout like me to agree with him. And I do! But I'd also make a distinction. If you're, say, Glenn Greenwald, I wouldn't expect you to buy Obama's defense at all. All of us have multiple interests, but if your primary concern is with civil liberties and the national security state, then the problem isn't that Obama hasn't done enough, it's that his policies have been actively damaging. There's just no reason why you should be especially excited about either his administration or the continuation of the Democratic Party in power.

On the other hand, if your critique is the broader and more common one — that Obama has moved in the right direction but has been too quick to compromise and hasn't accomplished enough — then I think you should take his defense of his record way, way more seriously. It's all too easy, like Velma Hart, to convince yourself that he could have waved a magic wand and gotten a bigger stimulus and a better healthcare bill and stronger financial regulation and a historic climate bill. But honestly, you have to buy into some pretty implausible political realities to believe that (Olympia Snowe would have voted for a trillion-dollar stimulus, there were Republican votes for a climate bill if only it had been a bigger priority, healthcare reform could have been passed via reconciliation, Harry Reid could have unilaterally ended the filibuster, etc.). The votes just weren't there and the president's leverage over centrist Dems and recalcitrant Republicans just wasn't very strong. Maybe he could have done better, but the evidence says that, at best, he could have done only a smidge better.

And the alternative? Well, if the prospect of ripping apart healthcare reform, shutting down the government, deep sixing START, slashing social spending, and reliving the glory days of investigations over Christmas card lists isn't enough to get you motivated, I guess I'm not sure what is. I wish I got more warm and fuzzies from Obama too, and I wish, like Mike Tomasky, that his "fetish of not kowtowing to public opinion" were a little less ostentatious. But letting Darrell Issa take over the House Committee on Oversight and Government Reform doesn't seem like a very good way of getting that message across.

OK then. I think I'll go donate a hundred bucks to someone. Who do you think it should be?

Everything Old is New Again

| Tue Sep. 28, 2010 9:00 AM EDT

So, how about that whole tea party movement, eh? Quite the contemporary phenomenon, isn't it? After all, they mostly seem to be mad about newly skyrocketing deficits, a recently passed healthcare bill, an unprecedented bank bailout, and a huge new stimulus bill enacted last year. But no. That's really not it at all:

Too many observers mistakenly react to the tea party as if it's brand new, an organic and spontaneous response to something unique in the current political climate. But it's not. It's not a response to the recession or to health care reform or to some kind of spectacular new liberal overreach. It's what happens whenever a Democrat takes over the White House. When FDR was in office in the 1930s, conservative zealotry coalesced in the Liberty League. When JFK won the presidency in the '60s, the John Birch Society flourished. When Bill Clinton ended the Reagan Revolution in the '90s, talk radio erupted with the conspiracy theories of the Arkansas Project. And today, with Barack Obama in the Oval Office, it's the tea party's turn.

....The growth of the tea party movement isn't really due to the recession (in fact, polling evidence shows that tea partiers are generally better off and less affected by the recession than the population at large). It's not because Obama is black (white Democratic presidents got largely the same treatment). And it's not because Obama bailed out General Motors (so did George W. Bush). It's simpler. Ever since the 1930s, something very much like the tea party movement has fluoresced every time a Democrat wins the presidency, and the nature of the fluorescence always follows many of the same broad contours: a reverence for the Constitution, a supposedly spontaneous uprising of formerly nonpolitical middle-class activists, a preoccupation with socialism and the expanding tyranny of big government, a bitterness toward an underclass viewed as unwilling to work, and a weakness for outlandish conspiracy theories.

That's me in the latest issue of the magazine. But don't despair: it turns out there is one thing new about the tea parties after all. But you'll have to click the link and read to the end of the story to find out what it is. Enjoy.

The Power of Fox

| Tue Sep. 28, 2010 12:30 AM EDT

Paul Waldman argues today that although the left has made some progress catching up to the right's media infrastructure, it hasn't closed the gap yet. That's especially true in one key area:

Todd Gitlin, professor of journalism at Columbia University, says the key is Fox News....On the right, he says, "it's Fox that makes the difference." While MSNBC's evening schedule features three liberal hosts (Olbermann, Maddow, and Ed Schultz), it doesn't have the same around-the-clock consistency of both ideology and story selection that Fox does.

Fox does more than amplify the conservative message; it builds momentum for a story by hammering it over and over for days or weeks until the mainstream media finally feels compelled to discuss it. While Maddow may take an interest in a particular story other media are ignoring, she won't be backed up by six separate MSNBC shows doing a dozen segments a day on her new pet topic. But Fox routinely takes that all-hands-on-deck approach. Recently Media Matters counted 95 separate segments on the New Black Panther Party voter-intimidation case — a contrived story conservatives did their best to trump up — in a period of two weeks on Fox. This kind of relentlessness doesn't work every time, but it works often enough. Eventually, many other news outlets covered the voter-intimidation story.

Yep. In most areas the left is at least close. The right has Drudge, we have the Huffington Post and TPM. The right has Rush, we have NPR. The right has the Wall Street Journal, we have the New York Times. The right has the Heritage Foundation, we have CAP. All of these comparisons are imprecise in one way or another (NPR isn't an anti-Rush, Heritage is bigger than CAP but the left boasts lots of center-left think tanks, the WSJ's editorial page is far more aggressive than the NYT's, the right has nothing to compete with Daily Kos or Jon Stewart, etc.) but they're at least in the same ballpark.

But nothing we have comes even close to the power of Fox. It is unique. MSNBC is so far behind in the agenda-setting arena that it's hardly even playing the same game. So far, the mainstream media simply hasn't figured out how to deal with Fox, and there's no hint that they're getting any closer.

Why Income Matters

| Mon Sep. 27, 2010 9:10 PM EDT

I'm a little bored at the moment. How about another post on income inequality to liven things up? That should bring the page views pouring in, shouldn't it?

I'm going to start by reporting on Will Wilkinson's emotional state: he's sad. He's been trying to explain the idea that there can be different inflation rates for different groups of people, but it's a complicated concept and hard to get across. However, he thinks it's an important part of the inequality argument, and that's the part I want to address.

So here's the simple version. Suppose that rich people tend to consume lots of Porsches and tins of Beluga caviar, while poor people tend to consume lots of Chevrolets and hot dogs. Now suppose that over the past decade the price of Porsches and caviar has gone up 20% while the price of Chevrolets and hot dogs has stayed the same.

Got that? Now suppose you read that the incomes of the poor had been flat during the aughts while the incomes of the rich had gone up 20%. You would be outraged. The rich are getting richer while the poor are stagnating! Inequality is rising! When will it ever stop?

And yet....rich people are consuming the exact same number of BMWs and tins of caviar as they did ten years ago and poor people are consuming the exact same number of Chevrolets and hot dogs. Looking at income is misleading. Both groups are doing about the same.

Now, measuring inflation is hard enough already, and the measurement problems associated with trying to figure out separate inflation rates for rich and poor are convoluted enough to make grown econometricians cry. What's more, you can't just assume that everyone is buying the same stuff today that they bought in the past. Maybe purchasing patterns have changed over time in response to different growth rates in wages. It's a tough nut to crack.

In theory, though, it's a legitimate topic of research if you're interested in understanding the lived experience of different groups. You also need to consider government transfers, tax rates, household compositions, number of hours worked, and lots of other things. It's a fertile field of study.

As it happens, though, it's not the topic I'm usually interested in. The topic that's my normal preoccupation is understanding how the private economy works. That is, how does the private economy reward various groups of people? How has this changed over time? Why has it changed over time? Is it healthy? Can it last?

This second question is purely one of income and wealth distribution. I just want to know how money flows to different classes of people. Because while it's reasonable to say that a particular industry can be a growth driver during some particular period — electricity in the early 20th century, cars during the middle, and computers later on, for example — it's not really reasonable to say that a particular income class is a growth driver. Does anyone really think that 30 years ago rich people suddenly became more responsible for economic growth than the poor or the middle class?

I don't, and the comparative international evidence doesn't suggest it either. Rather, I think the rich in America have simply managed to reengineer our political and economic institutions to suppress middle class income, thus producing a vast pool of money that flows in their direction. As a result, their share of national income becomes ever more swollen. And this is horribly corrosive. I believe pretty strongly that a modern mixed economy can remain healthy only if prosperity is broadly shared, economic values are widely regarded as fair, and the middle class is becoming steadily wealthier. If that stops happening over an extended period of time it spells trouble on a whole bunch of fronts. The middle class becomes alienated and discouraged. The rich wall themselves off from the rest of us. The political process becomes increasingly co-opted. Boom and bust cycles become ever more pronounced.

You can mask this, of course. Technological improvements can make life better even with a stagnant income. Globalization can make low-end consumer goods seemingly cheaper. The rich can loan money to the middle class — for a while. Government programs can redistribute wealth a bit.

But those are just band-aids. The real long-term problem is that the fruits of economic growth are being increasingly funneled to a small group of the super rich in the first place. This just isn't sustainable without becoming a banana republic. Eventually, if we want a prosperous society, the private economy needs to distribute economic growth reasonably equitably in the first place.

Plus there's this: money is money. Even if stagnant incomes can produce growing consumption for a while, it comes at the cost of other things money can buy: leisure, retirement, savings cushions, etc. Rising incomes for the middle class would allow them more of everything that money can buy, not just more consumer goods.

Bottom line (so to speak): how people live their lives is an important topic. But it's not the only topic. How the private economy distributes wealth and income is important too. And on that score, all the signs point to an ever-widening gulf between rich and poor — an unhealthy, unsustainable gulf. We can't just shrug our shoulders and accept it.

Tax Cut Update

| Mon Sep. 27, 2010 3:05 PM EDT

Bloomberg reports the latest on the middle class tax cuts:

Congressional Democrats and a top White House official said Congress will extend soon-to-expire tax cuts for low- and middle-income Americans after the Nov. 2 election. Republicans said the delay and the threat of higher taxes for top earners will hurt the economy.

Illinois Senator Richard Durbin said Democrats will come together to extend Bush-era tax cuts for the first $250,000 of a married couple’s income, including lawmakers who also want to keep the lower rates for high-earning Americans.

We'll see. I still don't see how this would be anything other than an election-year plus if they did it now, but I guess I'm not as smart as the Blue Dogs.

Advertise on MotherJones.com

On Not Fixing the Economy

| Mon Sep. 27, 2010 1:30 PM EDT

Here's another take on the structural vs. cyclic unemployment issue that I should have mentioned earlier. But better late than never! Here's the nickel summary: a recent IMF report suggested that about 1%-1.75% of our current unemployment is structural. So right off the bat, it means that most of our unemployment problem right now is cyclic: people just aren't buying enough stuff. It's a solvable problem.

But it turns out the structural problem is even smaller than that. Most people, when they talk about structural unemployment, are thinking of skill mismatches. So, for example, the construction industry is in a slump and lots of plumbers and bricklayers are out of work. Meanwhile, the healthcare industry is booming, but they need nurses and caretakers and they can't find any. Or, more generally, our economy needs lots of educated workers and we just aren't graduating enough people from college to meet the demand.

But that, it turns out, accounts for only about a third of structural unemployment. In other words, about half a percentage point, a drop in the ocean compared to our current 10% unemployment rate. The rest of our structural unemployment is caused by home foreclosures. Mike Konzcal explains:

Foreclosures are closely linked with what Ezra Klein calls the anti-stimulus, and what Bruce Bartlett summarizes as: “When the history of the current crisis is written, much of the blame will be placed on the sharp fiscal contraction of state and local governments…I think economists will view this as a preventable error equivalent to the Fed’s passive shrinkage of the money supply in the early 1930s.”

....We can, with one page, adjust the bankruptcy rules to allow lien-stripping of mortgages. There’s all kinds of clever plans coming out every month — here’s yet another voxeu plan — for how to monetize and share the potential upsides as well as arguing over who would carry this out and how, but it all comes back to a lien-stripping (“cramdown”) mechanism.

And the banks hate this. It didn’t even get 50 votes, much less the 60 you would need, in the Senate. This battle is what caused Dick Durbin to say “the banks own the place” about the relationship between financial sector and the Senate. Second-liens could be written-down overnight, but that would cause bondholders and owners of financial assets to take a hit. So that’s not going to happen either.

The evidence is overwhelming on multiple fronts. Only a tiny part — 0.5% — of our unemployment is caused by skill mismatches. The rest is caused by foreclosures and lack of consumer demand. We could reduce the foreclosure problem a variety of ways, but all of them would hurt banks and so we haven't pursued any of them. Instead we have only the hapless HAMP program. Likewise, we could stimulate consumer demand, but we didn't do that either. The federal stimulus program combined with state budget cuts provided a net government stimulus of about zero.

There's a lot we could do to reduce unemployment. We've simply chosen not to do it. Congress and the president have chosen not to seriously address either foreclosures or fiscal stimulus, and the Fed has chosen not to seriously pursue monetary loosening. It's as if a heavy rain were flooding your house and you just decided not to bother putting out sandbags or turning on the pump in your basement. Instead you gave your kids a bucket and told them to bail. And then, when your house was three feet underwater, you shrugged and said you'd done everything you could. But hey — at least Wall Street is happy. That's something.

Would More Reform Have Been More Popular?

| Mon Sep. 27, 2010 12:28 PM EDT

Atrios today:

A frustrating thing is that the administration doesn't say, "we'd like to do this but we got the best we can do," instead they say "what we did was awesome." The result is that they don't even come across as advocates for the more liberal (and quite often the more popular) position.

I share this frustration. Still, every incumbent politician in history faced with an election has regaled voters with the awesomeness of their accomplishments. When Ug was running for reelection as clan chief in 50,000 BC, he bragged about discovering fire and carving some great new wheels. He didn't mention the forest he burned down or the fact that his wheel split in two after one trip to the creek. It's not really reasonable to expect anything different during election season.

Second, Atrios links to a Dave Dayen post that links to a report that says, "A new AP poll finds that Americans who think the law should have done more outnumber those who think the government should stay out of health care by 2-to-1." And the poll does say that. However, it doesn't say what "done more" means, and the actual numbers suggest that a more liberal law wouldn't have been any more popular than what we got. Here are the basic results from the AP poll: 30% favor the healthcare reform law, 40% oppose, and 30% aren't sure. Then they asked the 70% who were opposers and not surers a second question:

So 23% of that 70% thought the law didn't do enough. That's 16%. Add that to the 30% who favor the law and you get 46%.

That leaves 54% who oppose all or most of the law. So you're still at 54%-46% opposed, and this is the best case since it's possible that making the law more liberal might also have turned some of the favorers into opposers. Of course, you can argue that this is still slightly better than 40%-30% opposed, but it's a pretty iffy thing. What's more, only 39% said they agreed with the Drum/Atrios/Dayen view that our system required a "great deal" or "a lot" of change compared to what we had before healthcare reform passed. Unfortunately, there's really not much evidence that making the law more liberal would have had a big impact on public opinion one way or the other.

No Baggage, No Refund

| Mon Sep. 27, 2010 11:55 AM EDT

Gotta love this. Since airlines now routinely charge large fees for checked baggage, it makes sense that the fee should be refunded if your checked baggage doesn't successfully get to your destination with you. Airlines, of course, are outraged at the idea:

In comments filed with the federal agency last week, the [Air Transport Assn.] said each airline should have the choice of offering a refund, depending on competition in the marketplace....The airline group also said it opposed the refund idea because a government mandate like this would only raise fares for everyone, including people who don't check bags. Finally, the association said a refund won't work because the requirement for "timely delivered" bags is a "subjective standard" and would "not account for varying conditions."

Varying conditions indeed. It's one thing if your flight is late due to weather or mechanical problems or whatnot. But if your flight makes it to your destination but your bags don't? What's the excuse other than airline incompetence? And why should I pay $25 a bag for that?

Feel free to take this kvetching with a grain of salt. I'm annoyed because Delta Airlines managed to trash yet another piece of my luggage yesterday. Considering that Marian and I don't travel more than a few times a year, it's remarkable how quickly our luggage falls apart these days. Is it crappy luggage or is it airline abuse? I guess I'll never be able to prove it one way or the other, will I?

Quote of the Day: No Solutions Please, We're Republicans

| Mon Sep. 27, 2010 11:12 AM EDT

From John Boehner, responding to Chris Wallace's complaint that the Republican Pledge to America doesn't contain any proposals to cut entitlement programs:

When you start down that path, you just invite all kind of problems. I know. I’ve been there....Let’s not get to the potential solutions. Let’s make sure Americans understand how big the problem is. Then we can talk about possible solutions and then work ourselves into those solutions that are doable.

Boehner is being a smart pol. Actually telling the American public what the Republican Party wants to do after it's in office would indeed invite all kinds of problems. Namely that Americans would all hate it and start voting against Republicans. So I think we can safely predict that they'll continue to be resolute in their unwillingness to fess up to the "potential solutions" they have in mind. They want to leave that as a surprise.