Kevin Drum - October 2010

Government Spending

| Mon Oct. 18, 2010 9:42 AM PDT

Has government spending been skyrocketing ever since Comrade Obama took office? Karl Smith brings the data, and I overlay a red line in order to provide some added value:

In other words, government expenditures have grown about as fast for the past two years as they did during the Bush administration's final term. All the supposed tea party angst over spending and deficits is based on precisely nothing. Federal expenditures are about the same as they've always has been, while revenue has gone down and transfer payments have gone up because of the recession. We have been adding to the deficit, but it's because of the recession, not because spending has spiraled out of control.

So what should we do? Increasing spending quickly is hard, and in any case politically impossible at the moment. A payroll tax holiday is a popular choice for getting money into the hands of consumers quickly, but Karl has another idea:

Another option is a radical increase in the standard deduction. I believe in bold yet, simple measures and so I don’t see a problem with increasing it by a factor of ten. This accomplishes several goals.

First, it gets money into the hands of consumers. Its our helicopter drop.

Second, it avoids any debate later over whether this should be the new tax structure. No one is going to suggest that a standard deduction of 100K should last forever.

Now, doesn’t this run afoul of the permanent income hypothesis? If its temporary then people will save it, no? I am not so sure that the PIH holds in a recession like this. Unless we think that the massive phase shift we got in retail sales is because people suddenly downgraded their entire future income stream by 10% there is a scramble for liquidity going on here. This is precisely what we will help undo.

Interesting! I don't know if anyone has suggested this before, but it's the first time I've heard it. I'm also not sure if it's better or worse than a payroll tax holiday. Probably a bit worse, I think, since it wouldn't be as progressive and wouldn't get much money into the hands of the poor. If it were more politically palatable, however, I could live with it.

But I don't suppose it is. Republicans, after all, don't really believe in the recession. They only believe in reductions on top marginal tax rates — aka tax cuts for the rich — and this certainly doesn't accomplish that. So they'll just go on pretending that it's merely uncertainty over Obamacare among heartland small business owners that's responsible for the weak economy, not deleveraging or foreclosures or disinflation or weak consumer demand. And so those small business owners will go on suffering.

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Mobs in China

| Mon Oct. 18, 2010 8:20 AM PDT

From China's Foreign Ministry spokesman, displaying just how troubled they are by a weekend of violent anti-Japanese riots:

It is understandable that some people expressed their outrage against the recent erroneous words and deeds on the Japanese side. Patriotism should be expressed rationally and in line with law.

It's good to see that the Chinese authorities have suddenly become so tolerant of free speech and free assembly rights, isn't it?

Bailouts, Deficits, and Spending, Oh My!

| Sun Oct. 17, 2010 9:55 PM PDT

Ross Douthat says today that the tea partiers' main concerns really are "bailouts, deficits and spending," but liberals refuse to take them at their word and accept this. So we keep coming up with one weird theory after another that "explains the tea parties—and then explains them away." One of those weird theories is mine: Namely that this kind of extreme conservative eruption is just what happens whenever a Democrat takes office. It's similar to FDR's Liberty Leaguers, the John Birch Society in the 60s, and the Arkansas Project gang during the Clinton years. Ross responds:

These parallels are real. But there’s a crucial difference. The Birchers only had a crackpot message; they never found a mainstream one. The Tea Party marries fringe concerns (repeal the 17th Amendment!) to a timely, responsible-seeming message about spending and deficits. Which is why, for now at least, it’s winning over independents in a way that movements like the Birchers rarely did.

Now, I actually agree with this, up to a point. One of the points I made in my tea party piece was that, unlike previous eruptions, tea partiers have all but taken over the Republican Party. So it's bigger, broader, and more mainstream than the previous movements. But the reason I don't really buy Ross's defense of the tea party movement's concern with spending and deficits comes in his very next paragraph, where he takes on a fourth and final liberal theory:

THE TEA PARTIERS ARE HYPOCRITES. That is, they say they’re for small government, but they don’t want anyone to touch their Social Security and Medicare. This is by far the most persuasive liberal storyline. Poll after poll suggests that Tea Partiers are ambivalent about trimming entitlements, even though that’s the spending that will ultimately send either deficits or taxes through the roof.

On the other hand, some Tea Party-backed candidates have been refreshingly courageous on this front — whether it’s Rand Paul telling Fox News that he’d support higher deductibles for seniors, or Buck apologizing to Michael Bennet, his Senate opponent in Colorado, for Republican demagoguery on Medicare.

So the jury is still out. If Tea Party standard-bearers end up being as hypocritical on entitlements as most American politicians, then this liberal narrative, at least, will have been vindicated.

But for the sake of the country’s finances, liberals should hope that the Tea Party proves their most convincing story wrong.

Sure, the jury is still out. But on this one, I'm willing to put my money where my mouth is. After all, Rand Paul has been running away from his Medicare heresy for weeks, while Republicans and conservative interest groups have been blanketing the nation with ads attacking Democrats for passing a health care reform bill that cuts Medicare spending. Given all that, Ken Buck is a pretty lonely figure sticking to his tea party guns on the subject.

Now, it's true that a divided government is almost certain to spend less than one controlled by a single party. Beyond that, though, there's little evidence that extreme conservatives are any more concerned about spending now than they've ever been, and over the past 30 years they've never been concerned about spending. They didn't cut it under Reagan, they didn't cut it under Bush Sr., and when they finally controlled the government completely under Bush Jr., they didn't cut it then either. Hell, Social Security privatization never got anywhere even within the Republican caucus despite the fact that it was sold relentlessly and dishonestly as a free lunch. Actual cuts in spending were never on the radar.

The tea partiers are angry not over spending, but because a Democrat is in the White House. Rick Santelli's rant, which kicked off the whole movement, occurred one month after Obama took office. That was before the auto bailout, before health care reform, before financial reform, before the Iraq drawdown, before cap-and-trade, and before extension of the Bush tax cuts was even on the horizon. The only thing that had happened at that point was the stimulus bill, but even as big as that was, everyone knew it was a one-time shot, not a permanent change in spending levels.

Really, there's just no evidence at all to suggest that tea partiers are any more upset about the level of spending and deficits than they ever have been. Rather, they're upset because the spending is currently being done by a Democrat. As soon as Republicans are doing it, they won't really care anymore.

And yes, that's too bad for the country's finances. So I hope I'm just being too cynical here. But what are the odds?

Life in a Bubble

| Sun Oct. 17, 2010 9:06 PM PDT

The modern, tea party-inflected conservative movement is based on a few core principles. Global warming is a hoax. Income inequality hasn't been growing. Tax cuts don't increase the deficit. America has the best healthcare in the world. Evolution is a myth. The economy is weak because of regulatory uncertainty. Barack Obama is a socialist.

I'm trying to think of another successful political movement in history based on so many objectively fantastical beliefs. Not really coming up with any, though certainly there have been individual doozies here and there. Commenters?

From the Annals of Non-Stories, Part Infinity

| Sun Oct. 17, 2010 8:47 PM PDT

The Washington Post writes today about the recent ruckus over Campbell Soup's introduction of a line of halal soups in Canada. Here's their explanation of how it started:

Blogger Pamela Geller began calling for a boycott....

Stop. Just stop. Even if we agree on nothing else, can't we agree never again to pursue a story that begins with those words? Especially one that has produced only a Facebook page with 3,500 friends — about as many as my cat could get if I set up a fan page for him — and, according to Campbell, hasn't had the slightest actual effect on sales? Come on, people.

Sarah P. Comes to Town

| Sat Oct. 16, 2010 6:34 PM PDT

I'm not quite sure why I had to go to the New York Times to read this, but apparently Sarah Palin headlined a Republican Party rally a few miles up the street from me today, and neither one of our top Republican candidates wanted to be seen with her:

The two Republicans at the top of the California ticket — Meg Whitman, the candidate for governor, and Carly Fiorina, the candidate for Senate — skipped the event, both claiming prior commitments. That said, Ms. Palin is a decidedly unpopular figure in the state, particularly with independent voters, and Republicans said it was probably not a good idea for Ms. Whitman or Ms. Fiorina to be seen at a campaign rally with her this close to Election Day.

The Orange County Register adds a bit of detail: "Fiorina did not attend, instead stumping Saturday in San Diego with Sen. John McCain, which was widely seen as a snub because of Palin's poor standing in the Golden State." That's rough. Palin endorsed Fiorina in the primary against genuine tea party hero Chuck DeVore (my assemblyman!), but even here in deep blue Orange County Fiorina is embarrassed to be seen with her. She'd rather hang with John McCain.

As for the rally itself, Register reporter Jeff Overly tells us this:

Sarah Palin brought her bold brand of folksiness and ferocity to Orange County on Saturday, telling a throng of admirers that Republican success on Election Day is their only hope of "saving our republic as we know it."

....The crowd — overwhelmingly white and middle aged or older — was heavily clad in patriotic attire, including April Gentry, a Huntington Beach resident who sported a Liberty Bell shirt.

Good times.

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Friday Cat Blogging - 15 October 2010

| Fri Oct. 15, 2010 12:07 PM PDT

Back in the day, both Inkblot and Domino used to stroll around on top of the fence between our house and our neighbors. The only way they could get up, though, was to jump onto the air conditioning unit first and then jump from there to the fence. That all ended a couple of years ago when we got a new air conditioner, which was too high and too rounded for them to get to. The days of fence walking were over.

Until now! But I'm stumped about what's going on. For about the last week or two they've been roaming along the fence again. Our first thought was that they were going into our neighbor's yard and jumping up from there, but Domino never goes over there. The air conditioning unit hasn't changed, and I'm pretty sure it's just too high for them to jump on. They always appear from the southeast corner, but there's nothing there that would help them make the jump. So what's going on?

One of these days I'll be outside and catch them in the act, and when I do I'll report back. In the meantime, here they are patrolling the fence. Don't you feel safer already?

Better Than a Radar Detector

| Fri Oct. 15, 2010 11:37 AM PDT

In the "news you can use" category, a study by Quality Planning, a San Francisco firm that services the auto insurance industry, provides us with a list of the cars most and least likely to get you a ticket. Here are the lists:

Why is the Toyota Camry the 2nd most ticketed model? That's a stumper. The rest make a little bit of sense, though the numbers seem surprisingly high. Why would a Mercedes SL get ticketed at a wildly higher rate than, say, a Corvette or a Porsche? As for the "cautious" list, Quality Planning, after noting eight of the top ten were either an SUV or a minivan, guesses that "carrying passengers, and possibly younger passengers in car seats, makes a noticeable difference in how one drives." Maybe so. Complete list here.

Is Gridlock Good?

| Fri Oct. 15, 2010 10:06 AM PDT

Bruce Bartlett celebrates divided government:

Too bad we didn’t have more gridlock in 2001 through 2006, when Democrats retook the House and Senate; it might have saved the country from two unnecessary wars, a lot of dead servicemen and women, a vast amount of spending that the country couldn’t afford, and the intentional destruction of the government’s revenue-raising capacity so that a debt crisis has become almost certain in the not-too-distant future.

Hard to argue with that! But I'm not so sure about this:

Democrats had the bad luck to retake complete control right at the beginning of the second greatest economic crisis in our history. Unfortunately, they played their cards badly. They didn’t have the guts to push a fiscal stimulus plan as large as their economic advisers said was necessary, then they immediately stopped talking about the economy and unemployment, turning their attention instead to health care reform, energy and the environment, and a host of other issues.

I think President Obama and Democrats in Congress are being punished less for economic conditions beyond their control than a perception that they didn’t care enough about the Number One problem affecting the country — slow growth and high unemployment. If they had put aside the rest of their agenda and focused like a laser on restoring the economy to health, they would be in far better shape politically, even if actual economic conditions were no better today.

The premise behind this is that Obama and the Democrats could have done a lot more to improve the economy. But I'm not convinced of that. A bigger stimulus? Sure, that would have helped, but even if they had been gutsier, political pressure wouldn't have allowed them to pass a $2 trillion bill. It would have been more like $900 billion, or maybe $1 trillion at best. That would have helped, but it's nowhere near big enough to have made a dramatic difference. Unemployment would still be sky high.

The only other thing I can think of that the administration screwed up seriously is mortgage reform. Again, though, that would have been politically difficult even if they had played all their cards perfectly. Like it or not, the American public hates the idea of seeing their neighbors get bailed out from stupid mortgages. It makes them feel like saps: we scrimped and saved and bought a house we could afford and we're getting nothing. Joe and Betty down the street lived the high life, took out a NINJA loan they knew was way more than they could afford, and now they're getting a taxpayer-funded bailout and living easy. That's not a vote getter.

I think Bruce way overestimates the value of perception. Sure, a better communications strategy might have helped. Getting healthcare done faster might have helped. Beyond that, though, people are mostly reacting to actual pain, and there's surprisingly little Obama could have done about that. A gigantic stimulus and more aggressive action from the Fed might have done the trick, but Republicans and centrist Dems flatly wouldn't have allowed the former and the president has no leverage over the latter. Failing that, balance sheet recessions just take a long time to work through. There's not a lot Obama could have done to change that.

The New Normal

| Fri Oct. 15, 2010 9:29 AM PDT

I didn't see last night's debate between Harry Reid and Sharron Angle, but the consensus seems to be that both speakers were terrible. However, Angle may have benefited from galactically low expectations. "Angle repeatedly found herself in verbal cul-de-sacs which she only escaped by returning to well-rehearsed talking points," said Politico's Jonathan Martin, "all the while blurring over some of her controversial statements or ignoring questions about them altogether." And the Las Vegas Sun's Jon Ralston more or less agreed: "Angle won because she looked relatively credible, appearing not to be the Wicked Witch of the West."

So I guess that's where we are. Freakish candidates are now held to such low standards that all they have to do is surprise us by not sounding like they belong in a locked mental ward. Welcome to 2010.