Kevin Drum - February 2011

The Secret Weapon of the Rich: Money

| Thu Feb. 17, 2011 1:12 AM EST

I've written before about Larry Bartels' research showing that politicians basically don't care about the views of low and medium-income individuals. The non-rich simply have no impact on their voting behavior at all. But I know you want more evidence. So here it is.

The charts below come from a 2005 paper by Martin Gilens (a revised 2007 version is here). His study is based on a dataset of polling questions about public policy issues between 1981 and 2002 (raising the minimum wage, sending U.S. troops to Haiti, requiring employers to provide health insurance, allowing gays to serve in the military, etc.) in which the responses differed significantly between the rich and the poor. On the left, you can see the impact that support from low-income voters had: when 10% of them supported a position, there was about a 32% probability of that change becoming law. When 90% supported a position, there was a....33% probability. The chart on the right shows the same for median income voters. They did slightly better, but not much.

Rich voters, on the other hand, had a much better chance of getting their way, as the steep solid line in both charts shows. Why? Gilens' guess is that "the most obvious source of influence over policy that distinguishes high-income Americans is money." This sounds like a pretty good guess to me.

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No Unemployed Need Apply

| Wed Feb. 16, 2011 8:06 PM EST

Here's the latest news on the long-term unemployment front:

There's a growing trend of employers refusing to consider the unemployed for job openings, according to a number of people who testified before the U.S. Equal Employment Opportunity Commission on Wednesday. They say that employers are barring the unemployed from job openings, which is particularly unfair to older workers and African Americans because more of them are unemployed.

Several examples of discriminatory help-wanted ads were offered: a Texas electronics company said online that it would "not consider/review anyone NOT currently employed regardless of the reason"; an ad for a restaurant manager position in New Jersey said applicants must be employed; a phone manufacturer's job announcement said "No Unemployed Candidates Will Be Considered At All," according to Helen Norton, associate professor at the University of Colorado School of Law.

Obviously the solution to this problem is to reduce the federal deficit.

Waiting for 2013

| Wed Feb. 16, 2011 4:53 PM EST

It's beating a dead horse to point out that the American public, which supposedly wants federal spending slashed to the bone, wants no such thing when you ask them about cuts to actual programs. But Bruce Bartlett points out something interesting today: not only are Americans reluctant to support major cuts in actual programs, they're even more reluctant than they were 30 years ago when Ronald Reagan took office. This suggests a lesson:

Considering how little spending actually got cut in 1981, this suggests that Republicans may have a lot less political capital to play with than they imagine. It also suggests that their strategy of front-loading spending cuts in the fiscal year 2011 is very ill-conceived. They are using up all the political capital they have for cutting spending in a way that is highly unlikely to be successful and that will not yield long-term savings. By the time they get around to doing something about entitlements, they may find that budget cutting exhaustion and frustration has set in and there is no support left for big budget cuts. It may be that they have one bite at the budget-cutting apple and they are squandering it.

Parties always come to power thinking they have more political capital than they do. Reagan couldn't cut the budget much, Clinton couldn't enact healthcare, and Gingrich couldn't pass his Contract With America. Americans might throw the bums out with regularity, but that doesn't mean they've suddenly done a U-turn on their political beliefs. At most they've shifted in their seats slightly.

I'm not a huge deficit hawk, but I do think the long-term deficit is a problem that we'd do well to address. But above all else, this means tax increases and slower growth in healthcare spending, and we're plainly in no shape to do either of those things right now.

Here's my guess: the best time to do this is in 2013. The Republican Party needs to get the tea party out of its system and wait for guys like Glenn Beck to outlive their 15 minutes of fame. They need to get over the idea that another two years of lunacy will allow them to win back the White House. Barack Obama needs to win reelection without promising to extend the Bush tax cuts. And the rest of us need to let the economy recover so we're dealing with the deficit from a position of realism, not panic.

At that point, with Obama back in office and Republicans chastened, it's possible — barely — that we can come up with some kind of one-time bargain that raises taxes, cuts Social Security slightly, reins in Medicare, and makes some cuts to the defense budget. The odds aren't good, but they'll be a lot better than zero, which is what they are now. Bruce is right: this is the kind of thing where you get one big shot, and it's foolish to waste it right now.

Zinc, Glorious Zinc

| Wed Feb. 16, 2011 2:30 PM EST

I've always wondered whether zinc really helps cure colds. I was never the zinc addict that Jon Chait is, but I've used it in the past and it seemed to help. So I was happy to see yesterday that a new metastudy suggests that it really does have an effect. But there are side effects, and Aaron Carroll remains unconvinced:

Yes, there is now statistically significant evidence (whose strength is debatable) that zinc may help. But if you’re asking me if I will be taking zinc if I get a cold, the answer is no.

My problem with zinc is that the lozenges taste so terrible that I could never keep up the habit even for the few days of a cold. So I switched to the nasal spray, but then I was told that nasal zinc could kill your sense of smell. So I stopped using it. But the lozenges are really grim stuff. So now I just suffer through colds zinc free. Besides, it turns out that the better the study, the weaker the results:

An examination of only the most scientifically rigorous of the zinc studies shows it probably doesn't shorten colds, said Dr. Terence M. Davidson, the director of the UC San Diego Nasal Dysfunction Clinic. "The more rigorously scientific studies, where you took a group of people and gave half of them zinc and half a placebo and inoculated their nose with a cold virus, found there were no differences," Davidson said. "I think enough research has been done to show if there is some benefit, it's not going to be very significant."

Maybe so. But significant is in the eye of the beholder. One less day of misery might be well worth it. So tell me: how does the syrup taste? Is it as bad as the lozenges? It can't possibly be, can it?

Is the Deficit a Crisis?

| Wed Feb. 16, 2011 1:05 PM EST

OK, so why does everyone think the deficit is out of control and a threat to the existence of the republic? Good question. It's probably way too late to pull us out of the rabbit hole we've collectively dived into, but anyone reporting on this really owes it to their readers to explain the basic political dynamics at work. So why do Republicans and Democrats both think the deficit is a problem?

Answer for Republicans: They don't think the deficit is a problem. If they did, they'd favor tax increases, Pentagon cuts, and Medicare cuts, since even the most dimwitted among them knows that cutting domestic discretionary spending won't make a dent in the deficit. But they favor none of these things.

Rather, they think federal spending on liberal social programs is a problem, and yammering about the deficit is a good way to force cuts to these programs. And there's nothing wrong with this. It's good politics. Why waste a crisis, after all? But anyone reporting on this issue really needs to be honest about what's going on. Republicans want to cut social spending. The deficit is just a handy cudgel to make this happen.

Answer for Democrats: I'm actually a little stumped here. I think most Democrats understand that the short-term deficit really isn't a problem, and they also understand (I hope) that allowing the Bush tax cuts to expire and letting the economy recover will get us very close to eliminating the primary deficit (i.e., the deficit minus interest payments). If we do that, then publicly held debt as a percent of GDP stabilizes and the deficit problem becomes pretty manageable. The chart on the right from CBPP shows this graphically.

In the longer term, Medicare growth is a problem — which is just another way of saying that healthcare spending in general is a problem. This needs to be addressed, but it needs to be addressed for its own sake, not just because it affects the federal deficit.

So why have Democrats joined the deficit chorus? I'm not sure, really. I'd guess it's mainly just fear that they've been outflanked on the issue, and if they want to stay in office they have to yammer about it. But that's just a guess.

In any case, Republicans are wrong: we don't have a spending problem, we have an aging problem. As America ages, Social Security and Medicare are going to cost more, and unless you want to start killing off old people Soylent Green style there's no way to avoid this even if we do get a handle on rising healthcare costs. This in turn means we're going to need more revenue to care for the elderly. As Jon Cohn says today, "It's ridiculous to have a conversation about balancing the budget that won't even contemplate higher taxes."

A perpetually growing deficit will eventually drive up interest rates and slow economic growth, so it's something we should take seriously. But slashing social programs is exactly the opposite of taking it seriously. We need to let the Bush tax cuts expire, get out of Iraq and Afghanistan, keep working hard on reining in healthcare costs, and accept the fact that we're going to need to fund an aging population whether we like it or not. Do that, and all we'll need is modest discipline in the rest of the budget. The long-term deficit is a problem, but it's not a crisis.

The Youth Movement Cracks Up

| Wed Feb. 16, 2011 12:00 PM EST

I don't have any real comment to make about this, but the LA Times has an interesting story today about Egyptian politics in the post-Mubarak era:

The new breed of professionals who helped topple President Hosni Mubarak is watching its rebellion turn into a political struggle among the country's splintered opposition forces....The major rift in the youth movement is between the Coalition for the Jan. 25 Revolution Youth and a clique of urban professionals led by Google executive Wael Ghonim and dentist Mustafa Nagar. The two groups had shared strategies in a ransacked travel agency and under a tent during protests in Tahrir Square that began in late January. But talks with the government involving members of the latter group in the last days of Mubarak's rule angered some members of the coalition.

"The guys from the coalition didn't like it," said Nagar, who has a persistent cough after inhaling tear gas during demonstrations. "They accused us of selling out the blood of the martyrs. And now that same coalition is trying to meet and talk to anyone they can. We are split from them completely."

....The split in the youth movement began when members of Ghonim's group met with the government to protect protesters from security forces and resolve the crisis in the days before Mubarak fell. It was further aggravated when Ghonim, who was arrested Jan. 27, was released from jail 12 days later and instantly became the new face of the revolution after an emotional television interview.

Unlike a number of coalition members, Ghonim did not have a long history in the dissident camp. One coalition member referred to the Google executive as "just the support" because he posted a Facebook page that helped provide a catalyst for the demonstrations.

I don't think there's anything unusual about this. It's just normal politics. Still, it's also fairly predictable, and there's not much question that this kind of infighting gives the Egyptian military a lot more leverage over the future of the country than they'd otherwise have. And since they'd have a lot of influence even under the best of circumstances, this probably means their political role really isn't going to change much. The whole piece is worth a read.

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Deficit Fever

| Wed Feb. 16, 2011 11:14 AM EST

John Dickerson wants someone to explain a little better why deficit reduction is suddenly so important:

Politicians haven't gotten better at delivering this message to people. Why do we have to reduce the deficit? And do we have to do it quickly? How will a smaller deficit improve the life of the average citizen?

It's an assumption of the current debate that these questions have already been answered. Politicians have jumped ahead to stage two of the debate: the competition over who can do more deficit-reducing. But both parties should go back to square one: Here's why we need to do it in the first place. The party that wins the political battle will be the one that makes this case most clearly to the public, because if people buy the diagnosis they'll be more likely to buy the prescription.

Dickerson has been a reliable deficit scold recently, and a friend of mine is annoyed. "It's almost as if he's saying 'Will somebody please explain to me what these parroted lines of mine mean?' " he says.

I guess I'd be a wee bit more charitable. Presumably Dickerson himself thinks he knows why the deficit is so important, but also thinks that the good word hasn't soaked through to the common man yet. And without that, our all-important budget cutting will never have enough public support to happen.

But if that's what he thinks, I'll bet he's wrong. So here's a challenge to Dickerson: without making any phone calls or doing any Google searches, write 500 words on why deficit reduction is so important. Write that speech you think the president should give! But lock yourself in your office and do it off the top of your head. Demonstrate to us that you really do understand why deficit reduction is so critical. Ten bucks says you don't get it right.

(Hint: your answer should not contain the words hyperinflation or Greece. It should contain the word healthcare.)

Means Testing Social Security

| Wed Feb. 16, 2011 12:35 AM EST

Atrios says there's not much point in trying to save money by cutting Social Security benefits for rich people:

There's No Money In Means Testing

You just can't save any money worth the additional administrative burden by depriving a few rich people of their Social Security and Medicare benefits. There aren't that many rich people! Now, those not many rich people make a hell of a lot of money so you can raise revenue by increasing tax rates on them, but it isn't worth bothering going after their Social Security checks.

This is probably true. If you make the means testing stringent enough so it applies only to the genuinely well off, it wouldn't hit enough people to matter much. Conversely, if you make the means testing loose enough to matter, it would bite into a lot of ordinary middle class earners, and that's neither fair nor politically feasible.

Want some evidence? Well, it turns out that Social Security is already means tested: your benefit level is calculated as 90% of your first $749 in monthly pre-retirement earnings, 32% of earnings up to $4,517, and 15% of your earnings above that. This means that high-income earners get a smaller benefit as a percentage of their income than low earners do.

One way to means test even more would be to reduce the third "bend point" to, say, 10% of earnings above $4,517. This would decrease benefits for the well off without touching benefits for anyone else, and it's easy to do since the system is already built with this structure in place. In fact, this is exactly the recommendation of the Rivlin-Domenici deficit reduction report.

So how much does it save? Answer: $59 billion in 2040, which is a grand total of 1.6% of the savings in their entire Social Security plan. You could reduce the third bend point to 0% and it still wouldn't be more than a nit. And note that this starts to bite at an income of $54,000 per year, which is hardly anyone's idea of rich. Raise that limit even to upper middle class territory and you'll save even less.

So why bother? To save real money, you'd have to get way more drastic, which means not just a lower cap on benefits, but actually reducing benefits for anyone with even modest retirement savings, and that would have the unhealthy side effect of reducing incentives to save for retirement as a supplement to Social Security. I don't think anyone is up for that.

Understanding Social Security in One Easy Lesson

| Tue Feb. 15, 2011 6:23 PM EST

Over at the Economist, Erica Grieder has given up on Social Security:

Every so often I get a document from the Social Security Administration in a green-edged envelope, and I open it straight away, thinking it might be important. Instead, I find that it's just a statement of my Social Security earnings and future benefits, a concept so absurd that I immediately recognise it for fiction....If I stopped working now, this document says, I would receive a couple thousand dollars a month in benefits at whatever age it is they suggest I retire, something I obviously do not expect to ever be able to do.

I just don't get it. Why do smart people keep saying stuff like this? Medicare is a problem. But unless you believe that the United States is literally going to collapse in the near future, Social Security isn't. Period.

The weird thing about this is that Social Security isn't even hard to understand. Taxes go in, benefits go out. Unlike healthcare, which involves extremely difficult questions of technological advancement and the specter of rationing, Social Security is just arithmetic. The chart on the right tells you everything you need to know: Right now, Social Security costs about 4.5% of GDP. That's going to increase as the baby boomer generation retires, and then in 2030 it steadies out forever at around 6% of GDP.

That's it. That's the story. Our choices are equally simple. If, about ten years from now, we slowly increase payroll taxes by 1.5% of GDP, Social Security will be able to pay out its current promised benefits for the rest of the century. Conversely, if we keep payroll taxes where they are today, benefits will have to be cut to 75% of their promised level by around 2040 or so. And if we do something in the middle, then taxes will go up, say, 1% of GDP and benefits will drop to about 92% of their promised level. But one way or another, at some level between 75% and 100% of what we've promised, Social Security benefits will always be there.

This is not a Ponzi scheme. It's not unsustainable. The percentage of old people in America isn't projected to grow forever. Lifespans will not increase to infinity.1 Taxes go in, benefits go out. It's simple.

Now, Social Security is not a very generous program, so it's possible that you won't want to retire on its modest benefits. But short of some kind of financial apocalypse — in which case we've got way bigger things to worry about anyway — Social Security benefits will be there for everyone alive today. Why is it that so few people seem to get this?

1Well, sure, they might. Who knows what medical breakthroughs we'll come up with? But lifespans have been increasing at a very slow rate for many decades now, and there's nothing on the horizon that suggests this will change suddenly. If it does, we'll have to deal with it when it happens, but there's no reason to think we should plan for it now.

Your Questions Answered

| Tue Feb. 15, 2011 5:51 PM EST

Jamelle Bouie is puzzled:

By disposition, I'm not that worried about the debt. But even if I were, I have yet to hear a compelling reason for why now is the time to be hyper-concerned about the debt.

Because a Democrat is president, that's why. Any other questions?