Kevin Drum - February 2011

It's Budget Day!

| Mon Feb. 14, 2011 12:28 PM EST

Today is budget day, so we're going to be hearing a lot about the budget deficit. Probably from me, too. But here's really all you need to know:

80% of the federal budget goes to Social Security, Medicare, Medicaid, the Pentagon, and interest on the national debt. So where are we trying to find cuts? The other 20%, naturally.

This is doomed to failure, and everyone knows it. But we'll continue with the kabuki show anyway.

Also this: if we simply let the Bush tax cuts expire in 2012 — all of them — and went back to the Clinton tax rates of the 90s, our medium-term deficit problem would be reduced to 3% of GDP in a stroke. That's pretty manageable. And we could do it, too: it's not as if the 90s were a hellscape of jackbooted IRS thugs confiscating all your money and driving the economy into the ditch, after all.

Beyond that, we should do something sensible about reining in the growth of Social Security and Medicare.

In other words, the things we should do are precisely the things that are completely off the table. This is called "listening to the will of the people." Welcome to America.

UPDATE: Letting the Bush tax cuts expire would reduce the deficit substantially, but not make it "nearly vanish." I've corrected the text to make it more accurate.

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The Republican Algorithm

| Mon Feb. 14, 2011 2:04 AM EST

I think Paul Krugman is uncharacteristically wrong in his analysis of why Republicans are proposing the budget cuts they are:

The answer, once you think about it, is obvious: sacrifice the future. Focus the cuts on programs whose benefits aren’t immediate; basically, eat America’s seed corn. There will be a huge price to pay, eventually — but for now, you can keep the base happy.

If you didn’t understand that logic, you might be puzzled by many items in the House G.O.P. proposal. Why cut a billion dollars from a highly successful program that provides supplemental nutrition to pregnant mothers, infants, and young children? Why cut $648 million from nuclear nonproliferation activities? (One terrorist nuke, assembled from stray ex-Soviet fissile material, can ruin your whole day.) Why cut $578 million from the I.R.S. enforcement budget? (Letting tax cheats run wild doesn’t exactly serve the cause of deficit reduction.)

I don't think you need to make up anything new and complicated to explain this. They want to cut the nutrition program because it's welfare for poor people. They want to cut the nonproliferation budget because it represents squishy liberal idealism. And they want to cut the IRS budget because rich people don't like being audited. Other parts of the GOP proposal include cuts to rail projects, the EPA, NOAA, Bill Clinton's program to put more cops on the street, the NSF, energy efficiency programs, the SEC, green building programs, clean water funding, employment training, various health programs, Head Start, community service, public broadcasting, foreign aid, rental assistance and other housing programs, FEMA, and both CDC and NHS. I'll confess that I don't quite get the last two: do Republicans think that capturing the House means we'll have fewer natural disasters and less disease? But the rest of this stuff is really straightforward: they're all programs that benefit poor people, hurt rich people, or just generally stink a little too much of liberalism.

But then, what do you expect? They're Republicans. What else would you expect them to cut?

Weekend Miscellany

| Sun Feb. 13, 2011 10:03 PM EST

Just a bit of weekend miscellany:

  • As of this writing, my Friday post about Glenn Beck has gotten 466 comments. This is — by far — the most comments I've ever gotten on a post since I moved to Mother Jones. So I dived in to see why. Answer: a Beckian true believer named Suzanne somehow discovered the post and wrote the very first comment. As near as I can tell, the entire rest of the comment thread is either directly or indirectly a response to Suzanne, not a comment on the blog post per se. There's no real moral here, just a demonstration of the power of the first mover.
     
  • The Egyptian government released Wael Ghonim from detention on February 7. Four days later Hosni Mubarak was toast. I wonder how many Arab regimes are drawing the obvious lesson from this?
     
  • Maybe Michael Hiltzik is just an old codger who doesn't know a good thing when it smacks him in the face. Maybe I am too. But the valuations of any site that can somehow pass itself off as "social networking" have gotten awfully eye-popping lately, and that sure brings back memories. Plus this: "It's not just the numbers that transport one to bygone times; it's the familiar trappings of frenzy. There are the same explanations that what's important isn't actual revenues, but eyeballs, and the lionization of venture investors who thus far have proved themselves wholly capable of shoveling the money out, not yet of shoveling it back in....Maybe one of these hot companies is the next Google. But it's more likely that these prices are insane."
     
  • I hate loyalty cards. A few days ago I was buying some books at Borders (gotta use up my gift cards before they go bust!) and dropped into a nearby Petco to buy some litter and cat food. Do you want to join our loyalty program? asked the cashier. Nope. Are you sure? You'll save mumble mumble dollars. No. Just ring me up. Thanks.

    I wasn't really paying attention, and it was only when I was halfway home that I realized he had said "nine dollars." Nine dollars? Sure enough, a pair of items that would cost about $28 even at my expensive local grocery store had set me back $35. So we've gotten to the point, at Petco at least, where you can't simply drop in casually to buy something if you happen to be in the area. Unless you're willing to sign up for their loyalty program, you're going to pay fantastically more than the ordinary retail price for stuff. This really pisses me off. And needless to say, I'll never drop into a Petco again.

Who Put Words in Keynes' Mouth?

| Sun Feb. 13, 2011 1:53 PM EST

John Maynard Keynes is famous for saying "The market can stay irrational longer than you can remain solvent." He's also famous for quipping at a dinner party to someone who criticized him for contradicting himself, "When the facts change, I change my mind. What do you do, sir?" Jason Zweig follows up:

There’s just one problem with both these quotations: No one can point to a primary source proving that Keynes ever uttered them.

In an e-mail in 2003, Keynes’ most authoritative biographer, Lord Robert Skidelsky, told investment advisor William Bernstein that he believed they were “both apocryphal.” This week I asked another renowned expert on Keynes, Donald Moggridge of the University of Toronto, if he could identify the source of either of the oft-quoted remarks. “The simple answer,” Prof. Moggridge replied by e-mail, “is there is no evidence.”

These two quotes, which really need to exist even if Keynes didn't utter them, join loads of others that apparently never got said either. Like this one and this one, for example. Zweig has offered ten dollars each to anyone who can find a primary reference for the Keynes quotes, but I'm willing to concede right now that he'll probably be able to hang on to his sawbucks. I'm more interested in something else: who made up the quotes? As a social phenomenon, that's really more intriguing. Someone, somewhere, invented these quotes, and they sounded so much like Keynes that they've been almost universally accepted ever since. Who knows? Maybe they were accepted even by Keynes himself. One of the linked quotes above is from Everett Dirksen, who was alive while he was being misquoted all over the place but just never bothered to correct the record. So this could go back a long way.

Anyway, fine: Keynes didn't say this. So who made up the story?

Those Inscrutable Chinese

| Sat Feb. 12, 2011 5:40 PM EST

James Galbraith attends a roadshow sponsored by the Peter G. Peterson Foundation and reports back on a presentation from David Walker:

Mr. Walker warned that “foreign lenders... can’t dump their debt but can curb their appetite” for new US Treasury bonds. This was an oblique reference to the yellow peril. The idea, when you think about it, is that the Chinese central bank will acquire dollars — which it does when China runs an export surplus — and then fail to convert them into Treasury bonds, thereby choosing, voluntarily, to hold dollars in cash, which earns no interest, instead of as Treasury bills, which do. Mr. Walker did not try to explain why this would appeal to the Chinese.

Good point. Anyone in the studio audience care to take a crack at this?

Friday Cat Blogging - 11 February 2011

| Fri Feb. 11, 2011 3:59 PM EST

For some reason, Inkblot has spent the past week burrowing under the quilt on our bed for his afternoon snooze. During cold weather this is pretty normal, but it's been anything but cold around here lately. It's 70 degrees right now, and has been all week. So what's up? Domino, as you can see, has the right idea, lolling about in the sunshine before she repairs to the chaise longue for a nap. She's a Southern California cat and never forgets it.

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Chart of the Day: Living With the Folks

| Fri Feb. 11, 2011 3:30 PM EST

Today's chart comes via Allison Schrager, and plots the riskiness of an economy (judged by the price of CDS coverage for its bonds) vs. the number of men aged 25-34 who are still living with their parents. The correlation is pretty striking:

It's possible, of course, that this is actually demonstrating some underlying correlation that has nothing to do with how many men live at home into their 30s. Still! It's interesting. And amenable to absolute mountains of amateur sociology. So go to it, blogosphere.

What Does the Muslim Brotherhood Want?

| Fri Feb. 11, 2011 2:58 PM EST

American conservatives have gone so far off the rails about the apocalyptic danger of the Muslim Brotherhood taking over in Egypt that it's tempting for liberals to go too far in the other direction. So when I read Robert Dreyfuss's piece about the Brotherhood today, I was all ready to criticize him for whitewashing some of the Brotherhood's less savory aspects. But he didn't. After a brief but extremely cogent summary of the Brotherhood's history, he sums up with this:

By the 1990s, despite the off-again, on-again repression by Mubarak's regime, the Brotherhood had completed what many observers say was a transformation. Step by step, its leadership renounced its violent past, engaged in politics, and tried to reinvent itself as a collection of community organizers who operated clinics and food banks, building a network of Islamic banks and companies....Nathan Brown, a political science professor at George Washington University and an expert on political Islam, is optimistic that the Brotherhood has evolved from its fundamentalist roots: "Their agenda is to make Egypt better," he told Salon recently...."They don't want to necessarily completely convert Egypt into a traditional Islamic legal system. But if the Parliament's going to pass a law, they want it to be consistent with Islamic law."

....But it's also fair to ask if Brown's interpretation is too charitable. In 2007, the Brotherhood released a draft political program that included several very troubling proposals, including the idea that Egypt's government be overseen by an unelected council of Islamic scholars who would measure the country's laws against the Koran and sharia to make sure governance would "conform to Islamic law." Since then, various Muslim Brotherhood officials have also made conflicting statements about anything from the role of women to the treatment of non-Muslim minorities.

In the end, there's no getting around the fact that the Muslim Brotherhood is, if not an anachronism, a profoundly reactionary force. Its views on marriage, the family, homosexuality, and the like are distasteful to most Western minds and many Egyptian ones. And it harbors a strong current of overt anti-Semitism, along with a penchant for conspiracy theories. Despite Egypt's drift toward a more conservative Islamic outlook since the 1970s—which paralleled similar trends across the Muslim world—the Egyptian people, especially the middle class, may in the end not be receptive to the Brotherhood's message.

The whole piece is really very good, and well worth a few minutes of your time if you want to understand a bit more about the Brotherhood than you get from the headlines — both good and bad. The truth is that it's hard to say how influential the group is likely to be in post-Mubarak Egypt, and it's also genuinely hard to know exactly what direction they'll pursue. But as Dreyfuss says, there are a couple of things we can say: "It is not Al Qaeda or the Taliban. It is a conservative, even ultra-orthodox Islamist group, but it's irresponsible to compare it to the terrorist groups and armed insurgencies that have preoccupied American foreign policy since 2001....[But] it is certain to infuse the country with a stronger strain of anti-American and anti-Israel politics....It's also likely to align Egypt more closely with other Islamist groups in the Arab world, especially Hamas."

But either way, it can hardly be ignored.

Good Spy, Bad Spy

| Fri Feb. 11, 2011 1:56 PM EST

Longtime CIA officer Frank Anderson writes today that we should continue to deny clemency to Jonathan Pollard, who was convicted of spying for Israel and sentenced to life in prison two decades ago:

The Pollard clemency pleas are partly based on the close relationship between Israel and the United States. Under this theory, spying for Israel was not serious because it was on behalf of an ally and a friendly government, rather than an enemy of America.

....The essential point is that any nation that steals American defense or intelligence secrets does serious damage to our nation. It might be our friend in many other important ways. In this, it is the enemy. Pollard's crime would not be less heinous had he committed it on behalf of Canada or Ireland. His betrayal would not be more serious had he acted for Russia or North Korea.

I basically agree with Anderson. In fact, I'd go a step further: spying for a friendly power ought to be punished at least as severely than spying for an enemy. This offends our natural instincts, bit it also makes sense. After all, there are already enormous cultural and conventional reasons that prevent most people from spying for national enemies. I mean, what are the odds that someone in the CIA actually wants to spy for Iran or North Korea?

But friends? It's pretty easy to convince yourself that maybe you should spy for, say, Israel or South Korea. After all, they're allies. And they're in dangerous parts of the world. But precisely because the incentives against spying break down a bit against friendly countries, the legal incentives need to step up. Everyone in the CIA or the military needs to know that if they pass secrets to friendly countries, they'll be treated at least as harshly as if they'd passed them to enemies.

Unfortunately, this reasoning applies to guys like Bradley Manning too. If he's convicted of handing classified documents to WikiLeaks, he should be treated pretty harshly.1 It needs to be clear that even — maybe especially — if you think you're acting altruistically, you're still going to get hammered. That's too bad for Manning, for whom I feel at least a bit of sympathy, but it's hard to see any way around it.

1This ought to go without saying, but apparently it still needs to be said: he should be sentenced harshly if he's convicted. He hasn't been yet.

Mubarak Finally Leaves

| Fri Feb. 11, 2011 1:08 PM EST

Wait. Now Mubarak is gone? Didn't he say he was staying last night? I'm so confused.

Anyway, the military brass and the former head of intelligence are now in charge, so I'm sure everything will be OK. Democracy is just around the corner.