Kevin Drum - March 2011

Countervailing Powers

| Wed Mar. 30, 2011 12:19 PM EDT

David Leonhardt on Fed policy:

Whenever officials at the Federal Reserve confront a big decision, they have to weigh two competing risks. Are they doing too much to speed up economic growth and touching off inflation? Or are they doing too little and allowing unemployment to stay high?

It’s clear which way the Fed has erred recently. It has done too little....Why is this happening? Above all, blame our unbalanced approach to monetary policy.

One group of Fed officials and watchers worries constantly about the prospect of rising inflation, no matter what the economy is doing. Some of them are haunted by the inflation of the 1970s and worry it may return at any time. Others spend much of their time with bank executives or big investors, who generally have more to lose from high inflation than from high unemployment.

There is no equivalent group — at least not one as influential — that obsesses over unemployment.

Hmmm. A big, powerful, influential group that obsesses over unemployment. Sounds like a great idea. But I wonder what kind of group that could possibly be? Some kind of organization of workers, I suppose. Too bad there's nothing like that around.

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Supreme Court: Withholding Evidence Now Officially OK

| Wed Mar. 30, 2011 12:06 PM EDT

Today I have the unfortunate job of following up on the case of John Thompson, who was sent to death row in 1985 after a New Orleans DA deliberately withheld evidence showing that Thompson's blood type didn't match a previous crime he'd been convicted of, and also deliberately withheld various other pieces of evidence that exonerated Thompson of the murder he was charged with. After the murder charges were eventually tossed out, a court awarded him $14 million in civil damages, but on Tuesday the Supreme Court overturned the award:

In rejecting the judgment, Justice Thomas described the case as a "single incident" in which mistakes were made. He said Thompson did not prove a pattern of similar violations that would justify holding the city's government liable for the wrongdoing. Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Anthony M. Kennedy and Samuel A. Alito Jr. joined to form the majority.

There were at least four other prosecutors who knew about the blood test, as well as a number of other cases like this one in New Orleans through the years. Nonetheless, Clarence Thomas figures this was just a single bad apple. Move along folks, nothing to see here.

Quote of the Day: "With Notably Rare Exceptions...."

| Wed Mar. 30, 2011 11:24 AM EDT

From Alan Greenspan:

Today’s competitive markets, whether we seek to recognise it or not, are driven by an international version of Adam Smith’s “invisible hand” that is unredeemably opaque. With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.

Henry Farrell comments:

It’s best not to interpret this as an empirical claim, but a carefully-thought-out bid for Internet immortality. It has the sublime combination of supreme self-confidence and utter cluelessness of previously successful memes such as “I am aware of all Internet traditions” and the “argument that has never been made in such detail or with such care,” but with added Greenspanny goodness. I tried to think of useful variations on the way in to work this morning — “With notably rare exceptions, Russian Roulette is a fun, safe game for all the family to play,” and “With notably rare exceptions, (the Third Punic War for example), the Carthaginian war machine was extremely successful,” but none do proper justice to the magnificence of the original. But then, that’s why we have commenters.

Quite so. But what makes this even worse than it seems (if that's possible) is that 2008 is hardly the only notable exception to global economic stability since the globalization and deregulation of finance began in earnest three decades ago. While they're playing Henry's game, commenters might also want to spare a few moments to recall some of the other slightly lesser catastrophes that Greenspan rather blithely passed over.

Should Mitch Daniels Run?

| Tue Mar. 29, 2011 7:41 PM EDT

Joe Klein is unhappy:

This is my 10th presidential campaign, Lord help me. I have never before seen such a bunch of vile, desperate-to-please, shameless, embarrassing losers coagulated under a single party's banner. They are the most compelling argument I've seen against American exceptionalism.

....There are those who say, cynically, if this is the dim-witted freak show the Republicans want to present in 2012, so be it. I disagree. One of them could get elected. You never know. Mick Huckabee, the front-runner if you can believe it, might have to negotiate a trade agreement, or a defense treaty, with the Indonesian President some day. Newt might have to discuss very delicate matters of national security with the President of Pakistan. And so I plead, as an unflinching American patriot — please Mitch Daniels, please Jeb Bush, please run. I may not agree with you on most things, but I respect you. And you seem to respect yourselves enough not to behave like public clowns.

I don't know about Jeb, but I agree that Mitch Daniels seems like he ought to be a decent candidate. He's a genuine conservative, not a RINO sellout, but also not a wingnut. He's a midwesterner, has experience in the Bush administration, and commands a fair amount of establishment respect. Not my cup of tea, obviously, but his background ought to be appealing to a fair number of Republicans.

But the usual question remains: how does he get through the primaries? When he hops over to Iowa, they'll expect him to denounce sharia law, make jokes about Obama's Kenyan birth, throw himself wholeheartedly into the culture wars, pretend that global warming is a liberal conspiracy, and make dire remarks about the specter of socialism taking over America. In other words, he'll have to act like a public clown, and if he doesn't do it, he'll lose.

So it's pretty much a no-win scenario for him. If he's smart, he'll wait for 2016 and hope that the Republican Party has come to its senses by then.

Quote of the Day: Pawlenty on Cap-and-Trade

| Tue Mar. 29, 2011 5:31 PM EDT

From Tim Pawlenty, possibly the most boring person ever to be considered a front runner for a presidential nomination:

Anybody who’s going to run for this office who’s been in an executive position, or may run, has got some clunkers in their record. Laura, mine I think are fewer and less severe than most. As to climate change, or more specifically cap-and-trade, I’ve just come out and admitted it — look, it was a mistake, it was stupid....Everybody in the race, well at least the big names in the race, embraced climate change or cap-and-trade at one point or another. Every one of us.

That's true. And then, suddenly, every one of them didn't. Why is that?

One possibility is that they just like taking stands that piss off liberals. But opposing cap-and-trade would have pissed off liberals four years ago and they didn't do it then. So what changed?

The answer isn't very complex. Four years ago, in the wake of Al Gore's Inconvenient Truth and growing public concern about global warming, corporate America felt that some kind of action on greenhouse gases was probably inevitable. And if it was inevitable, then cap-and-trade was their best bet. From their point of view it probably looked less threatening than a flat carbon tax, which is harder to game than cap-and-trade, and less costly than flat mandates from the EPA. So they got on board, and Republicans got on board with them.

But then a couple of years ago public concern over global warming started to wane and it became less obvious that action on greenhouse gases really was inevitable. So instead of settling for cap-and-trade as their least worst alternative, they decided to fight instead for their first best alternative: doing nothing. And once again, Republicans got on board with them.

All this was made easier by the fact that the conservative wing of the GOP was never a fan of regulating greenhouse gases in the first place, and when John McCain lost the 2008 election it was easy to demonize squishy stands like his support of cap-and-trade as evidence that America had no interest in Democrat-lite policies. If corporations had continued to support cap-and-trade, there could have been a real tug-of-war between the business wing of the party and the Obama-is-a-socialist wing of the party, but once the business community jumped ship it was no contest. They usually get what they pay for, after all.

Obama the Socialist

| Tue Mar. 29, 2011 12:34 PM EDT

Fox News VP Bill Sammon told a conservative audience last year that he engaged in a wee bit of fabrication during the 2008 campaign:

At that time, I have to admit, that I went on TV on Fox News and publicly engaged in what I guess was some rather mischievous speculation about whether Barack Obama really advocated socialism, a premise that privately I found rather far-fetched.

Today he explains himself to Howard Kurtz:

He doesn’t regret repeatedly raising it on the air because, Sammon says, “it was a main point of discussion on all the channels, in all the media” — and by 2009 he was “astonished by how the needle had moved.”

Actually, no: I don't think it was a "main point of discussion" on all the channels. It was a main point of discussion on Fox News. On the other channels it was mainly treated as something ridiculous that Fox was promoting.

As for Sammon's moving needle, Greg Sargent sums things up: "Sammon is conceding that the idea did indeed strike him as far fetched in 2008, even though he and his network aggressively promoted it day in and day out throughout the campaign. And he’s defending this by pointing out that the idea ended up gaining traction, as if this somehow justifies the original act of dishonesty!"

Which, of course, it does. All Sammon was doing was creating a new reality, which the rest of us merely get to study judiciously. And while we're studying it (and mocking it), Fox will create another new reality. This is the way the empire works these days.

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Obama's Speech

| Tue Mar. 29, 2011 11:45 AM EDT

I've been under the weather for the past few days, so I missed Obama's big Libya speech yesterday. I meant to watch it, but then I fell asleep on the couch and by the time I woke up it was over. But I've since read the text of the speech, and I basically agree with Fred Kaplan: it was "about as shrewd and sensible as any such address could have been." A little messy, perhaps, but we live in a messy world:

Obama's main point was this: When, as he put it, "our interests and values are at stake," and when taking military action a) carries few risks, b) costs little, and c) may reap huge benefits, both political and humanitarian, then such action is worth taking even if the interests involved aren't quite vital.

This formulation is unsatisfying, both to the Realists (who shy from using force except in pursuit of vital interests and, even then, only when the outcome is fairly certain and preponderant force is mustered) and to the neoconservatives (who leap to use force anywhere and everywhere in the cause of universal moral values). But it reflects a sense of realism with a small r.

Clive Crook seems to find this likewise a bit unsatisfying, but suggests that, like democracy, Obama's approach produced the worst possible policy except for all the others:

If you doubt it, don't just list the policy's all too obvious dangers: test it against the alternatives — something I have not seen Obama's critics do. One option would have been to do nothing. In other words, abstain with China and Russia on the UNSC resolution. What a splendid message to the world that would have sent. Or maybe vote for the resolution, then commit no resources to enforcing it--the usual European approach to global leadership. Thankfully, the US is better than that. Alternatively, go all in, make regime change the goal, and target Gaddafi--but now without international backing. That would have been a heavier burden and an even bigger gamble. The course of action Obama chose is risky, to be sure, but when you think them through the alternatives look worse.

In the end, Obama will be judged on whether his approach works. If U.S. involvement really stays limited; if Qaddafi finds himself out of a job within a few weeks; and if the aftermath of the war isn't too disastrous, then Obama will be vindicated, congressional approval or not. If any of these things doesn't happen — and I'd pay particular attention to the last of them — he'll be in trouble. As with all things, success justifies nearly anything.

Avoiding the Conservative Rabbit Hole

| Mon Mar. 28, 2011 11:31 PM EDT

Mike Konczal says that by now he understands pretty much all of the pro and con arguments related to the financial reform bill:

But at this point I simply no longer understand the hysterical, off-reality, arguments conservatives, especially the Wall Street Journal’s editorial page, are making about the Consumer Financial Protection Bureau. Again, if they wanted to argue the meta-level, bring it on. If they think the problem is, a la Phil Gramm, predatory borrowers, say it. If they are freaked out about cost of capital going higher, make that case. I’ve written that the previous attempts to make that case are quite amateur, but I’d love to hear new ones. Anything, really, and I’ll give it a fair listen.

Don't hold your breath, Mike. The CFPB is opposed by banks because it will probably make them slightly less profitable, and conservatives, in turn, oppose it because banks oppose it. Looking any further is just a fool's errand.

Taking Aim at the Poor

| Mon Mar. 28, 2011 4:22 PM EDT

This is an oddly fascinating quote from a GOP staffer:

Republicans are poised to reject a White House offer, TPM has learned, that would cut over $30 billion in current spending because of disagreements over whether the package should include cuts to mandatory spending programs. Democrats are pushing for such cuts, which include the big entitlement programs, though the specific cuts they're proposing remain unclear. In an ironic twist, Republicans oppose those cuts and want to limit the negotiations to non-defense discretionary spending, a smaller subset of the federal budget.

....Asked about the offer the White House has floated, a top Republican aide says, "This debate has always been about discretionary spending — not autopilot 'mandatory' spending or tax hikes."

This isn't a big surprise or anything, but I've never seen it put quite so baldly. This guy is literally saying that Republicans don't want to cut spending, they only want to cut nondefense discretionary spending. That's it. This, of course, is the one part of the budget that's (a) too small to really matter much, and (b) includes social welfare spending for poor people. Again, no big surprise, but at least it clears up what Republicans really care about cutting. And it's not the deficit.

Money Talks -- And Talks, and Talks, and Talks....

| Mon Mar. 28, 2011 1:54 PM EDT

Several years ago Arizona passed a clean elections law that provides state subsidies for candidates who follow certain rules. One provision of the law states that if a subsidized candidate is running against a self-funded candidate, and the self-funded candidate spends more than the subsidized candidate, then the subsidies increase. This is meant to prevent zillionaires from massively outspending everyone else, and needless to say, zillionaires and their allies don't like this much. Over at SCOTUSblog, Lyle Denniston summarizes the zillionaire side of the argument like this:

The only ways a self-financed candidate could prevent the state from helping to put out the message of the subsidized candidate — a “windfall” — would be to reduce the volume of his or her own speech, or at least to rearrange the timing of the speech, with negative effect. Either of those restraints, the petitions argued, would impose the campaigning burden that the Supreme Court had found unconstitutional in the Davis case.

The Davis case is Davis v. Federal Election Commission, in which Samuel Alito ruled against the "Millionaire's Amendment" of the 2002 campaign finance law. That amendment created different rules for candidates who abided by spending limits vs. those who didn't, and Alito ruled that Congress had no right to do that. Paul Waldman disagrees:

What is the "right" at issue here? It's not the right to free speech, since the self-financed candidate still can speak as much as he likes. It's the "right" to have the loudest voice if you have the most money, to drown out every other voice.

Which isn't a right at all. It's a privilege: the privilege of those with money to bend the political system to their will, to have the biggest megaphone, to make sure that their money gives them the ability to put a thumb on the electoral scale.

So how is the Court going to rule? If the Roberts Court has a guiding principle, it's that those with power should prevail. But as in all cases like this, the decision will likely come down to one man, Justice Anthony Kennedy. No one doubts that John Roberts, Samuel Alito, Antonin Scalia, and Clarence Thomas will rule in favor of the candidates who want to gut the public-financing system so that those with the most money will always have the advantage. The four liberals on the Court will probably disagree. And Kennedy will decide, most likely in favor of the plaintiffs.

The Arizona law is now before the Supreme Court (in McComish v. Bennett), which heard oral arguments today. My guess is that Paul is right: the court will strike down the Arizona law, and this in turn will be the death knell for campaign finance reform. The Arizona law, and others like it, were very carefully crafted to remain within constitutional limits, and if a key provision is struck down it's difficult to envision any kind of effective limits on campaign financing that the court would uphold. It's taken them several decades, but combined with last year's ruling in Citizens United the zillionaires are on the brink of an almost complete victory. Not only does money talk, but soon it won't have to worry about anyone talking back either.