Kevin Drum - July 2011

"There is Zero Equivalence Here"

| Thu Jul. 28, 2011 1:42 PM EDT

Joe Klein admits today that he loves himself some good old-school Democrat bashing, but he's just not up for it these days:

And so, here we are. Our nation’s economy and international reputation as the world’s presiding grownup has already been badly damaged. It is a self-inflicted wound of monumental stupidity. I am usually willing to acknowledge that Democrats can be as silly, and hidebound, as Republicans — but not this time. There is zero equivalence here. The vast majority of Democrats have been more than reasonable, more than willing to accept cuts in some of their most valued programs. Given the chance, there was the likelihood that they would have surrendered their most powerful weapon in next year’s election — a Mediscare campaign — by agreeing to some necessary long-term reforms in that program. The President, remarkably, proposed raising the age of eligibility for Medicare to 67.

The Republicans have been willing to concede nothing. Their stand means higher interest rates, fewer jobs created and more destroyed, a general weakening of this country’s standing in the world. Osama bin Laden, if he were still alive, could not have come up with a more clever strategy for strangling our nation.

I don't think that most Republicans, or even most tea partiers, actively want the American economy to tank. At the same time, an awful lot of them sure don't seem to care very much. They're more focused on getting Obama out of the White House, and the truth is that a little bit of economy tanking makes that goal a little easier to achieve. And so, here we are.

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Do Voter ID Laws Target Women?

| Thu Jul. 28, 2011 1:04 PM EDT

Abundant evidence demonstrates that although voter ID laws don't do anything to curtail fraudulent voting, they do reduce election participation by ethnic minorities, the poor, and the young. This might seem like an unfortunate side effect to you, but to the Republican activists behind these laws it's a feature, not a bug. Why? Because ethnic minorities, the poor, and the young tend to vote for Democrats, and Republican activists find it remarkably easy to live with the prospect of fewer Democrats voting when election day rolls around. For more, see here, here, here, and here.

But guess which other demographic group tends to vote Democratic? Women. I have to say that this one hadn't occurred to me, but Megan Devlin takes a closer look at the fine print of some recent voter ID laws:

Here's where women get stuck. American women change their names in about 90 percent of marriages and divorces. So newly married and recently divorced women whose legal names do not match those of their current photo ID will face opposition when voting, especially in the seven states with the stricter voter-ID rules. They cannot provide personal information like a birthday or take an oath swearing to their identity in lieu of showing a photo ID. Instead, they will have to fill out substitute ballots and later return with valid documentation like a certified court document showing a divorce decree or marriage license.

Since only 66 percent of voting-age women have easy access to proof of citizenship and documentation with their current legal name, a significant number of women could be disenfranchised by the new laws.

By February 2012, these stricter laws will be in effect in seven states, just in time for the spring primaries.

I'm sure some enterprising political scientist will examine the evidence after next year's election to see if women really have been disproportionately affected by these new laws. But if they are, I'll bet the Republicans behind them will consider it acceptable collateral damage. Why wouldn't they, after all?

Chart of the Day: The Great Speedup

| Thu Jul. 28, 2011 11:15 AM EDT

During the recession, men lost far more jobs than women. Since the recovery began, though, that's reversed: women are recovering jobs at a much slower pace than men. Partly this is related to job cuts by state and local governments, but Bryce Covert and Mike Konczal write today that it's also related to what MoJo editors Clara Jeffery and Monika Bauerlein called "The Great Speedup" in the current issue of the magazine. Here are Bryce and Mike:

Women have been brutally hit when it comes to a category called “office and administrative support occupations," i.e. those who make workplaces run smoothly....It falls on other workers to pick up the slack in offices where assistants have been let go. Americans have been working harder without seeing better pay or even new titles. Mother Jones recently reported that Americans put in an average 122 more hours than British workers and 378 more than Germans. As companies trim budgets, employers are “rationalizing” far more positions than usual. This leaves everyone else to pick up the remaining work. In a recent survey by Spherion Staffing, 53 percent of workers said they’ve taken on new roles. Just 7 percent got a raise or a bonus for doing so.

The chart below tells the story. For the most part, though, I think it just puts some numbers to something all of us knew was happening already.

Double Dip Recession Starting to Look More Likely

| Thu Jul. 28, 2011 10:21 AM EDT

Earlier this week Britain announced that economic growth in the second quarter was an anemic 0.2%, within a hair's breadth of re-entering recession territory. But what about the rest of Europe? Today Edward Hugh passes along the latest Purchasing Managers Index figures for the Eurozone, a statistic that generally suggests the economy is expanding when it's above 50 and contracting when it's below 50. It's been dropping steadily for the past quarter, and in July registered just 50.8:

Outside of France and Germany, which are still expanding, though slowly, the rest of Europe is already below 50. "Even as growth in the core economies approaches stall speed, out on the periphery a new recession seems increasingly on the cards, and most importantly in countries like Spain and Italy which have so far managed to keep their heads just above the waterline. Growth in the second quarter of the year looks likely to have been minimal in both cases, and the outlook for the third quarter suggests we are entering a bout of economic shrinkage."

Click the link for the rest. Economic growth is slowing all over the world as we fiddle around with our insane, politically motivated debt ceiling fight. A double dip recession might still not be the betting choice, but it's hardly out of the question anymore.

Breaking Down the Lucky Duckies

| Thu Jul. 28, 2011 12:57 AM EDT

The other day I wrote about the zombie lie that half of Americans pay no taxes. This is something conservatives repeat routinely, somehow forgetting repeatedly to explain that what they really mean is that half of Americans pay no federal income tax but do pay plenty of other taxes. When you call them out on this wee mistake they tend to get offended — though somehow, never quite offended enough to stop saying it.

But put that aside. Even stated accurately, you might be wondering how it is that so many people end up not paying any federal income tax. Today the Tax Policy Center has the answer for you. In 2011 they estimate that 46% of Americans will pay no federal income tax. Donald Marron breaks this down:

  • 23% pay nothing because they're poor. A couple making less than $19,000, for example, doesn't owe anything after their $11,600 standard deduction and two exemptions of $3,700 each reduce their taxable income to zero. As Bob Williamson puts it, "The basic structure of the income tax simply exempts subsistence levels of income from tax."
  • 10% are elderly and pay nothing because their Social Security benefits are exempt from federal income taxes.
  • 7% pay nothing thanks to provisions in the tax code designed to benefit low-income families: the earned income tax credit, the child credit, and the childcare credit account.

And the other 6%? Their taxes are zero for a variety of reasons: above-the-line deductions and tax-exempt interest; itemized deductions; education credits; other credits; and reduced rates on capital gains and dividends. TPC's report has all the gruesome details.

But for the vast bulk of nonpayers, the explanation is simple: the federal tax code is designed not to tax the poor, the elderly, or low-income families with children, and there are more of these in America than you'd think. One way or another, it turns out, this accounts for about 40% of the country.

Setting the Economy on Fire

| Wed Jul. 27, 2011 7:35 PM EDT

If the United States defaults on its debt, its credit rating will be downgraded catastrophically by every ratings agency. That's not going to happen because the United States isn't going to default, but Standard & Poor's has warned that it might downgrade U.S. debt regardless. Even if there's no default, says S&P, it might take action if Congress fails to credibly cut the long-term deficit by $4 trillion.

So how worried should we be about this? The answer comes from two places. First this from Time's Massimo Calabresi:

S&P is an outlier among the top three ratings agencies: Moody’s and Fitch say they won’t even consider a downgrade unless there’s a danger of an actual default.

And this from the mysterious Wall Street lawyer who writes Economics of Contempt:

So even if S&P follows through on its threat — and frankly, I suspect it's just a bluff — it probably won't have any immediate effect on the market for U.S. bonds. Pension funds won't have to engage in a massive sell-off, state and local bonds will be fine, and life will go on.

In other words, the threat of actual default is nil, and the threat of downgrade is pretty close to nil too. This goes a long way toward explaining why bond markets aren't panicking over the debt ceiling fight.

The real danger, of course, is different: shutting down the government for any extended period would likely have a disastrous effect on our still weak economy. Unfortunately, keeping the government operating at the cost of passing the deficit deals currently on the table would probably also be pretty disastrous. We are, for no good reason, deliberately setting our economy on fire. It's insane. Nero may have fiddled while Rome burned,1 but at least he didn't set the fire himself.2

1Though probably not, actually.

2Then again, he might have.

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Tooth Fairies and Quarters

| Wed Jul. 27, 2011 4:13 PM EDT

A survey by Visa says that the recession has caused a drop in the average amount the Tooth Fairy pays for a tooth, from $3 to $2.60. Jon Chait comments:

Clearly this is a prime expenditure to cut back when you're feeling strapped. But $2.60 seems really high to me. My kids each lost a tooth the other night — actually within seconds of each other, strangely enough — and I gave them each a dollar. I thought it seemed high. When I was a kid I got a coin — either a dime or a quarter, I can't recall which.

I don't remember either. But let's say it was a dime back in 1965, my prime tooth-losing year, which is roughly the same as a quarter in 1979, Chait's prime year. Adjusted for CPI, that only comes to about 75 cents today, which does indeed make three bucks seem pretty high. On the other hand, that dime in 1965 represented 0.00028% of per-capita GDP, which comes to about $1.40 today. Or maybe income is a better measure. In 1965, a quarter represented 0.0078% of the median income. The equivalent today would be about a dollar.

That's quite a range, which just goes to show that it's harder to figure out this stuff than you'd think. In any case, an exodontic payoff of about a dollar or so is definitely in the same range as my dime or Chait's quarter. His kids have no reason to feel ripped off. I am, however, now suspicious of Visa's survey methodology. I know my readers are hardly a cross section of America, but how much do you give your kids for a tooth under the pillow?

Chart of the Day: Yet More Bad Job News

| Wed Jul. 27, 2011 1:42 PM EDT

Via Economix, this chart comes from a new study by the National Employment Law Project, and it shows yet another way in which our jobless recovery is grim news. As you can see, we lost only a small number of low-paying jobs during the Great Recession and we've since gained almost all of them back. But mid-wage and high-wage occupations? Those are the jobs that really drive recovery, and they're still very deeply in the hole. Ugh.

The Republican Clown Show Proceeds Apace

| Wed Jul. 27, 2011 12:45 PM EDT

Politico has the latest on the clown show that is the modern Republican Party:

House Republicans on Wednesday morning were calling for the firing of the Republican Study Committee top staffer after he was caught sending e-mails to conservative groups urging them to pressure GOP lawmakers to vote against a debt proposal from Speaker John Boehner (R-Ohio).

Infuriated by the e-mails from Paul Teller, the executive director of the RSC, members started chanting “Fire him, fire him!” while Teller stood silently at a closed-door meetings of House Republicans.

“It was an unbelievable moment,” said one GOP insider. “I’ve never seen anything like it.”....A steady stream of Republicans stood up at the meeting to heap abuse on Teller and the RSC. House Republicans were particularly peeved that that the RSC was targeting some of its own dues-paying members.

I don't really see the case for downgrading U.S. treasury debt, but is it possible for S&P to downgrade the Republican Party? Maybe from Deranged+ to Infantile--? That seems like it would be pretty justifiable.

BY THE WAY: Someone has just got to have video of this, don't they? They just have to. This is late-night gold.

The Truth About Stella Liebeck

| Wed Jul. 27, 2011 12:23 PM EDT

I've long been pissed off over the case of Stella Liebeck. You remember her, right? The woman who spilled some McDonald's coffee on herself while carelessly careening down the highway and then scored a million-dollar jackpot when her high-priced lawyer convinced a credulous jury to stick it to a deep-pocketed corporation.

Except, not quite. In fact, Liebeck's burns were extremely serious, she wasn't the first person this happened to, and when people learn the facts of the case and view the actual injuries they almost always change their minds about it. Scott Lemieux summarizes in a review of a new HBO film, Hot Coffee:

Saladoff’s film lays out the real story in lucid detail, and no matter how many times the suit was used in Jay Leno monologues there was nothing funny about it. Liebeck was not careless, but spilled the coffee when she, as a passenger in a parked car, took the lid off the cup. The spill did not cause a trivial injury, but severe burns that required multiple operations and skin grafts to treat. McDonald’s, which served its coffee at 180 degrees, had received more than 700 complaints from customers, constituting a clear warning, but it nonetheless required its franchises to serve it at that temperature without warning customers.

Nor was Liebeck greedy or especially litigious. Her initial complaint requested only about $20,000 to cover her medical bills and other related expenses, and she took McDonald’s to court only after the corporation offered a paltry $800 settlement. The headline-generating $2.7 million Liebeck was awarded in punitive damages (selected because it approximated two days worth of the revenues McDonald’s makes by selling coffee) was reduced on appeal to less than $500,000. (The case was later settled for an undisclosed amount.) The Liebeck suit was a thoughtful attempt to seek appropriate redress for a serious harm, not about a clumsy woman trying to wring millions from an innocent corporation.

I don't get HBO, but I guess one of these days I'm going to have to break down and do it. This is good stuff, and it's good to see that it's going to find a wider audience.

UPDATE: More about the making of the film here from our own Stephanie Mencimer, author of the wonderful Blocking the Courthouse Door and one of the people featured in the film. My review of her book is here.