Kevin Drum - July 2011

Paul Broun's Budget

| Wed Jul. 6, 2011 5:52 PM PDT

Republican congressman Paul Broun — the same Paul Broun who doesn't know if Barack Obama is a U.S. citizen but does know that he's a socialist — the same Paul Broun who believes the federal government plans to force us all to eat more fruits and vegetables — yes, that Paul Broun — serves up some outside-the-box thinking today:

Today, I introduced a unique bill that goes in a completely different direction than everything else we’ve been hearing out of Washington. It would force politicians to start practicing what they’ve been preaching by lowering the debt ceiling from $14.3 trillion back down to $13 trillion.

I'm increasingly convinced that there's some kind of gigantic practical joke being played on all of us. But by whom? Who has the power to orchestrate such a thing? I think someone needs to waterboard Glenn Beck to find out.

But back to Broun. Oddly enough, he concedes that "to be realistic, we can’t lower the debt limit today, but if we set a deadline, the beginning of FY 2012, it would force politicians to make those decisions in the months to come." My back-of-the-envelope guess — and I'm not willing to do anything more than that — is that this would force federal spending down to about $1.3 trillion in FY2012. Slice off interest on the debt and you'd have about a trillion bucks left over. That's enough to fund, say, the Pentagon plus half of Social Security and nothing more. That's outside the box all right.

You might reasonably ask, who cares? So Paul Broun is an insane wingnut. There are always a few of them around. Answer: because this proposal is currently being hosted by the fine folks at National Review. They don't endorse it, of course, but presumably they think it's sane enough to deserve a wider audience. This, ladies and gentlemen, is the flagship of mainstream conservatism. Revel in it.

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Quote of the Day: Bill Clinton on Voter ID Laws

| Wed Jul. 6, 2011 1:38 PM PDT

From Bill Clinton, talking to a group of college students about the relentless two-decade Republican effort to restrict voting among minorities, the young, and felons who have done their time and finished their probation:

One of the most pervasive political movements going on outside Washington today is the disciplined, passionate, determined effort of Republican governors and legislators to keep most of you from voting next time....There has never been in my lifetime, since we got rid of the poll tax and all the Jim Crow burdens on voting, the determined effort to limit the franchise that we see today. Why should we disenfranchise people forever once they’ve paid their price? Because most of them in Florida were African Americans and Hispanics who tended to vote for Democrats. That’s why.

Good for him for saying this so directly. The Republican push for "voter ID" laws that address no actual problem and are plainly designed solely to reduce voting among Democratic-leaning constituencies is one of its most disgraceful projects. And it's not just the formal party apparatus either: the Supreme Court's refusal to overturn these laws is one of the clearest indications we have of the nakedly partisan turn the court has taken in recent years. It's shameful.

Warming Up to Cool Light

| Wed Jul. 6, 2011 11:02 AM PDT

Farhad Manjoo writes in Slate today about the holy grail in indoor lighting: an energy-efficient bulb that's dimmable and produces nice warm light. It comes from a company called Switch, and it all sounds very nice. But I found this parenthetical pretty interesting:

(The 60- and 75-watt-alternative bulbs are also available in neutral white, which Sharenow says is a popular color in many different places around the world—people in Japan, India, and other Asian countries can't stand the yellow light we find comforting, Sharenow says.)

Obviously people don't like bulbs that flicker, can't be dimmed, and don't come on immediately. But the recent freakout over the end of incandescent bulbs has been at least equally driven by an insistence that a less yellowy light than Thomas Edison bequeathed to us is simply intolerable. This is, and always has been, nuts. It's a product of habit, not a law of human optics. The warm incandescent bulbs we use today are closer to candlelight than to sunlight, and I'll bet that every single person in America would very quickly get accustomed to a more neutral color in light bulbs if they'd just use them for a while and allow their old habits to die out.

In any case, if the Switch folks are on the level, they've got an LED bulb that doesn't flicker, comes on immediately, can be dimmed, and is available in old-school "warm" white or a more neutral white. So now you'll have your choice. But the neutral bulb puts out more light per watt, and it's almost certainly a better light source for anyone willing to give it a chance.

No, Let's Not Slash the Minimum Wage

| Wed Jul. 6, 2011 10:11 AM PDT

Karl Smith agrees with Casey Mulligan that reducing the minimum wage would boost the job market:

I understand that there are sophisticated studies showing a limited impact of the minimum wage on employment. My judgment is impacted by those studies. Nonetheless, they are climbing a steep hill against intuition and a supply and demand paradigm that has proved incredibly powerful in the past.

It may not be the case that the minimum wage cut employment by 800K but I have a hard time swallowing that it does not impede recovery and exacerbate long term unemployment.

I can’t imagine that there are no workers at all in America whom it is profitable to hire at $4.75 an hour but unprofitable to hire at $7.25.

This kind of stuff bothers me on a bunch of different levels. Let's count the ways:

  • You either believe empirical studies or you don't. If you have reason not to believe them, then let's hear it.
  • Intuition about supply and demand just flatly won't work in this case. We're talking about a market with (probably) low elasticities and a huge number of confounding factors that could push it in multiple directions. It's easy to see that a small increase in the minimum wage could be overwhelmed by other factors and lead to either a very small or zero impact on employment levels.
  • Are there jobs where it's profitable to hire at $4.75 but not at $7.25? Well, there must be some, but we're talking about such low skill levels here that there very well might not be many. That's why empirical studies are so important. The effects are just too small to intuit.
  • Is this really what we've come to? That we should provide a (probably very small) boost to the job market by allowing businesses to hire people for $9,500 per year instead of $14,500? Seriously? I mean, this is the ultimate safety net program, aimed squarely at working people at the very bottom of the income ladder. If we're willing to throw them under the bus, who aren't we willing to throw under the bus?

There are, obviously, nuances here. Maybe you think we should do away with the minimum wage and instead beef up the EITC or something similar. Or maybe we should directly subsidize higher wages instead of making businesses pay them directly. For a variety of non-economic reasons I don't think that's a good idea, but reasonable people can differ. But what it's hard to differ about is that this is pie in the sky. If we reduce the minimum wage, nothing is going to take its place and we all know it. It would increase corporate profits and dramatically reduce the wages of the poorest workers, and that's about it. Employment would probably be affected only marginally, and nothing would take the place of that lost income. Welcome to America.

"Deficit Reduction" in Plain English

| Wed Jul. 6, 2011 9:28 AM PDT

David Leonhardt complains that the business community likes to talk big about how damaging the deficit is, but in practice lobbies extensively for policies that would increase the deficit. Even the Business Roundtable, a supposedly moderate business group, lobbies for lower tax rates, more loopholes, and increased spending on stuff it cares about:

It’s easy to look at the squabbling politicians in Washington and decide that they are the cause of the country’s huge looming budget deficit. Certainly, they deserve some blame. The larger problem, though, is what you might call roundtable syndrome.

In short, there isn’t much of a constituency for deficit reduction. Sure, plenty of people and special-interest groups say that they are deeply worried about the deficit. But they are not lobbying for specific spending cuts or tax increases. They aren’t marshaling their resources to defend politicians who take tough stands, like President Obama’s 2009 Medicare cuts or Rand Paul’s proposed military cuts.

Well, look: business groups learned long ago that they no longer had to compromise. In 1986 they managed — barely — to support an agreement to remove lots of tax loopholes in return for lower corporate tax rates, but that was the last gasp of a dying era. Since then, the Republican Party, with an ever-growing assist from a newly corporatized Democratic Party, has made it clear that this kind of deal is no longer necessary. The business community can get lower rates and more loopholes, and once they get them they'll never have to give them back.

It's hardly a revelation that people prefer to raise taxes and reduce spending only on other people. Take taxes off the table, as they have been, and that leaves only spending cuts on others. In our current political environment, "others" means not businesses and not the elderly and not the middle class. By elimination, it means spending cuts on programs for the young and the poor, which is exactly what the Republican base has bent all its energies toward for the past 40 years. Here it is in terms everyone can understand:

"Deficit reduction" = spending cuts on social programs for the young and the poor.

Republicans don't want to cut the deficit. They want to cut liberal social programs. Anyone who continues not to understand this is simply being willfully ignorant.

Gambling On Armageddon (No, Seriously)

| Wed Jul. 6, 2011 8:17 AM PDT

The debt ceiling fight is sucking up all the wonk blogging oxygen these days, but I'm struggling to think of anything new to say about it. Republicans are great negotiators, Obama left himself wide open to lose this battle, Republicans are crazy, Democrats have no consistent position on offer, Republicans may benefit if the economy tanks, Democrats may benefit if independents conclude that Republicans are reckless and crazy, etc. etc. I guess it's worth repeating this stuff to make sure the point gets across, but there are only so many synonyms for "insane."

So instead, let's have a pool. Answer the following three questions:

  1. When will we finally reach a debt ceiling agreement? (The drop-dead date is supposedly July 22, with a second really-for-sure drop-dead date of August 2.)
  2. How much will the debt ceiling be increased? A lot (the full $2 trillion or so) or will it just be a stopgap ($400 billion or so)?
  3. Will it include any net revenue increases? How much?

I know, I know, I'm asking you to bet on the end of the world. And I'm not even offering any prizes. But the winner gains much commenting-fu in the coming year. Here's my entry: (1) August 7, (2) $1.7 trillion, (3) Yes, $200 billion.

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The American Public Hates Stimulus Spending

| Tue Jul. 5, 2011 8:34 PM PDT

"Given a choice," says McClatchy's Steven Thomma, "59 percent of Americans prefer reducing debt even if that slows the economic recovery." Thomma wouldn't lie about his own poll, but that's still a pretty gobsmacking result. So I had to go look for myself. And luckily for my sanity, I don't believe the poll says quite what Thomma thinks it does. Here's the detail:

It turns out only that most people want to reduce the national debt "even if the economy is slow to recover." That's quite a bit different from wanting to reduce the national debt "even if it causes the economy to be slow to recover." There's a little bit of association between spending and strength of recovery when you read both of the poll's options to people, but it's pretty thin.

At the same time, whether we like it or not, this poll does pretty clearly tell us two things: (a) most people probably don't link stimulus spending with helping the economy to recover faster, and (b) large majorities are pretty obsessed about cutting the national debt — and those large majorities cut across practically every demographic subgroup. If you want to know why President Obama is willing to cut a deal with Republicans to drastically cut federal spending, this is it. We liberals have miserably failed to make the case for stimulus spending, and as a result conservatives have spectacularly succeeded in reverting the American public to its default state of believing that the federal books should always be balanced, the same as household books. On this score, we've just been flatly outplayed over the past couple of years.

Brooks: Republicans No Longer Normal

| Tue Jul. 5, 2011 3:44 PM PDT

David Brooks is getting lots of hosannas today for a column that forthrightly calls the Republican Party nuts for its unwillingness to accept a debt ceiling compromise that's weighted something like 5:1 in favor of spending cuts and doesn't raise marginal tax rates a dime in order to generate its modest revenue increases. The GOP, he says, should grab a deal like this with both hands:

But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

The members of this movement do not accept the logic of compromise....The members of this movement do not accept the legitimacy of scholars and intellectual authorities....The members of this movement have no sense of moral decency....The members of this movement have no economic theory worthy of the name.

....If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.

And they will be right.

I've avoided commenting on this today because I didn't want to seem churlish. But on second thought, there's nothing wrong with some occasional churl, is there?

So here's my churlishness for the day: I'll believe that Brooks has seen the light when he actually keeps this up for a few consecutive weeks. I've never been a Brooks hater, but the fact is that he occasionally writes columns like this. Normally, though, having done it, he then devotes his next five or six columns to nitpicking at Democrats and pretending that they are, when all's said and done, just as bad as Republicans after all.

They aren't, of course. They're just a normal party with all the virtues and all the pathologies of any broad-based political party. That means it's easy to find a laundry list of things to criticize and then add them up to make it seem as if everyone's equally to blame for the insanity of our current political impasses. But it's not true, and it's long past time for non-insane conservatives to give up on this kind of faux Olympianism. As Brooks says, the GOP is no longer a normal political party and they are not fit to govern. The question is, will Brooks still believe that in a couple of weeks when — and it's bound to happen — Democrats do something he dislikes? I'll wait and see.

Quote of the Day: The New Normal

| Tue Jul. 5, 2011 12:06 PM PDT

From Jon Chait, explaining how the definition of "reasonable" changes over time:

The GOP's willingness to undermine the full faith and credit of the Treasury in pursuit of anti-tax fundamentalism is shocking now, but eventually it will come to be seen as simply part of the process.

Yep. In the same way that Wall Street hoovering up a third of all corporate profits is the new normal. Or that 9% unemployment is the new normal. Or that obstruction, rather than legislation, is the new normal for Congress. Or that massive spending cuts during a recession is the new normal. Or that conducting three overseas wars at the same time is the new normal.

The new normal kind of sucks, doesn't it?

Wall Street: Yep, They Still Own the Place

| Tue Jul. 5, 2011 10:13 AM PDT

Today the blogosphere features a fight over "business process" patents — things like Amazon's patent for one-click checkout, for example. These have been abused pretty badly, and Wall Street is fighting back. How? They got Chuck Schumer to insert a special provision in a bill that changes the ground rules for challenging business process patents related to “a financial product or service.” It's good to have friends in high places, no?

Andrew Ross Sorkin is outraged. This provision "is perhaps the most blatant demonstration of the lobbying power of Wall Street and, just as important, the willingness of Congress to support the interests of the banks, even in the face of clear evidence that the law has no purpose other than to benefit the financial services industry."

Felix Salmon is a lot less outraged. "Sorkin’s attempts to defend the idea of financial business-method patents ring pretty hollow....The law will benefit the financial services industry. No one is arguing that point. And it will hurt rentiers with patents. The important question is whether it’s a good idea from a public-policy perspective. Sorkin ducks that question entirely. But the fact is that if we want a level playing field in financial services, getting rid of business-method patents is an extremely good idea."

But why fight over this? I officially declare everyone right today. Business process patents have been abused, and Felix is right that making them more difficult to get in the financial services arena is a good idea. At the same time, the fact that Wall Street is the only industry getting patent relief from Congress really is a blatant demonstration, in Dick Durbin's immortal words, of the fact that banks "frankly own the place."

I think the Schumer provision is terrible policy. We need to overhaul the way we handle business process patents, but the worst possible way to do that is to start singling out specific industries for special treatment. After all, having gotten what they wanted, do you think Wall Street will sign on to any future effort to broadly reform policy in the area of business process patents? Nope. They might even fight it if it would replace their special provision and possibly make them slightly worse off than before. This is practically a parody of bad lawmaking, and as with nearly anything having to do with Chuck Schumer and Wall Street, it's a terrible idea and deserves an early death.