Kevin Drum - August 2011

A Closer Look at the Texas Miracle

| Wed Aug. 17, 2011 12:09 PM EDT
Rick Perry, the Republican governor of Texas, is running for president.

So what's the real skinny on the "Texas Miracle"? Without diving into every last detail (I'll provide some links for that), here are the main bullet points:

I think it's obvious that there are lots of openings to criticize both Texas' economic performance and Rick Perry's role in it. For one thing, the Texas virtues that Perry likes to emphasize are actually common to lots of low-tax, low-service states in the Sun Belt and the South. As Ed Kilgore says, "Eventually, someone will draw attention to the fact that if Perry’s low-tax, low-services, corporate-subsidizing policies really were an economic cure-all, similar conditions should have made states like Alabama and Mississippi world-beating dynamos years ago." This is going to make it hard for Perry to make a convincing case that taxes and regulation and general business friendliness are really behind his state's performance. What's more, there are lots of obvious chinks in the Texas armor: its poor rate of health care coverage, its high poverty rate, its weak educational system, and so forth.

And yet…jobs! It's still the case that Texas has created lots and lots of jobs and has attracted a huge influx of new residents thanks to those jobs. No one's putting a gun to their heads and forcing them to move to Houston, after all. No matter how many hits Perry takes over his simplistic explanations, and no matter how many sophisticated arguments his opponents make about the emperor's lack of clothes, it's still the case that Texas has created lots of jobs. All Perry has to do is repeat that until his face turns red while tossing out some folksy mockery of the eggheads and bureaucrats and their ivory-tower Harvard counterarguments. After all, who are you going to believe, all those East Coast twerps who have never run a company in their lives, or your own eyes?

This is going to be a tough row to hoe for Perry's detractors. It's worth going after it, but in the end, Texas' record on jobs is good enough and real enough that Perry will probably be able to brush off most of the criticism. The Texas Miracle is going to be one of his strongest calling cards.

His weakness for Texas-style crony capitalism, however, might be a real problem. I suspect we're going to be hearing a lot more about that as the oppo teams start to seriously gear up.

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The Rich and Their Legal Teams

| Wed Aug. 17, 2011 10:32 AM EDT

Here's a lovely story worth a few minutes of your time today: a pair of rich assholes move into one of the most popular ballooning spots in the country, build a gigantic and secretive "Moorish fortress castle" catering to "ultra high net worth individuals," and then start suing the balloonists out of existence because they don't like people flying over their exclusive getaway property. Not so lovely after all. But today they finally caved in thanks to a pro bono lawyer who finally fought back. Lovely again!

The Real Engine Behind the Tea Party

| Wed Aug. 17, 2011 9:58 AM EDT

In my piece last year about America's periodic upheavals of right-wing activism, I noted that one of the common tropes about these uprisings is "a myth that the movement is composed entirely of fed-up grassroots amateurs." Today, David Campbell and Robert Putnam report on the results of a detailed survey of political attitudes they did in 2006. A recent followup allows them to figure out what kind of people were most likely to become members of the latest right-wing fluorescence, the tea party:

Our analysis casts doubt on the Tea Party’s “origin story.” Early on, Tea Partiers were often described as nonpartisan political neophytes. Actually, the Tea Party’s supporters today were highly partisan Republicans long before the Tea Party was born, and were more likely than others to have contacted government officials. In fact, past Republican affiliation is the single strongest predictor of Tea Party support today.

No surprise there. What else? The recession didn't really play much of a role in prompting people to join the tea party, they report, but other things did:

So what do Tea Partiers have in common? They are overwhelmingly white, but even compared to other white Republicans, they had a low regard for immigrants and blacks long before Barack Obama was president, and they still do.

More important, they were disproportionately social conservatives in 2006 — opposing abortion, for example — and still are today. Next to being a Republican, the strongest predictor of being a Tea Party supporter today was a desire, back in 2006, to see religion play a prominent role in politics. And Tea Partiers continue to hold these views: they seek “deeply religious” elected officials, approve of religious leaders’ engaging in politics and want religion brought into political debates. The Tea Party’s generals may say their overriding concern is a smaller government, but not their rank and file, who are more concerned about putting God in government.

And this, say Campbell and Putnam, is most likely why public opinion has lately turned so sharply against the tea party movement. Lots of Americans can sympathize with a disgust toward Wall Street or a desire for small government, but their tolerance for Christian Right fervor and retrograde social attitudes is pretty low. As it's become clearer that this is what truly unites the tea partiers, more and more Americans are getting off the bus.

This particular bus, of course, is the campaign vehicle of choice for Michele Bachmann and Rick Perry. The Republican Party nominates either one of them at its peril.

Our Real Jobs Problem (Hint: Its Initials Are "GOP")

| Tue Aug. 16, 2011 7:58 PM EDT

Dylan Matthews says that Eliot Spitzer's list of things Obama could do to help the economy is one of the more plausible he's seen. I love me some plausible ideas, so I clicked. Turns out Spitzer only has two suggestions for Obama:

First, he should act dramatically to help the American homeowner....The administration, in conjunction with the Federal Reserve, should insist that banks, in return for all the taxpayer subsidies they have gotten and continue to receive, reduce any mortgage that exceeds the value of the house....Borrowers with reduced mortgages would have more money to spend, thus boosting the economy etc. etc.

....Second, the president should do more to help the American worker. He should establish a jobs program. Do the simple math: We are spending more than $110 billion annually in Afghanistan. Stop it. Or scale it back to the sort of covert operations and drone war that is warranted. Savings? Perhaps about $100 billion—per year. Use that money to create up to 5 million jobs at $20,000 each....Just as FDR did during the Great Depression, put these Americans to work in states, counties, schools, parks.

I have two questions. First: Under what plausible legal authority can the president unilaterally demand that banks — along with all of the assorted other note holders who would have to buy into this plan — reduce the principal of underwater mortgages? Second: Under what plausible political scenario will House Republicans agree to spend $100 billion on federal makework jobs even if Obama is willing to offset the cost by bailing out of Afghanistan?

I'm pretty sure the answers are (a) None and (b) None. At some point everyone needs to accept the plain political fact that on the jobs front Obama can do very little on his own and can't do anything that requires cooperation from House Republicans. There are a few small-bore things he can do, and he can certainly mount a major PR campaign for his favorite employment ideas if he thinks it will help him politically. But actual, effective jobs programs? He's a president, not a king. Republicans don't want any jobs programs and that means we aren't going to get any. End of story.

Rick Perry, Chucklehead

| Tue Aug. 16, 2011 5:18 PM EDT

Not all of these qualify as gaffes, exactly, but considering that his campaign is only three days old, doesn't it seem as if Rick Perry has been doing a pretty remarkable job of confirming his reputation as a Texas league chucklehead?

On a federal rule that doesn't actually exist: “If you’re a tractor driver, if you drive your tractor across a public road, you’re gonna have to have a commercial driver’s license. Now how idiotic is that? What were they thinkin’?”

On the possibility of Ben Bernanke helping the economic recovery via looser monetary policy: "If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in history is almost treasonous in my opinion."

On Obama's love of country: At a Republican Party event Monday night, a reporter asked Perry whether he was suggesting that President Obama does not love America. “You need to ask him,” Perry responded. “I’m saying, you’re a good reporter, go ask him”

On drone aircraft that have been used to patrol Texas borders for the past six years: "I mean, we know that there are Predator drones being flown for practice every day because we're seeing them....Why not be flying those missions and using (that) real-time information to help our law-enforcement? Because if we will commit to that, I will suggest to you that we will be able to drive the drug cartels away from our border."

On military unease with a civilian commander-in-chief: "I think they would really like to see a person who wore a uniform in that office and I think that's just a true statement....Experience matters, having walked in a person's shoes, having done what these young men and women in the military are doing matters to them. I don't want somebody sitting in the front left seat of that airliner who just got their pilot's license."

This list probably isn't complete. They're just the ones I remembered off the top of my head. All in three days!

More Money, Please

| Tue Aug. 16, 2011 1:37 PM EDT

Bruce Bartlett says today that plummeting housing prices are responsible for a big decrease in consumer spending, something that can be visualized by looking at the velocity of money — i.e., the speed at which money gets turned over from person to person instead of being stashed away. When velocity goes down, it's roughly the same as the money supply going down. This presents us with a grim picture:

Since 2006, money supply has increased by about $2 trillion. But velocity fell faster than the money supply increased as households reduced spending and increased saving — the saving rate is now over 5 percent — and banks and businesses hoarded cash.

....Fiscal policy could raise velocity and growth by getting money moving throughout the economy. But since that is not feasible, the Fed is the only game in town. Joseph Gagnon, a former Fed economist, says that it should immediately increase the money supply by $2 trillion and promise to keep increasing it until the economy has turned around.

But the Fed is already under pressure to tighten monetary policy from its regional bank presidents, three of whom dissented from last week’s Fed decision to keep policy steady. They fear that inflation is right around the corner. But as the Harvard economist Kenneth Rogoff has argued, a short burst of inflation would do more to fix the economy’s problems than any other thing. One reason is that inflation raises spending by encouraging consumers and businesses to buy things they need immediately because prices will be higher in the future.

Contrary to current Republican dogma, the Fed should be printing gobs and gobs of money. There's little reason to think this would have any long-term effect on inflation, and igniting the economy would have a much greater impact on reducing future deficits than whatever flimsy deal our congressional supercommittee comes up with later this year.

Of course, as Rick Perry accidentally pointed out yesterday, printing gobs of money would ignite the economy right now, which is about a year too early for Republican tastes. Sometime after the election would be their preference.

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Barack Obama's Real Opponent

| Tue Aug. 16, 2011 1:02 PM EDT

I saw a bit of Obama's speech in Iowa a few minutes ago, and it reminded me of the micro-debate over whether Obama knows how to craft a public narrative. I think the answer is clearly yes: it's just not the one that his lefty critics want him to craft. Obama was moderately tough sounding today, and he was clearly trying to relate his policy proposals to jobs jobs jobs, but at the same time he's sticking to his guns on his master narrative. It's all about Obama being the grown-up in the room and the squabbling kids in Congress needing to put "country ahead of party" for once in their misbegotten lives.

That's not a popular message among the progressive base, but it's obvious that Obama doesn't care. He's doubling down on this narrative, with jobs added on as the overlay of the moment. Nonetheless, employment is plainly not his main theme even if it permeates everything he says. Persuading the public that he's a sober, serious guy who's fit to be president is. He's running against Teh Crazy, not against Mitt Romney or Rick Perry.

Malpractice Reform: Yet Another Texas Non-Miracle

| Tue Aug. 16, 2011 11:56 AM EDT

On the campaign trail this weekend, Rick Perry was bragging about the medical malpractice reform that Texas adopted a few years ago. That's something we can expect to hear a lot more about, so here's a little story from a piece I wrote in 2007 at the Washington Monthly:

Like many Texans, Alvin Berry voted Yes on Proposition 12, a 2003 initiative that limited pain and suffering damages in medical malpractice suits. “I think there are too many frivolous lawsuits,” he told Texas Monthly reporter Mimi Swartz.

But then Berry suffered some malpractice of his own: a doctor who ignored a set of plainly dangerous lab results for months. When the doctor finally ordered a biopsy, he discovered that Berry had prostate cancer that had spread to his bones in 20 places. He gave Berry five years to live.

Unlike Jordan Fogal, Berry had the right to go to court. In theory, anyway. In practice, as his lawyer explained to him, it’s now usually an exercise in futility. Because of the new damage caps, it’s not worth it for lawyers to take anything but the most slam-dunk cases. What’s more, even if you can find a lawyer to represent you, insurance companies have very little incentive to settle since their losses are limited by law. Thus, between court costs, attorneys’ fees, and other expenses, Berry would be lucky to recover $75,000. Maybe not even that much. Given that reality, was he really willing to sign up for two years of litigation? Most people aren’t.

This is the key to damage caps, the worst possible kind of medmal reform because it affects only the biggest, most serious cases of malpractice, not the frivolous little suits. $250,000 may sound like a fair chunk of change, but the fact is that the cost of mounting a case is expensive enough that it's barely worthwhile for a lawyer to bother. Unless there are also some pretty hefty economic damages — and for retired people there usually aren't since they don't have much in the way of lost income to claim — most suits just don't get filed no matter how justified they are.

But hey — maybe in Texas they're willing to swallow some tough medicine in order to tackle a big problem. Unfortunately, as Aaron Carroll repeats today, Proposition 12 solved nothing. Malpractice payouts may have gone down, but the extra money seems to have gone mostly into the pockets of insurance companies. The cost of healthcare hasn't gone down, the cost of healthcare insurance hasn't gone down, the number of people with healthcare insurance hasn't gone up, and doctors haven't come flocking to Texas. Prop 12 has helped insurance companies (who support Republicans) and hurt trial lawyers (who support Democrats), and that's about it.

But since that what it was really designed for, I guess you'd have to call it a success.

POSTSCRIPT: California, where I live, also has damage caps. In fact, we've had them since 1975, so there's a pretty long baseline of data to judge whether they've worked. They haven't. See here and here for more.

Why Do Short People Still Exist?

| Tue Aug. 16, 2011 11:21 AM EDT

A friend emails to say he's sick and tired of Rick Perry and wants me to write a post about the first non-Perry item that comes up in my RSS feed. Fine. But who to choose? One potato, two potato, I haven't linked to Modeled Behavior for a while, so let's see what's up there. Sadly, their top post right now is about Rick Perry. But the next post down is from Karl Smith:

I am short. My wife is short. Chances are my son will be short. Here’s a question – why?

At this point in human history, height in the Western world is mostly genetically determined. Yet, as far as I can tell the advantages to having tall genes outweigh those to having short.

Even in a preindustrial environment this seems to be true. This is likely why taller people, especially men are more attractive and have higher status.

So, why did genetic shortness persist?

Hmmm. What kind of ill-informed ev psych speculation can I offer up here? Maybe shortness isn't especially maladaptive. Maybe the big, tall cavemen all went chasing after the saber-tooth tigers and got eaten while the short guys ran away to live another day. Or maybe the short guys, being less sexually attractive, had to develop a better line of patter and became more socially adept? Or maybe agility and climbing ability are as important as speed and strength. Perhaps the little guys tended to stay at home and help with the farming instead of going out on hunts, thus providing lots of opportunities for afternoon quickies while Og was away? Or maybe shortness genes were all conserved via women, for whom it was an advantage?

Hell, I don't know. So let's get back to Rick Perry. Authoritative information on his height is surprisingly hard to come by, but in this picture he's pretty close to standing up straight and looks to be about six feet tall or maybe a little under — but in any case clearly a bit shorter than Barack Obama. (Perry is also about six feet wide, but that doesn't matter.) Since it's widely known that the taller candidate usually wins in a presidential contest, this makes Perry a pretty chancy GOP opponent for Obama. Mitt Romney is 6' 2", which makes him a safer alpha male bet for Republicans. And pipsqueak Michele Bachmann is obviously doomed. So I'll stick with Romney as the favorite to win the Republican nomination this year.

Rick Perry's Billionaire Club

| Tue Aug. 16, 2011 10:33 AM EDT

The LA Times investigates the big-money culture of Texas politics, which has gotten even bigger and money-er since Rick Perry became governor:

Perry has received a total of $37 million over the last decade from just 150 individuals and couples, who are likely to form the backbone of his new effort to win the Republican presidential nomination....Nearly half of those mega-donors received hefty business contracts, tax breaks or appointments under Perry, according to a Los Angeles Times analysis.

Perry, campaigning Monday at the Iowa State Fair in Des Moines, declined to comment when asked how he separated the interests of his donors from the needs of his state. His aides vigorously dispute that his contributors received any perks. "They get the same thing that all Texans get," said spokesman Mark Miner.

Nearly half! And this doesn't even include anything about David Nance and the largesse Perry distributes via his $200 million state-managed venture capital slush fund. Doling out political favors in industrial quantities is obviously something that isn't frowned upon by Texas political culture, and Perry has taken it to whole new levels.

Still, as long as all these good 'ol boys get all the same stuff that all Texans get, I guess it's OK.