• Friday Cat Blogging – 30 September 2011


    Yes, I’m still traveling. Sort of. Actually, right about now I should be sunning myself at Golden Gate Park, where we’re holding a MoJo staff picnic. But that doesn’t mean you don’t get catblogging this week. It only means that catblogging has been reduced 50%.

    Sorry about that, Domino fans, but I just didn’t get a new picture of her before I left. What I got instead was a rare inside look at the working conditions here at blog central. I am, as you can see in this picture taken through my window, closely supervised. Until my supervisor gets bored, that is, which happens a lot. Still, you have to stay on your toes. It’s sort of a feline-opticon around here. 

  • Bank Fees Finally Out in the Open


    Banks all over the country, led by Bank of America, are announcing new monthly fees for customers who use debit cards. Why? Because new laws restrict both the insanely high overdraft fees they used to charge and the “swipe fee” they tack on to every transaction — so they’re making up for the lost revenue elsewhere. “Thanks Dick!” is a typical reaction, because the new rules are the brainchild of Sen. Dick Durbin. In San Francisco, where I am today, the Examiner puts things a little more colorfully.

    If you want to know why so many people hate liberals, this is it. We’re annoying! And now, thanks to us, you have to pay a monthly fee to use your debit card.

    Unfortunately, it’s hard to explain why this is, nonetheless, a good thing. But here’s the nickel version: the old fees were largely hidden. The new ones aren’t. Overdraft fees were deliberately designed to be unpredictable, unforeseen, and primarily aimed at low-income users. Swipe fees were invisible because the credit card industry is effectively a duopoly and prohibits merchants from adding swipe fees to credit card bills. After all, if they did that, consumers might actually see what they were really paying for the privilege of using credit and debit cards.

    All along, banks have had the option of reforming overdraft fees to make them fairer and more transparent. They had the option of allowing merchants to charge customers for swipe fees or not as they preferred. But they didn’t. That’s because hidden fees, on average, are more lucrative. Hidden or not, though, we’re all still paying them.

    So yes: the new fees are annoying. But that’s a feature, not a bug, because now they’re right up front in black and white, which means that consumers will see them and can be properly outraged (or not) by them. This in turn means that the free market has a chance to actually work: consumers will abandon Bank of America if their fees are too high and force them to charge less. Likewise, other banks will compete openly on the size of their fees. In the end, this competition will force fees down to the lowest possible profitable level, which is exactly what competition is supposed to.

    It may not seem like much of a blessing at first, and lots of people will remain annoyed at us annoying liberals for introducing this new annoyance into their lives. But if you actually believe that competition is good for consumers and eventually produces lower prices and better service, you should welcome these new fees. Banks liked the cozy old system, where everything was hidden and competition remained subdued. Consumers should like the new one.

    UPDATE: Want an even shorter explanation? Here it is: banks hate the new rules. But do you seriously think they’d hate a rule that was going to increase costs to consumers and thereby put more money in their own pockets? Of course not. Obviously they believe that consumers are the ones who are going to benefit, not banks, and who would know better?

  • Obama Assassinates U.S. Citizen


    Up until now, the Obama administration’s policy of sanctioning the assassination of U.S. citizens has been more theoretical than real. Not any longer:

    A missile fired from an American drone aircraft in Yemen on Friday killed Anwar al-Awlaki, the radical American-born cleric who was a leading figure in Al Qaeda’s affiliate in this country, according to an official in Washington.

    ….Yemen’s official news agency, Saba, reported that the attack also killed Samir Khan, an American citizen of Pakistani origin and the editor of Inspire, Al Qaeda’s English-language Internet magazine. Mr. Khan proclaimed in the magazine last year that he was “proud to be a traitor to America.”

    Is this the first targeted assassination of a U.S. citizen as part of the war on terror? Probably. The Bush administration killed Buffalo-born Kamal Derwish in 2002, but at least for public consumption, quickly claimed that they had been targeting someone else and Derwish was simply collateral damage. You can take that for what it’s worth, but in any case, even that fig leaf is gone now: no one’s even bothering to pretend that al-Awlaki’s killing was anything other than deliberately planned and executed.

    No one is likely to mourn al-Awlaki himself — which is what made his assassination so safe in the first place — but we sure ought be mourning the fact that it happened, and that it’s likely to happen routinely from now on. The Obama administration has demonstrated once again, as it did in Libya and as it’s done in a variety of surveillance cases, that its view of executive power in the arena of national security is hardly any less expansive than Dick Cheney’s was. The fact that this was predictable makes it no less alarming. Regardless of how any of us feels about warmaking in general, there are very good reasons that national governments are more constrained in their ability to kill their own citizens than in their ability to kill foreigners, constraints enshrined in both the explicit rules and longstanding traditions of due process. That bright line has grown a lot dimmer today.

    The hardcore national security hawks in both parties will likely cheer Obama’s “toughness” today, but they shouldn’t. Bright lines, once crossed, seldom survive. Adam Serwer has more here. Glenn Greenwald has more here.

  • Dammit, There Is No $16 Muffin


    On the Daily Show last night, Bill O’Reilly was griping about the great $16 muffin affair and Jon Stewart had no idea what he was talking about. So the whole thing passed without any pushback, and now millions more people think Uncle Sam is paying $16 for hotel muffins.

    Once again, then: it’s a myth. There were no $16 muffins. It’s just an artifact of the way hotels aggregate costs for events and bill them all to a few line items instead of breaking down every charge separately. In fact, for the event in question, DOJ came in exactly on budget. All the details are here.

    Now, can we please hear no more about this?

  • San Francisco Meetup


    In the comments downblog, a few people asked if I planned to meet up with Bay Area readers while I was in town. This slipped my mind, actually, but as it happens I’m free Thursday night. So here’s the deal: I’m going to be largely tied up most of the day, so someone will have to organize this in the comment section. If it’s just one or two people, that’s fine. If it’s a bigger crowd, that’s great too. I have a strong craving for Chinese food at the moment, but anything else will do if the masses speak up in unison for something different. I can make it to any place that’s fairly easily accessible from downtown.

    So…..any takers for dinner on Thursday? I’ll try to check in around noon, and if there’s some kind of consensus I’ll post it as an update.

    UPDATE: I don’t have access to comments at the moment, but compromising a bit between various suggestions, times, and closeness to my hotel….how about R&G (on Kearney just north of Sacramento) at 7:00? Can I get a show of hands in comments for how many people are OK with that? (It’s fine to show up late or leave early, of course.)

    CONFIRMATION: This is to confirm the meetup. We’ll be at R&G at 7:00 tonight. It looks like maybe half dozen folks will be there. But maybe more! See you there.

  • Coming Soon: The Tea Party Recession of 2011?


    Back in 2008, during the worst of the financial crisis, I remember that many of us were shaking our heads a bit over Europe. American banks were clearly overleveraged, which led to the collapse of Bear Stearns and Lehman and Wachovia, and the near collapse of several others, but European banks mostly came through unscathed. Outside of Great Britain (and Iceland, of course), Europe suffered only a few bank failures, and they were pretty easily contained. And yet, European banks, on average, were more highly leveraged than ours. Shouldn’t they have collapsed even worse than ours? What gives?

    Well, now we know: European banks were in worse shape than ours, but they were overleveraged in a different way that allowed them to hang on a couple of years longer. But now the jig is about up. Greece is about ready to fail, and after that, maybe Spain and Italy too. Ezra Klein talks to Desmond Lachman about what this means:

    EK: And if some of these dominoes fall, how bad are things likely to get?

    DL: What’s really at stake here is the European banking system. These countries might be relatively small, but if you just look at Greece, Ireland and Portugal, that’s $1 trillion in sovereign debt. If you add Spain, that’s another trillion. If you add Italy, that’s another $1.9 trillion. If the European banks take the hit, that could really cause another Lehman moment. It would be a credit crunch that would throw the European economy into a meaningful recession.

    Bummer. But hey, that’s just Europe. At least we’ll be OK, right? Sadly, no. We’re highly exposed in a number of ways to trouble in Europe. In fact, it might even be worse this time around:

    EK: And what are the chances that this leads us back into a recession?

    DL: If you want me to depress you some more, let me tell you what really worries me. If we do go into recession this time around, what will be different from 2008 and 2009 is even if the recession isn’t as deep, we either don’t have the policy ammunition to fight it or we have convinced ourselves that we don’t have the policy ammunition to fight it. So what will the policy response be? Bernanke just showed you he thinks he has very little ammunition left. There’s no way Congress will go in for another big stimulus package. And the Europeans are tied up in the belief that they need to balance their budget.

    Just remember: it doesn’t have to be this way, no matter how often and how loudly Republicans shriek about austerity and budget deficits. If we want them to, both monetary and fiscal policy can have plenty of bite left. Bottom line: If we plummet into a second recession, it will be solely the fault of fanatical conservatives in Congress who refuse for reasons both partisan and ideological to acknowledge that we can do something about this. It’ll be the Tea Party Recession of 2011.

  • Housekeeping Note


    I’ll be in San Francisco for the next three days at a MoJo staff meeting, so blogging will be light. Maybe even nonexistent. It all depends on my mood, my schedule, and the vagaries of WiFi availability. Catblogging, however, will appear normally, though it will be reduced by 50%. I’ll be back this weekend, and normal blogging will resume on Monday. 

  • Headline of the Day


    Someone on the New York Times copy desk pretty much nails it today:

  • The Cost of Healthcare


    It’s a slow news days, so everyone is highlighting the latest Kaiser report on healthcare costs. Guess what? They’re up!

    I don’t have a ton to say on the fact that healthcare costs are increasing, but it’s worth pointing out what this means for household incomes. In the last year, for example, the Census Bureau reports that median household incomes dropped from $49,777 to $49,445. That’s a decrease of 0.7%.

    But households also got compensation in the form of healthcare insurance. According to the Kaiser report, the employer share of healthcare premiums increased from $9,773 to $10,994. So let’s add this up:

    • 2010: $49,777 + $9,773 = $59,550
    • 2011: $49,445 + $10,994 = $60,439

    Suddenly, instead of a decrease, we have an increase of 1.5%. Adjusted for inflation, this is still a net loss, but it’s a smaller one: about -1.2% instead of -3.4%. (All numbers are a bit rough since the sampling periods aren’t identical. But they’re probably accurate within a tenth of a point or two.)

    Obviously the Great Recession is still taking its toll on household incomes. But so is healthcare. Household cash incomes have dropped considerably over the past decade, and that’s a sign of something seriously wrong with the economy. But it’s also a sign that instead of cash, we’re increasingly taking our compensation in the form of ever more healthcare. That’s probably a bad deal for most of us.

  • Obama’s Devious Plot to Take Away Your Guns


    More 11-dimensional chess from President Obama! He says he has no interest in further gun control, and he’s done nothing to restrict gun ownership, but NRA president Wayne LaPierre sees what the rest of us don’t:

    Obama himself is no fool. So when he got elected, they concocted a scheme to stay away from the gun issue, lull gun owners to sleep and play us for fools in 2012. Well, gun owners are not fools and we are not fooled.

    Sotomayor, Kagan, Fast & Furious, the United Nations, executive orders. Those are the facts we face today….President Obama and his cohorts, yeah, they’re going to deny their conspiracy to fool gun owners. Some in the liberal media, they are already probably blogging about it. But we don’t care because the lying, conniving Obama crowd can kiss our Constitution!

    What good is 11-dimensional chess when your opponents are playing in 12 dimensions? Obama has met his match.

  • Chris Christie Will Not Be Our Next President


    The constant drumbeat of attention being paid to New Jersey Governor Chris Christie is really starting to grate. The guy says he’s not going to run. Why not take him at his word and just let him govern New Jersey until 2016?

    Answer: because Republicans are in a panic. They don’t trust Romney, they’re increasingly worried that Perry is unelectable, they think Bachmann is a nutcase, and the rest of their field are just fill-ins. So Christie is their once and future saviour. He yells at constituents! He killed a tunnel that liberals loved! He yells at teachers! He cut budgets! He yells at Democratic legislators! What’s not to like?

    Lots, it turns out, and Dan Amira finally tallies up Christie’s weak points with the Republican base in a convincing fashion. Christie does like to yell at people, but unfortunately, he likes to yell at crazy conservatives too. In particular, he’s taken very loud, very public positions on illegal immigration, gun control, climate change, education, and Sharia law that are precisely the opposite of the tea party positions. Any one of them would probably be enough to doom his chances, but five? Fuhgeddaboutit. He’d crash and burn before he even had his first chance to yell at a debate moderator for asking him a stupid question.

    Note to Republicans: your field is set. Your choice is between an apparently inept Rick Perry and a transparently insincere Mitt Romney. Them’s the breaks. Make the best of it.

  • Money and Medicine


    Via Aaron Carroll, a new survey of doctors reports that 42% of them think they’re overtreating their patients. But why are they overtreating their patients? The top answers were fear of malpractice suits, mandated performance measures, and too little time with patients. Aaron finds all three unlikely and then adds this:

    Notice what’s not in the top reasons? Money. Could it be that doctors might practice more aggressively because when they do, they make more? Well, only 3% believed that financial considerations could influence their own practice. Most, however, thought that other physicians would be affected by such things.

    I’m sure doctors aren’t alone here. We’re all pretty sure that other people are motivated by grubby concerns like money and status and power, but we’re equally sure that our own motivations are always pure and humanitarian. See, for example, both sides of every political fight ever in the history of the world.

    Anyway, Aaron says in a followup post that more than a few doctors were pissed off about his suggestion that money influences their decisons. I don’t blame them. Still, the rest of us should probably assume that money does indeed influence them, just like it influences every other human being on the planet. As usual, doctors are pretty good at diagnosing others, but not so good at diagnosing themselves.

  • The Alternate Universe Strikes Again


    It’s probably not a wise use of time to obsess too much about David Brooks, but…..I just don’t get the guy. Today he argues that the global economy is on the verge of a train wreck and neither Democrats nor Republicans are thinking big enough:

    We need an approach that is both grander and more modest. When you are confronted by a complex, emergent problem, don’t try to pick out the one lever that is the key to the whole thing. There is no one lever. You wouldn’t be smart enough to find it even if there was.

    Instead, try to reform whole institutions and hope that by getting the long-term fundamentals right you’ll set off a positive cascade to reverse the negative ones.

    Simplify the tax code. End corporate taxes and create a consumption tax. Reshape the European Union to make it either more unified or less, but not halfway as it is now. Reduce the barriers to business formation. Reform Medicare so it is fiscally sustainable. Break up the banks and increase capital requirements. Lighten debt burdens even if it means hitting the institutional creditors.

    Wow. Eliminate corporate taxation! Completely reform the EU! Fix Medicare! Break up the banks! Declare a debt holiday! And do it all now now now. This is coming from a guy who likes to think of himself as a Burkean conservative?

    At a grand policy level, it’s not even that I disagree that much. I’ve written in favor of all these things except for simplifying the personal tax code (sort of trivial on the scale Brooks is writing about) and reducing the barriers to business formation (the World Bank ranks us pretty satisfactorily on this already). But whether or not these are good ideas, this is a pretty mind-boggling list of things to just casually toss off with one sentence apiece. I mean, what’s the pitch to the Europeans? You’ve probably never thought about this before, but you need to either dissolve the eurozone or create a United States of Europe. Tick tock, time’s a wasting. What’s it going to be? [Cue Jeopardy theme music.]

    It’s probably not a good idea to dash off a column right after you’ve jerked awake in a cold sweat in the middle of the night. Especially one week after writing a column castigating President Obama for cynically proposing ideas that “couldn’t get passed even when Democrats controlled Congress.” But implementing a VAT, getting healthcare costs under control, reforming the tax code, and breaking up the banks could? In which universe?

    In the universe we actually do live in, Democrats are willing to talk about the kinds of things on Brooks’s list. Maybe not as bravely or as fully as Brooks would like, but at least they’ll entertain his ideas. But Republicans? They’re dead set against any tax reform that isn’t effectively regressive; they’re dead set against a VAT; they’re dead set against any new revenues for Medicare, which is plainly required as part of any serious reform; they’re dead set against breaking up banks; and they’re dead set against any kind of debt relief. Until conservatives like Brooks manage to get their more rabid compatriots to abandon this antediluvian approach to just about everything, there’s not even a faint hope of getting anything on his wish list done. That’s Job 1. In the meantime, there’s hardly any point in writing about anything else.

  • Rick Perry and the Invisible Primary


    Yesterday I said that although Rick Perry’s immigration gaffe is getting a lot of attention, his “real problem is that Thursday’s debate badly shook up a GOP establishment that was pretty uneasy with him already.” Adam Serwer dissents: “According to a forthcoming study from Harvard’s Theda Skocpol and two of her graduate students, Vanessa Williamson and John Coggin, immigration is among the most important issues for self-identified ‘Tea Party’ Republicans.”

    This is actually a pretty minor disagreement, since I too believe that Perry’s immigration apostasy is a really big deal. Still, it’s worth explaining briefly why I said what I said. Basically, I’m piggybacking on the views of political scientists Martin Cohen, David Karol, Hans Noel, and John Zaller, who wrote an influential book a couple of years ago called The Party Decides: Presidential Nominations Before and After Reform. Their contention is that the key fight isn’t so much the primaries themselves, but the “invisible primary” that’s fought for several months before voting ever starts. During this time, candidates fight for the attention and endorsements of party insiders, as represented by interest groups, state party leaders, funders, media bigwigs, and others whose support is either important in its own right (because lots of people take their cues from them) or whose support is an important signal of acceptability. Hans Noel explains:

    Our argument is that the party is not just the formal DNC and RNC chair and the official hierarchy. It’s all of the people who have made a commitment to be part of the group that’s coordinating together to try to advance the party’s interests.

    You could say the voters count too, because they’re doing some type of coordination and trying to encourage their friends. But their contribution is much smaller, because they don’t have as much influence. So we focus more on the high-profile actors, but we have an expansive definition to encompass all the elite actors who are trying to help the party achieve its collective goals.

    And those goals are to find a nominee who can win, but who is also someone they can trust. Whether they can trust them because they’re in the right place ideologically is part of it, but it’s richer than that. It’s someone who they think will advance party goals over their own personal goals.

    If you buy this argument, it means that although tea party unhappiness with Perry over immigration is what’s getting lots of attention, it’s really just a superficial sign of a deeper danger. Perry’s real problem is that his inability to address an obvious and predictable problem with the base — which reveals either laziness, ineptitude, stubbornness, or all of the above — makes him an unreliable candidate. If this view starts to harden among party insiders, they’ll eventually start to signal their support for Romney or some other candidate, and the rank-and-file will follow their lead.

    By all accounts, Perry’s disastrous debate performance has hurt him badly in the invisible primary. He’s still got plenty of time to rejuvenate himself, but he can’t afford too many more outings like last Thursday’s. The party is watching.

  • Understanding Comp Plans


    Dan Ariely says you shouldn’t be too specific in your compensation practices because it motivates people to game the system instead of working hard. For example:

    A consulting company once told me they made a rule that if you stayed until 8 in the office, you could order food and use the car service to get home. So what happens? A ton of people are there at 8. Nobody’s there at 8:05.

    Really? A “ton of people” who probably billed out at $300 per hour were there at 8? At a cost of maybe 30 bucks in food and another 50 for the car service? Sounds like this strategy worked great — as long as you understand that it’s primarily aimed at increasing billable hours. What’s the problem?

  • Quote of the Day: Massive Failure


    From Ryan Avent, surveying both the weak current economy as well as the spectacular destruction about to be let loose in the near future:

    It’s just shocking to think about the dangers that loom and consider the extent to which they’re driven by governmental failures.

    And yet, to a large extent, governments are merely responding to the wishes of the public. It’s a simple fact that the average Joe (or Dieter or Emile or Carlotta) believes pretty strongly in folk economics — low inflation, a strong currency, and balanced budgets — and decidedly doesn’t believe in bailing out people who aren’t them. On the latter front, this applies both to Germans who don’t want to bail out Greeks and Americans who don’t want to bail out underwater homeowners.

    It’s all perfectly understandable — and about as self-destructive as insisting that we should plant crops by the phase of the moon. Which might be about where we’re headed if we don’t get our act together soon.

  • Big Trends, Little Trends


    Jonathan Bernstein picks up on one of my hobbyhorses:

    Here’s the thing. Barack Obama isn’t as popular now as he was in January 2009. This is not exactly a little-known fact; indeed, we fortunately have some really good indicators of exactly how popular Obama is overall, and they’re not all that obscure.

    What this means is that sloppy journalists can get endless mileage from picking out any subgroup in the nation and finding out that, gee, Obama has lost popularity there!….To know whether any of these stories is actually news, it’s absolutely necessary to compare Obama’s decline within the group in question to his overall decline. If it’s more, then you have something; if it’s the same or less, then you’re at best illustrating how an overall decline works within that subgroup.

    Roger that. This usually bugs me most during the post-election recap season. In 2008 the media was full of breathless reports about how Obama gained support among married women or McCain lost support among Hispanics or some such. But of course they did. In 2008 Obama did a lot better among all voters than Kerry did in 2004, and McCain did worse than Bush. So it stands to reason that Obama also did better among most demographic groups and McCain did worse. In 2008, for example, several writers suggested that Obama did especially well among churchgoers, but in fact he didn’t: he performed about 9 points better than Kerry overall and about 10 points better among churchgoers. There was nothing to it.

    Anyway, this is just another example of “compared to what?” That’s a question that should be on everyone’s minds a lot more than it usually is.

  • How Ben Bernanke is Helping Rick Perry Win the White House


    Brad Plumer points today to a Dallas Fed report that, rather amusingly, demonstrates that a big reason Texas has done well during the recession is because of Fed policy. Roughly speaking, most of the Fed’s monetary policy works through bank channels, and since Texas banks were in better shape than most (thanks to Texas’s mild housing bubble), the Fed’s actions were especially effective there. That’s pretty interesting. But for sheer comedy gold, this chart is my favorite:

    That “debased” dollar that tea partiers keep screaming about? Actually, it’s not really very debased in the first place. But it has weakened over the past couple of years, and it’s weakened especially against Texas’s major trading partners, primarily Mexico. And the Texas economy has benefited from that.

    Maybe Rick Perry needs to send Ben Bernanke a a fruit basket or something?

  • The Price of Trying and Failing


    Polls show repeatedly that people (a) approve of Obama’s specific proposals to boost the economy, but (b) disapprove of Obama’s handling of the economy. Weird! But then again, maybe not. Andrew Sprung points out that there’s a reason Obama lost support after the debt ceiling deal even though the public largely supported his approach:

    He wanted to cut spending and raise taxes, and so put the U.S., by his lights, on a firm financial footing for ten years and put the deficit wars behind him. That’s what he told the American people, repeatedly, through the summer. They believed him. They supported him — polls showed strong backing for his “balanced” approach to deficit reduction. And he couldn’t do it — not because he was happy to just cut spending, but because he lashed himself to the debt ceiling mast, notwithstanding the fact that Republicans were swearing their willingness to row him (and the country) over a cliff. He is being punished in the court of public opinion not for trying to compromise but for failing to get a compromise.

    The difference is important.

    Yes it is. And you know who understands this really, really well? The Republican leadership.

    This is one of the reasons I’ve long been skeptical of the notion that Obama should have fought harder for progressive legislation even when it was likely to fail. “At least people would know where he stands,” goes the usual mantra. And that’s true. But what people would also know is that he didn’t have the juice to get anything done. You can stand on a soapbox forever and tell people that this is all the fault of those obstructionist Republicans, but most of them aren’t paying attention. They’ll just vaguely hear that Obama failed yet again and start to think that the guy’s a loser.

    Nothing succeeds like success. And nothing helps a president more than an economy that’s actually doing well. The details of failure just don’t matter that much, unfortunately. And Republicans know it. For them, congressional dysfunction is a feature, not a bug.

  • Housing vs. Fiscal Stimulus: Why Not Both?


    I think Christina Romer is pulling a fast one in her op-ed defending President Obama’s jobs plan. She takes on several arguments against his proposal, and this is one of them:

    WE NEED A HOUSING PLAN, NOT MORE FISCAL STIMULUS The bubble and bust in house prices has left households burdened with too much debt. Until we deal with this problem — perhaps by providing principal relief to the 11 million households whose mortgages are larger than the current value of their homes — we’ll never get the economy going.

    The premise of this argument is probably true….[But] recent research shows that government spending on infrastructure or other investments raises demand even in an economy beset by over-indebted consumers….In the recovery from the Great Depression, economic growth, which raised incomes and asset prices, played a big role in lowering debt burdens. I strongly suspect that fiscal stimulus will be more cost effective at speeding deleveraging and recovery than government-paid policies aimed directly at reducing debt.

    Hmmm. Romer seems to be attacking a straw man. No one — at least no one arguing that we need a better housing plan — is claiming that fiscal stimulus won’t spur economic growth, or that economic growth won’t lower debt burdens. Of course they will! The argument is that fiscal stimulus isn’t enough by itself, or, alternately, that it might not give us the biggest bang for our buck. Among state economies, there’s a very strong correlation between deleveraging and unemployment, which suggests pretty strongly that programs aimed at targeting underwater mortgages would be extremely helpful.

    But Romer’s only real response is that she “strongly suspects” that fiscal stimulus is the best way of addressing this. As it happens, I’m willing to give a “strongly suspects” from Christina Romer a lot of weight. Still, the role of housing in driving the recession and its continuing role in keeping demand depressed is pretty clear cut, and this suggests that any effective jobs plan should include both fiscal stimulus and an aggressive mortgage forgiveness program. It’s possible (likely, in fact) that an aggressive housing plan is politically infeasible, but still, from an economist I’d like to hear an economic argument either for or against. I don’t think we have one here.