Kevin Drum - September 2011

Friday Cat Blogging - 30 September 2011

| Fri Sep. 30, 2011 2:56 PM EDT

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. 

Advertise on MotherJones.com

Bank Fees Finally Out in the Open

| Fri Sep. 30, 2011 1:43 PM EDT

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

| Fri Sep. 30, 2011 11:10 AM EDT

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

| Thu Sep. 29, 2011 4:30 PM EDT

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

| Wed Sep. 28, 2011 11:26 PM EDT

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?

| Wed Sep. 28, 2011 11:09 PM EDT

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.

Advertise on MotherJones.com

Housekeeping Note

| Wed Sep. 28, 2011 9:14 AM EDT

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

| Tue Sep. 27, 2011 6:31 PM EDT

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

The Cost of Healthcare

| Tue Sep. 27, 2011 4:35 PM EDT

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

| Tue Sep. 27, 2011 1:41 PM EDT

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.