Kevin Drum - March 2012

The Fed Should Help Out the Recovery by Letting Inflation Rise a Bit

| Fri Mar. 9, 2012 2:22 PM EST

We had some pretty decent jobs numbers today: 227,000 new jobs in February and an upward revision for January to 284,000 new jobs. Hooray! And with that out of the way, I'm going to profoundly abuse the principles of fair use and republish this post of Karl Smith's in its entirety:

I had considered oil prices to be the primary threat to an accelerating recovery. I do think the fundamentals are ripe for an accelerating job creation rate. 300K+ a month is not fundamentally unrealistic at all.

I now believe, however, a panic-y federal reserve and an over-obsession with keeping inflation expectations moored is the biggest threat.

For now I think it should be the mission of every Journalist to harp on Fed Officials as to why they are willing to tolerate half a decade of unemployment above 5% and the devastation and loss of skills associated with that but they are not willing to tolerate Core-PCE rising above 2%?

I still think oil prices are a potential problem area, as is Europe — though the EU seems to have successfully kicked the can down the road for a while and is probably not an immediate threat. And in the Fed's defense, they've made it clear that interest rates are going to stay super-low for quite a while.

Still, a wee bit of higher inflation would be pretty welcome. Just as insurance, mind you. Let's do everything we can to avoid an economic relapse, OK?

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Arizona Moves to Bar "Wrongful Birth" Lawsuits

| Fri Mar. 9, 2012 1:08 PM EST

Aaron Carroll asks:

Should doctors be protected by law for withholding information from patients that their patients might want to know?

Hmmm. I guess the correct answer is "no." But I'm a little confused about whether anyone actually disagrees about this.

At issue is an Arizona bill that would bar "wrongful birth" and "wrongful life" suits. These suits have a long history, and are generally brought by parents who believe their physician failed to tell them about a prenatal problem that might have led them to seek an abortion if they'd known about it. Some states allow these suits, some don't. But does the Arizona bill protect a doctor who, perhaps because he or she opposes abortion on principle, deliberately withholds information that could lead the mother to seek an abortion?

It doesn't seem like it to me. The bill in question is SB 1359, and it's pretty short. Here's paragraph D:

This section does not apply to any civil action for damages for an intentional or grossly negligent act or omission, including an act or omission that violates a criminal law.

Any Arizona readers care to comment? Is there some kind of legal distinction between "negligent" and "grossly negligent" that's germane here? Is "intentional" so hard to prove that in practice no one can ever do it? Is there some key distinction between a wrongful birth tort and an ordinary malpractice tort? This bill is obviously motivated by pro-life principles, and obviously it does something. But it plainly doesn't allow doctors to deliberately lie about prenatal conditions. Still, perhaps it gives them more wiggle room to "accidentally" miss something or "just decide" not to run a test? I can't tell. Doctors, lawyers, and Arizonans are urged to weigh in and educate the rest of us.

No, Virginia, There Are No Independent Voters

| Fri Mar. 9, 2012 12:19 PM EST

Any book review that starts like this is probably worth reading:

I suppose we should be grateful to Linda Killian. Her new book collects in one place every clichéd and suspect empirical generalization about political independents. So in that sense—and only in that sense—it is a useful volume.

That's from Ruy Teixeira. His simple point is one that regular readers will be familiar with: most "independent" voters are actually pretty partisan. Indies who lean Democratic vote Democratic and indies who lean Republican vote Republican. They're just about as reliable in their voting patterns as actual Democrats and Republicans. This has long been common knowledge among political scientists who actually look at voting data.

But what about the folks who don't lean at all?

Yet the “independent” group does include one sub-group whose members look and act more like swing voters. This is the so-called pure independents subgroup, those who say they do not lean toward either party. In 2008, they split their vote much more evenly between the parties—51-41 for Obama—and they have policy views that are not closely aligned with either party. But this is a small group, and because it tends to show low information, low involvement, and relatively low turnout, it is even smaller in the context of an actual election. In 2008, according to the NES, they were just 7 percent of all voters and only 20 percent of nominally independent voters.

Independent voters aren't entirely a myth, but they're surely an endangered species. There just aren't as many of these fabled creatures as the mainstream press endlessly suggests. Like it or not, we're a partisan country.

Good News! Obamacare Will Cost Less than Projected

| Thu Mar. 8, 2012 6:58 PM EST

As long as we're on the subject of healthcare, have you heard about the conservative discovery that Obamacare is going to cost $111 billion more than originally projected? No? Good for you. It means you have a life.

But I don't, and in case you have heard about this you might also want to hear the actual story. Jonathan Cohn has you covered:

After the Affordable Care Act became law, the administration became aware of a glitch in the law....Congress responded by amending the law, to redefine who would be eligible for Medicaid.

....As a result, some people who would have gotten their insurance through Medicaid will now get their health insurance through the new exchanges....That makes the overall cost of subsidies a lot higher. Throw in some changes in economic forecasting, and you get that extra $111 billion in subsidies.

But that’s only half the story! The cost of subsidies has gone up, because more people will be getting insurance through the exchanges. But the cost of Medicaid has gone down, because, among other things, fewer people will be getting coverage through that program. Overall, the administration now projects the ten-year Medicaid cost to decline by $272 billion.

So, um, subtract two, carry the one, and....you end up with net cost reduction of $161 billion over ten years. The actual number might end up being different once the accounting boffins grind all the way through their spreadsheets, but it looks a lot like it's going to be negative.

It's worth pointing out, once again, the object lesson here: Obamacare isn't perfect. It's not set in stone. Stuff is going to go wrong and it's going to get fixed. In a few cases, like the CLASS Act, things just aren't going to work out and some element of the law will be abandoned. In other cases, like this one, mistakes will be corrected and costs will change modestly either up or down. And in still others, there's really nothing wrong at all and conservatives are just trying to gin up some faux outrage. So take everything you hear with a grain of salt. Every big bill has problems, and those problems get addressed as implementation goes forward. Obamacare will be no different.

Chart of the Day: Medicare Growth Slowing Down to Near Zero

| Thu Mar. 8, 2012 6:20 PM EST

Via Sarah Kliff, a pair of researchers have taken a look at per-capita Medicare spending and concluded that it's on a long-term downward path which is likely to continue into the future. Their argument is pretty simple: Although Medicare's sustainable growth rate formula has been overridden year after year (this is the infamous annual "doc fix"), they say that other attempts to rein in spending have actually been pretty effective. This suggests that the cost controls in Obamacare have a pretty good chance of being effective too. Their basic chart is below, and since we're all about the value-added around here I've added a colorful red arrow to indicate the trajectory.

(Note that their calculations are based on potential GDP, not actual GDP. I'm not sure why, but I assume it's to control for the effects of recessions and boom years.)

Now, this calculation is per beneficiary, which means that overall Medicare costs will still go up if the number of beneficiaries goes up — which it will for the next few decades as the baby boomer generation ages. There's really nothing to be done about that, though. Demographic bills just have to be paid. Nonetheless, if we can manage to keep benefits per beneficiary stable compared to GDP we'll be in pretty good shape.

We Need Both Plumbers and English Majors

| Thu Mar. 8, 2012 3:16 PM EST

Rick Perlstein writes today that Rick Santorum was right when he said "Not all folks are gifted in the same way. Some people have incredible gifts with their hands ... and want to work out there making things":

Santorum’s claim that Obama wants everyone to go to college to become Marxist deconstructionists was wrong. In fact, it was so wrong that it didn't even survive Fox News, where, presented with evidence that Obama, like him, favored all kinds of educational opportunities, including but not limited to college, Santorum replied, sheepishly, "Maybe I was reading some things" that gave him the wrong impression, and "if it was an error, then I agree with the president."

But wait. Stick to your guns, Rick! The thing is, you exposed a poetic truth: While Obama might not push college education exclusively, like most Democrats he does oversell it, and does shortchange the alternatives. And millions of young Americans pay the price.

...."The administration has done a good job of talking about, and even funding, career training for high-school graduates," says education expert Dana Goldstein of the New America Foundation. "What they will not do very much is talk about or fund career training for teens, even though there is good evidence that if you don't offer career and technical training via the public schools, you may lose people forever." A democracy of the heart that acknowledges there are simply some people who will never step into an academic classroom post-high school, and that this is alright, seems a bridge-to-the-twentieth-century too far for our schooling-mad politicians these days.

None of this is an accident, of course. American high schools used to be big suppliers of vocational education. But in the 70s and 80s, the practice of "tracking" — placing the smart kids in chemistry classes and the not-so-smart kids in shop classes — came under withering assault. There was pretty good reason for it, too, since tracking really did have some pernicious effects. Tom Loveless glosses the arguments of the critics here, including those in Jeanne Oakes’s influential 1985 book, Keeping Track:

They pointed out that poor, non-English speaking, and minority youngsters were disproportionately assigned to low tracks and wealthier, white students to high tracks—and concluded that this was not a coincidence. Oakes's book helped ignite a firestorm of anti-tracking activity. Tracking was blamed for unfairly categorizing students, stigmatizing struggling learners, and consigning them to a fate over which neither they nor their parents had control. The indictment spread from scholarly journals to the popular press. A 1988 article in Better Homes and Gardens asked, "Is Your Child Being Tracked for Failure?" In 1989, Psychology Today ran "Tracked to Fail" and U.S News and World Report published "The Label That Sticks." Although the anti-tracking movement’s left-leaning political base conflicted with that of the movement for rigorous academic standards, parental choice, and other grassroots proposals that gained popularity in the late 1980s, it managed to hitch its wagon to growing public demand for excellence in the public schools.

The detracking movement did a lot to undermine vocational education, and people like Bill Gates and others have since been influential boosters of the idea that everyone should go to college. But I'm with Dana and the Ricks: not everyone either can or wants to go to college. We never needed to destroy the village in order to save it, and there are ways of addressing the ills of tracking without losing its benefits at the same time. American high schools ought to be as good at turning out plumbers as they are at turning out future English majors.

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Being in Congress Sucks These Days

| Thu Mar. 8, 2012 2:19 PM EST

From Politico:

For members of Congress, the thrill is gone.

They don’t make national policy anymore. They can’t earmark money for communities back home. The public hates them. And perks little and big, from private jet travel to a little free nosh now and then, have been locked down by ethics rules.

I wouldn't have expected this, but I actually do feel a little sorry for them. Just a little, mind you, but still. I'll bet it does kind of suck these days for a lot of people. If you're a true believer, then you love being in the fight regardless of anything else. But if you're someone who actually wants to get things done, there's not much left. Just an endless grind of fundraising and nothing much to make it all worthwhile.

This is also why, within reason, I actually support earmarks. Members of Congress should be important people in their districts. They should be able to get things done for their constituents. They should have some say — based on their ideology and their local knowledge — over what kinds of projects get built and which ones don't. That's what they were elected for. If their constituents don't like the way they handle this, they can vote 'em out.

Earmarks should be transparent, and they should be limited. But they shouldn't have been banned. They're part of the job, and they're part of the culture of dealmaking that helps get things done. There's really nothing wrong with them in limited quantities.

HSR Opponents Working Hard to Turn Me Into a Supporter

| Thu Mar. 8, 2012 1:07 PM EST

Regular readers know that I'm not a fan of the proposed LA-San Francisco high-speed rail project, and as the projected costs have ballooned I've become even less of a fan. But lord almighty, stuff like this could change my mind:

The fast trains connecting Los Angeles and San Francisco would create new communities of high-density apartments and small homes around stations, reducing the suburbanization of California, rail advocates say. That new lifestyle would mean fewer cars and less gasoline consumption, lowering California's contribution to global warming.

....Opponents, most of whom are political conservatives, regard the ambitious project as a classic government overreach that will require taxpayer subsidies. But they also see something more sinister: an agenda to push people into European or Asian models of dense cities, tight apartments and reliance on state-provided transportation.

...."It is a real movement in California of controlling the masses, controlling land use, deciding where people should live," said Rep. Devin Nunes (R-Tulare). "I oppose that absolutely, because it is a form of left-wing social engineering."

...."It has nothing to do with transportation. This is entirely social policy," said Rep. Tom McClintock (R-Granite Bay). "It is all about the far left's fever dream to get mother Earth back to a pristine condition by elbowing us into these dense urban cores."

So who spilled the beans, anyway? Now the whole world knows that we lefties are drooling over the prospect of taking away everyone's homes and engineering a forced march into modern-day high-rise concentration camps where the cable companies don't offer Fox News. All the better to control you with, my sweeties.

Yeesh. But that's the mindset we're up against. Not we're giving people more lifestyle choices but your lifestyle choice is inherently insulting to the one I prefer. And sweet reason will do little to change this. As Matt Yglesias, one of our most vocal proponents of denser lifestyles, says, "A lot of the time there's genuinely no substitute for changing people's minds."

Looking Ahead to 2016

| Thu Mar. 8, 2012 11:43 AM EST

Can this possibly be for real?

A true-sounding aside from Alex Pareene: "Rick Santorum is the 2016 GOP nomination frontrunner." It's true because the runner-up of the last Republican primary always starts off with an advantage. McCain 2008. Dole 1996. Bush 1988. Reagan 1976. Romney looked like the candidate most likely to break the trend, but no longer.

Maybe! This is why I sort-of-but-not-really-but-then-again-maybe-seriously want Rick Santorum to win the nomination this year. The only hope for the future of the Republican Party is to finally nominate the conservative of their dreams and then go down to an epic, ego-shattering defeat. It would, perhaps, pound some sense into them and finally give the party's moderates the backbone they need to wrest control away from the Limbaugh/Fox/Dobson/Norquist brigade. But if they nominate Romney and lose? Then, once again, it will be because they denied the one true faith. And that could, I suppose, make Santorum the frontrunner for 2016. Buckle up.

Targeted Ads Are the Least of Our Online Worries

| Thu Mar. 8, 2012 11:19 AM EST

Katherine Mangu-Ward thinks people are freaking out way too much over Google's plan to aggregate personal information about its users across all its platforms:

As it happens, we know how much people value their privacy: They'll sell information about every prescription they fill at CVS — or every pint of Haagen Dazs at Safeway — in exchange for a steady infusion of $1 coupons. They'll hand off information about the timing of their daily commute in exchange for a couple of minutes saved at a toll booth every day. They'll let Amazon track their diaper and book purchases because they would rather not re-enter their credit card number every time they want to buy something.

This is totally true. I happen to think that most people don't take this seriously enough, but who cares what I think? If you're willing to sell information about your buying habits to the highest bidder, there's no reason I should be able to stop you. She's also right about this:

But if you're more skeeved than pleased, consider letting your brain overpower your gut here. This is a fact you cannot change: All the free stuff on the Internet is possible because you slap your eyeballs on some ads from time to time. If Google and other retailers can't scrape and sort your data to offer a few well targeted ads, there are two other viable choices: 1) Less of the free stuff you like. Like this blog. It might stop being free. For instance. 2) More ads in the throw-spaghetti-at-the-wall-and-see-what-sticks school. Think: those annoying dancing silhouette gals selling cheap mortgages.

In fact, because of the fundamental failure of the online advertising model, more and more of the web is inaccessible all the time. Archives are unavailable, news sites are behind paywalls, etc. That's a pain in the ass for someone like me.

So, yeah, maybe some targeted ads are a small price to pay for all this stuff being collected. And if targeted ads were the only thing to be worried about, I wouldn't be worried. But I don't think you need to have a very active imagination to figure out that both the public and private sectors can eventually do a whole lot more with this stuff than learn what brand of ice cream you like. Just as they can use it to offer you services, they can also use it to deny you services. They can use it to discriminate in subtle ways that are putatively based on data mining, not race/sex/ethnicity. They can use it to make decisions about who should and shouldn't be allowed to fly on airplanes. They can sell it to marketers somewhat less scrupulous than Procter & Gamble. They can subpoena it in divorce cases. They can make it a part of massive NSA-run surveillance programs.

It's not the targeted ads I mind. It's everything that comes after targeted ads that I mind. I'd suggest that the rest of us ought to mind it a little more too.