Kevin Drum - January 2012

Lie of the Day: Romney on Obamacare

| Thu Jun. 7, 2012 2:18 PM EDT

From Mitt Romney, telling a friendly audience about a disturbing passage from Noam Scheiber's The Escape Artists:

In this book he says that there was a discussion about the fact that Obamacare would slow down the economic recovery in this country and they knew that before they passed it. But they concluded that we would all forget how long the recovery took once it had happened, so they decided to go ahead. The idea that they knowingly slowed down our recovery [...] is something which I think deserves a lot of explaining.

You know, I expect political candidates to bend the truth a fair amount. Maybe I don't like it, but it's the way the game is played and it's the way the game has always been played.

But Romney's willingness to flat-out lie is singular. Usually presidential candidates leave that kind of thing to surrogates, so they have deniability if they're called on it. Personally, they limit themselves to cherry picking and semi-defensible twisting of reality. After all, a plain lie is so very unpresidential.

But Romney doesn't much seem to care about that. I guess he's figured out that something like this works on the campaign trail but isn't a big enough deal to ever attract any national attention. So why not?

In any case, Jon Chait has chapter and verse of the truth here if you're interested. The chart comparing flat-out whoppers between Romney and Obama comes from one of Andrew Sullivan's readers.

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There are More Insomniacs in America Than You Think

| Thu Jun. 7, 2012 12:26 PM EDT

Austin Frakt writes today that you don't have to be fretfully pacing the house all night to fit the definition of an insomniac. It's a lot simpler than that:

Consistent difficulty in falling or staying asleep that causes problems during the day is all it takes to be an insomniac. That can mean instead of getting, say, 7 hours of sleep each night, one gets only 5 or 6 a handful of nights a week. That can happen, for example, if you devote 7 hours to sleep but it takes you 30 minute to fall asleep and then you wake up in the night and can’t return to sleep for another 30 minutes or more. You’re still getting a lot of sleep, just not quite what you need. The key is that it has to be problematic for daytime function or the cause of distress. There are tons of people who only sleep 5 or 6 (or fewer) hours many nights of every week. But if they’re not upset by it and they function fine, they’re not insomniacs.

On the flip side, many insomniacs actually function very well most days and have nights of decent sleep. I am (was) one of them. It’s not like I was up at all hours every night, which is what I think many people assume insomnia must be. I bet a lot more people are insomniacs than are willing to admit. I also bet a lot of people could sleep better with a little help. Next week, I’ll report on my recovery.

By this definition, I'm pretty clearly an insomniac. Possibly I have been for years, but certainly for the past six months or so. And the past week has been gruesome. It's like having permanent jet lag: I wake up every morning at about 3 am and then toss and turn the rest of the night. Maybe I get an hour or two more sleep, maybe not, and I spend the entire morning bleary-eyed. I'm pretty sure my blogging has remained coherent during this period, but then, I'd hardly be the best judge of that, would I?

I sure wish I knew what's going on. Nothing in particular happened late last year, when this all started, and in the past I've never had any jet lag traveling west. Still having it after a week is ridiculous.

So I, for one, look forward to Austin's report next week. It would be nice not to feel cottonheaded all day long.

No, Healthcare Reform Was Not a Mistake

| Thu Jun. 7, 2012 11:48 AM EDT

Ezra Klein takes on the conventional wisdom that President Obama made a mistake by spending so much time on healthcare reform in 2009 instead of "focusing on the economy." Exhibit A is the calendar:

The stimulus bill passed in February 2009. Most of its spending was scheduled for 2010 and 2011. Health care reform passed in March 2010. That is to say, the bulk of the health care debate took place in 2009 — before the stimulus had really begun its work. If Obama hadn’t done health care, he would have needed to be doing something else between February 2009 and March 2010. Some people seem to think that “something else” could have been passing more stimulus bills. I find it very hard to believe that Congress would have greenlighted further stimulus before the $800 billion stimulus bill they’d just passed began spending out.

The smart version of this criticism has always focused on October 2009, when Democrats had a filibuster-proof majority in the Senate and there were some early warning signs that the economy might be faltering. But Ezra is right. Take a look at the chart on the right, which shows new employment figures through October 2009. It shows steady improvement. At the moment in time when Obama supposedly should have been pressing for more stimulus, our primary sign of economic health was looking pretty good. And it would continue to look pretty good for the next six months. It wasn't until the second half of 2010 that employment growth started to falter.

So what are the odds that Congress would have passed a second stimulus in the fall of 2009? About zero, I'd say. Using reconciliation, which would have allowed a stimulus bill to pass the Senate with 50 votes, was off the table because the Senate had previously decided to approve budget reconciliation instructions that included only healthcare and education. This means that a new stimulus bill would have required every single Democratic vote to pass, and that just wasn't in the cards. The awkward truth is that Obama simply didn't lose anything by spending time on healthcare during the summer and fall of 2009.

A better criticism is a simpler one: the original stimulus was too small. But even here, the problem is raw numbers. Obama needed a couple of Republican votes to win passage in the Senate, and one of those votes, Olympia Snowe, had already demanded reductions in return for her support. There was no feasible way to pass a bigger package.

But is there an even better criticism to be made? I think there is. Although Obama didn't have the leverage to get more stimulus spending even if he'd wanted it, he could have done more on the housing front. A full-court press on cramdown would have been a good start, and serious pressure on Fannie Mae and Freddie Mac to support principal reductions would have made a difference too. This, I think, is easily the biggest mistake the Obama administration made during 2009. Focusing some serious attention on debt overhang, especially in the key areas of California and Florida, was quite feasible and would probably have made a noticeable difference in keeping the recovery on a stronger track.

But even here, this was a plain and simple mistake, not something that slipped through the cracks because they were spending too much time on healthcare. Tim Geithner just didn't like the idea of pressing harder on the mortgage relief front, and Obama went along. Healthcare reform had nothing to do with it.

Did Union Members Turn Against Unions on Tuesday?

| Thu Jun. 7, 2012 10:58 AM EDT

Conservatives have made a big deal out of the fact that 38% of households with a union member voted for the union-busting Scott Walker in Tuesday's election in Wisconsin. For example, here's the New York Post:

Republican Gov. Scott Walker’s successful battle to keep his job during this week’s Wisconsin recall election got a lift from an unexpected quarter — voters from union households....“The union members, they’ll support us,” said presidential candidate Mitt Romney during a campaign stop in Texas. “Without the union members who support our campaign and support conservative principles — we wouldn’t have Scott Walker win in Wisconsin if that weren’t the case.”

Walker’s labor vote was a surprise for the first-term incumbent, given the outcry over his policies that wiped out collective-bargaining rights and automatic dues collection for public-employee unions. And that chunk of the union vote contributed to his comfortable 7 point win, 53-46, over Democrat Tom Barrett.

Actually, this is exactly the opposite of surprising. Take a look at past elections. In 2004, 38% of union members and 40% of voters in union households voted for George Bush.  In 2008, 39% of union members and 38% of voters in union households voted for John McCain.  In 2010, 37% of voters in union households nationwide voted for Republicans, and that's also the share of the union vote that Walker got in Wisconsin that year.

For better or worse, about 37% of union members vote for Republicans, both nationwide and in Wisconsin. On Tuesday they did it again. So whatever lessons there are from Tuesday's election, the idea that union members are somehow abandoning their own cause isn't one of them. On that score, nothing interesting happened at all.

Quote of the Day: Fed Still Waiting and Seeing

| Thu Jun. 7, 2012 9:54 AM EDT

From Ben Bernanke, in testimony before Congress today:

As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate.

Good to hear. Very prudent. We certainly wouldn't want to risk taking too much action to help out people who aren't bankers. Better to let them suffer a while longer and see what happens.

Our Trench Warfare Future

| Wed Jun. 6, 2012 3:34 PM EDT

Ross Douthat puts last night's results in Wisconsin in a broader context:

To understand the broader trends at work, a useful place to turn is Jay Cost’s essay on “The Politics of Loss” in the latest issue of National Affairs. For most of the post-World War II era, Cost argues, our debates over taxing and spending have taken place in an atmosphere of surplus. The operative question has been how best to divide a growing pie, which has enabled politicians in both parties to practice a kind of ideologically flexible profligacy. Republicans from Dwight Eisenhower to George W. Bush have increased spending, Democrats from John F. Kennedy to Bill Clinton have found ways to cut taxes, and the great American growth machine has largely kept the toughest choices off the table.

But not anymore. Between our slowing growth and our unsustainable spending commitments, “the days when lawmakers could give to some Americans without shortchanging others are over; the politics of deciding who loses what, and when and how, is upon us.” In this era, debates will be increasingly zero-sum, bipartisan compromise will be increasingly difficult, and “the rules and norms of our politics that several generations have taken for granted” will fade away into irrelevance.

I think you have to strain a bit to derive that big a lesson from a single recall election in a medium-sized state, but for a variety of reasons I agree that economic growth is probably going to be fairly modest in the medium term — over, say, the next decade or two. And this does indeed imply a sort of trench warfare style of politics, with everyone fighting over scraps because the pie isn't growing as fast as it used to. Anyone who's worked in a high-flying company that had to deal with a sudden slowdown in growth knows what I'm talking about. The departmental infighting can get pretty vicious.

Anyway, I have a short piece in Democracy that should be online next week making exactly this point, along with a few others. It's about the likely shape of politics a decade from now, and although I have a couple of optimistic things to say about that, it's not, as you can probably guess, an especially cheerful take.

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Transit of Venus Blogging, Take 2

| Wed Jun. 6, 2012 1:39 PM EDT

Hey, guess what? I got a picture of the transit of Venus after all. Isn't that exciting? The unretouched photo below was the very last one I took before the middle of the sun dipped below the horizon, and that tiny little smudge is Venus. I figured everyone would want to know.

Europe's Creditanstalt Moment is Ticking Ever Closer

| Wed Jun. 6, 2012 11:38 AM EDT

This paragraph from Martin Wolf has been much quoted over the past day:

Before now, I had never really understood how the 1930s could happen. Now I do. All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events. Perhaps the panic will vanish. But investors who are buying bonds at current rates are indicating a deep aversion to the downside risks. Policy makers must eliminate this panic, not stoke it.

This describes my own reaction to events of the past year or so perfectly. Still, I think this paragraph from the same piece might be more important:

It is often forgotten that the failure of Austria’s Creditanstalt in 1931 led to a wave of bank failures across the continent. That turned out to be the beginning of the end of the gold standard and caused a second downward leg of the Great Depression itself. The fear must now be that a wave of banking and sovereign failures might cause a similar meltdown inside the eurozone, the closest thing the world now has to the old gold standard. The failure of the eurozone would, in turn, generate further massive disruption in the European and even global financial systems, possibly even knocking over the walls now containing the depression.

To the extent that I continue to hold out a shred of optimism, this is why. European policymakers may be in nearly terminal denial, but I still think that when they finally and fully stare into the abyss and understand that it's staring back at them — when their Creditanstalt moment comes — they'll act. They won't want to, and they'll wait until the 59th minute of the 11th hour to do so. But when the big hand on the clock is finally just seconds away from ticking past midnight, they'll do what needs to be done.

This is the worst of all solutions except for the one in which they don't act at all. But it will prevent a rerun of the 1930s. I hope.

Chart of the Day: More Than Half of All High School Grads are Unemployed

| Wed Jun. 6, 2012 10:04 AM EDT

The chart below shows the effect of the Great Recession on high school grads entering the workforce. Back in 2006-08, about 60% found work of some kind right after graduating. Since 2009, only about 40% have found work. This is a staggering waste of human potential, and almost certainly a lifelong burden for these workers, since abundant evidence suggests that starting out your working career either unemployed or in a low-paying job leads to lower pay throughout your entire life. Having the bad luck to graduate in 2009 will probably cost these kids something close to half a million dollars over the course of their lives.

The data comes from a report by the John J. Heldrich Center for Workforce Development at Rutgers University. The chart comes from Stuart Staniford.

Wisconsin Sounds Labor's Death Knell

| Wed Jun. 6, 2012 9:14 AM EDT

Ezra Klein looks at labor's loss in Wisconsin last night and sounds their death knell:

For a long time, a lot of the energy has been devoted to the question of "how do you revive the labor movement?" The truth is, at this point, you probably can't. You can slow decline. And you can score isolated wins. But it's hard to see a real turnaround in labor's fortunes.

But if you take labor's decline as a given, then another question presents itself: How do you limit the resulting corporate power over elections and legislators? And that's much more possible, even in a post-Citizens United world. There's legislation, like the Fair Elections Now Act, that could publicly finance elections. There's legislation, like the DISCLOSE Act, that could force so much transparency on corporate spending that it ceases to be an attractive option.

Republicans have had great success arguing that organized labor has too much political power. So much success, in fact, that it seems clear that labor will soon have too little. But last night showed that Democrats aren't going to get very far simply disputing Republican claims on this point. Rather, they should argue that all interest groups have too much political power, and unite behind legislation that would weaken them.

I think that's about right. But Ezra himself points out the problem with this idea: as labor gets ever weaker and corporations get ever stronger, "Democrats will have to be that much more solicitous of business demands in order to keep from being spent into oblivion." So where does the backing come from to pass legislation that would weaken corporate interests? This is perhaps the big political/institutional question of the next couple of decades: what replaces labor as a broad-based, nationwide countervailing force against the power of business? The answer, unfortunately, remains elusive.