Kevin Drum - July 2012

Fun With Numbers From the #4 Man in the Senate

| Tue Jul. 10, 2012 11:22 AM EDT

A few days ago, the clue in one of my daily crossword puzzles was "#4 name in Senate seniority." Hmmm. Five letters. Hatch? He seems like he's been around long enough that he might be #4. But the last two letters were IN. Maybe Levin? He also seemed like a decent candidate. But no: I was right the first time. I was just stuck in a rut thinking of only last names. The answer was Orrin.

Today, Bob Somerby highlights a peculiar statement from our #4 man in the Senate. He was on Fox last night chatting about the individual mandate and whether it was a penalty or a tax:

Now they're trying to say, “Well, it's just really a penalty.” Unfortunately for them, the chief justice and the majority of the members of the Supreme Court held that it is a tax. And therefore, that means that, well, if you talk about a tax, that means about 77 percent of people earning less than $120,000 a year are going to have to pay it. And by the way, 10 percent of the people earning less than $23,000 a year, the poverty level, have to pay that tax as well. It's going to be a devastating thing for those not earning a lot of money in our society.

WTF? I can't even fathom what he's talking about here. Does anyone know? I'm almost afraid to ask, because the answer always turns out to be some kind of meme circulating in Rush/Fox/tea party land that I've been blissfully unaware of, but curiosity has gotten the better of me. Who makes up this vast crowd that's supposedly going to feel the icy grip of the IRS when the mandate goes into effect?

UPDATE: I think we have an answer. It comes from a piece written by Keith Hennessey at Real Clear Politics a few days ago. Hennessey quotes a CBO report projecting that in 2016 there will be 3.9 million people who will be both uninsured and have to pay the tax:

CBO says that under this law in 2016 there will be 400,000 people below the poverty line who will be uninsured and pay the tax....There will, in 2016, be three million people with incomes less than $59,000 (singles) or $120,000 (families of four) who will be uninsured and have to pay the tax. These three million people are not rich, they will be uninsured, and they will be required to pay higher taxes.

400,000 is 10% of 3.9 million, and three million is 77% of 3.9 million. So the correct talking point is that of the people paying the penalty, 10% will be under the poverty level and 77% will be middle class. Hatch just bollixed it up. Thanks to Gadolphus and JohnBroughton for clearing this up in comments.

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It Doesn't Really Matter Who Runs the Fed

| Tue Jul. 10, 2012 10:57 AM EDT

Betsey Stevenson and Justin Wolfers note that the Fed has consistently undershot its inflation target lately. Monetary policy today only makes sense if the Fed not only doesn't care about unemployment at all, but also, for some reason, is hellbent on getting inflation under its 2% target. Matt Yglesias is contempuous: "Ben Bernanke has brought us the lowest inflation of any Federal Reserve Chairman of the postwar period. You may call it prolonged mass unemployment, but he may see it as a huge success." Atrios goes even further:

I do wish more people who are maybe a bit more respectable than I am would start using moral language to describe the reprehensible actions of Bernanke and pals. There's no possible analysis of the welfare tradeoffs of these policies which leads to any other conclusion than "mass unemployment is a small price to pay for keeping the rich fat and happy, or even fatter and happier."

Time to end our failed experiment in "independent" central banking.

I don't really disagree with any of this except for one thing: what makes anybody think that monetary policy would be any different if the Fed weren't independent? It's not clear to me that Tim Geithner would run things much differently, and it's sure as hell not the case that Congress would suddenly get religion and ease up on monetary policy.

The problem, I think, isn't Fed independence. It's the mindset of the entire financial elite in the developed world. Until that changes, it hardly matters who runs the Fed.

Why Doesn't Obama Have a Bigger Lead?

| Tue Jul. 10, 2012 9:56 AM EDT

Ezra Klein points out today that presidential polling has been unusually stable this year: Neither Romney nor Obama has managed to open up a lead of more than a couple of points over the past 12 months:

This is a good moment for my typical polling disclaimer: At this point in 1980, Jimmy Carter was ahead in the polls. At this point in 1988, Michael Dukakis was ahead in the polls. At this point in 1992, George H. W. Bush was ahead in the polls. In other words: Who cares what the polls say in July?

But it’s not a disclaimer I fully believe. Permanent campaigns, mass media and bitterly divided parties has, I suspect, encouraged many voters to form a preference earlier than was true in past elections. Or, as Balz and Cohen put it, "the lack of movement underscores intense polarization—about nine in 10 Republicans back Romney, and a similar proportion of Democrats support Obama—and a relatively small percentage of voters say there is a 'good chance' that they could change their minds before November.”

When I was growing up, one of the big deals in political science was the steady deterioration of party loyalty: People simply didn't vote the party line the way they had in the past, which made presidential campaigns more volatile. That trend continued for a long time, but seems to have plateaued around 2000 or so, when we famously became a 50-50 nation and party cues apparently began to reassert themselves. It might be more accurate to say that most voters have ideological loyalties these days, rather than party loyalties per se, but I'm not sure that's much more than a semantic difference in the end. There just aren't many independents left who genuinely switch their party loyalties from election to election. 

Will this 50-50 split persist? A lot of smart people say that demographic trends are steadily moving in favor of Democrats, and they make a good case. The young have turned sharply against Republicans over the past decade, and brand loyalty means their anti-Republican voting behavior is likely to persist over their entire lives. A lot of that was driven by George Bush and the Iraq war and might therefore be expected to lighten up now, but new cohorts of the young continue to be repelled by the GOP's anti-gay animus. And the steadily growing nonwhite vote is getting, if anything, even more loyal to the Democratic Party than it was in the past, thanks to Republican immigration stands driven by the tea party. 

And yet, real-world events belie these trends. Republicans continue to be just as competitive in national elections as ever. It's easy, of course, to chalk this up to events: 9/11 moved the electorate in a pro-Republican direction, while continuing economic stagnation has more recently moved them in an anti-incumbent—and therefore anti-Democratic—direction. But either the demographic argument is wrong, or else it's been continuing apace, a growing tide held back by chance events. If the latter is true, Democrats should very soon start blowing Republicans out of the water in a very regular and very spectacular kind of way.

That sounds great, but I confess that I don't see much sign of it. What am I missing?

We Make More Money Than Our Parents, But We Aren't as Rich

| Mon Jul. 9, 2012 11:11 PM EDT

Here's an interesting pair of charts from the latest release of the Pew Economic Mobility Project. It compares income and wealth between generations at roughly age 45 (though there's a bit of statistical massaging involved to make the ages similar), and the results are shown below. Income — which includes cash transfers like Social Security and welfare payments, but not non-cash payments like food stamps — has risen for every income level. Wealth, however, hasn't. Despite making more money than their parents, the bottom three income quintiles have all amassed less wealth. Only the top two income quintiles have done better. The data goes through 2009, so there's probably a little bit of an artifact from the housing bust, but not a huge one. All figures are adjusted for inflation.

I'm not quite sure what conclusions to draw from this. For now, just consider it an interesting piece of raw data.

Fear and Loathing at the Supreme Court

| Mon Jul. 9, 2012 4:53 PM EDT

Conservatives are mad at Chief Justice John Roberts for voting to uphold Obamacare. But two liberal justices, Stephen Breyer and Elena Kagan, joined Roberts in ruling that Congress went too far when it threatened to remove all Medicaid funding from any state that didn't accept Obamacare's new Medicaid expansion. Congress can nudge the states, said Roberts, but it can't command them, and the threat of losing all Medicaid funding amounted to "gun to the head."

So should liberals be just as mad at Breyer and Kagan as conservatives are at Roberts? Scott Lemieux says no: Roberts was the swing vote that meant the difference between keeping or killing the entire Affordable Care Act, while Kagan and Breyer were just two bonus votes on a small subset of the law. There was already a 5-4 majority for Roberts's view, so Kagan and Breyer didn't affect the outcome.

But there might be more to this. Lemieux spells it out:

There was a unique strategic element to this case that gave a powerful reason for Kagan and Breyer to join Roberts. Roberts's belated decision to uphold most of the ACA, first of all, probably compelled Kagan and Breyer to show some cross-ideological comity to encourage him to stay in the fold. Admittedly, we cannot know for certain what effect the strategic votes of Kagan and Breyer had on Roberts. (I hope that the Supreme Court leakers will find some time to tell us whether Breyer and Kagan changed their votes after conference.) Given that it's unlikely that there was explicit horse-trading involved, it may always be unknowable. But this is where the first point becomes crucial. Liberals had nothing to lose by joining Roberts on this one issue, so they had no reason not to try to cement his belated switch.

This is all completely speculative, of course, but my gut feeling agrees with Lemieux. Whether the horsetrading was explicit or not, something about this whole case smells of logrolling: Maybe Roberts really did feel that it was unwise to overturn ACA based on a new and fairly tenuous doctrine, but I can't help but wonder if he also tried to convince some of the other conservative justices that there was a deal to be made with the liberals: namely keeping Obamacare alive in return for a strong ruling (7-2, maybe even 8-1) that placed some real constraints on Congress's Commerce Clause powers. In the end, he didn't get that. None of the conservatives signed on to a larger deal, and all Roberts got was a 7-2 ruling on the Medicaid issue.

Needless to say, I have no idea if this is what happened, and I'll admit that the sense of genuine anger coming from the conservative leakers doesn't really fit this theory. Their anger is more consistent with the notion that Roberts's switch came out of the blue and was motivated by cowardice or politics or fear. 

On the other hand, the fact that the leakers are so obviously angry means that we're getting a pretty one-sided story from them (i.e., Roberts betrayed us even though we tried hard to make him see reason, and that's all there is to it). Isn't there somebody somewhere who has any contacts with the liberal side of the court and can get their side of the story? If we're going to hear anything at all, it would be nice to hear from more than just the embittered Kennedy/Scalia wing.

Getting It Right on the Obama Tax Plan

| Mon Jul. 9, 2012 2:28 PM EDT

Dan Amira makes a point today about President Obama's new tax proposal, and I'm trying to figure out if I think it's mostly a pedantic complaint or one with real substance. You be the judge.

Basically, every news outlet in the country is reporting that Obama wants to extend the Bush tax cuts for those making under $250,000 per year. In fact, even Obama himself describes his own plan that way. But it's not true.

What Obama is actually proposing is to retain the Bush rates on all income under $250,000. If you're a middle-class wage slave, this applies to all your income. If you're a Wall Street lawyer pulling down half a million per year, it applies to half your income. Everyone would have lower taxes than they did in the 90s. The table on the right shows how this would work. (The tax brackets are approximate and apply to married couples filing jointly.)

So the question is: what's the best way to describe this? The Obama way ("keep the tax cuts for anyone making less than $250,000") is more populist and a lot easier to understand. The technically correct way is more complicated, but it reduces the alleged class warfare angle a bit. Obama isn't taking away all the tax cuts the rich got from Bush, just some of them.

So which is better? More populist or more centrist-y? Decisions, decisions.....

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Obama, the Senate, and the Future of the GOP

| Mon Jul. 9, 2012 1:22 PM EDT

Will Republicans win control of the Senate this November? Jamelle Bouie cuts through the fog of detailed state-by-state projections:

The easy way to put this is that the Republican Senate majority depends entirely on Mitt Romney’s performance in November. If Romney wins with even a slight majority, then—given the decline of split-ticket voting—odds are good that Republicans [will win the Senate]. By contrast, an Obama win—which would imply high minority turnout—would likely result in a narrow Senate majority for Democrats, and a smaller House majority for Republicans. In other words, we would have a variation on the status quo.

It should be said that this puts lie to Obama’s promise to “break the stalemate” if he wins re-election. Republicans have no incentive to be The moderate; as time goes on, it becomes much more difficult for the incumbent party to maintain its hold on power. If Republicans hold on to their right-wing intransigence, they’ll eventually be rewarded; Democrats will lose their grip on the White House and their majorities in Congress, and the GOP will have the space it needs to pursue its agenda.

Maybe. But this implies that Obama himself plays no real role in this aside from winning a second term. I'm not sure that's true. If you assume that the election is going to be close either way, then it probably matters whether or not Obama runs a fairly selfish campaign, focused solely on his own reelection, or if he spends a fair amount of time in Wisconsin and Virginia and a few other states with close races. The latter might help tip a few states into the blue column that would otherwise go to the Republicans.

As for the future, I guess I agree with Jamelle at this point. A couple of years ago, I would have suggested that if Republicans lost again in 2012 they'd finally do what Democrats did in the late 80s, and start tacking back toward the center. That would mean compromising on immigration, ditching the anti-gay hysteria that turns off young voters so badly, and maybe even accepting more government intervention in the healthcare market. But I'm nowhere near as sure of that anymore. The other possible GOP reaction to demographic change is to double down on the groups that already support them — whites, Southerners, the rich, the elderly, etc. — and continue trying to eke out victories. Given how slowly demographic changes occur, and how powerful the Fox News effect is, this strategy could be effective for longer than anyone thinks.

Who Is Edmund Husserl?

| Mon Jul. 9, 2012 12:06 PM EDT

This is way outside of my usual wheelhouse, but I was sort of intrigued by this network graph of famous philosophers put together a few weeks ago by Simon Raper. (Via Sullivan.) As you'd expect, virtually all of the big circles are household names (or pretty close), and as the circles get smaller there's a greater chance that I haven't heard of the person. But what's interesting is that this graph has a feature shared by a lot of assessments like this, namely that there are frequently one or two sharp exceptions: someone extremely influential who's not only not a household name, but completely unknown to me. In this case, it's Edmund Husserl. Never heard of him. And yet, if this graph is anything close to accurate, he's as influential among philosophers as Heidegger, Spinoza, Schopenhauer, Hume, and Wittgenstein — and more influential than Leibniz, Descartes, Hobbes, Locke, and Mill.

This seems to happen a lot. In this case I'm curious about whether it's for real. Is Husserl one of those guys who had immense influence within his profession but is largely unknown to the public at large? Did the algorithm that produces this chart make a mistake? Or was the guy who wrote his Wikipedia entry just an enthusiast who eagerly dropped Husserl's name into lots of other entries, thus gaming the system? Educate me in comments.

Quote of the Day: Samsung Not As Cool As Apple

| Mon Jul. 9, 2012 11:29 AM EDT

From UK Judge Colin Birss, ruling that Samsung tablets don't infringe on Apple's iPad design:

They do not have the same understated and extreme simplicity which is possessed by the Apple design. They are not as cool. The overall impression produced is different.

Now that's a Pyrrhic victory.

Explaining the Economy's Annual June Swoon

| Mon Jul. 9, 2012 11:05 AM EDT

Every year, it seems like the economy goes into spring training on a promising note, only to quickly dip into the kind of June swoon normally associated with the Dodgers. That is, it seems like this if, by "every year," you mean the past three years. What's up?

One possibility is that something about the nature of the recession has played havoc with the seasonal adjustments made to economic data. Normally, summer means lots of temporary summer jobs, so the various economic agencies take that into account. They don't report that the economy added a million jobs in June because they know that's merely an artifact of the time of year. Instead they subtract those jobs from the total in an effort to provide a better indication of how the underlying economy is really doing.

Usually this works fine. But Cardiff Garcia passes along this chart from Nomura suggesting that something about the Great Recession has thrown things out of kilter. The summer months are regularly looking gloomier than expected and the winter months slightly better. Garcia suggests that this might mean the economy isn't bouncing around quite as much as it seems:

Our guess — and please, we emphasise that it’s just a guess — is that that the underlying pace of jobs growth is somewhere between this month’s print of 80,000 and the six-month average of monthly job gains (150,000). We base this both on the seasonality issues and on the fact that certain other employment reports (initial jobless claims, the ADP private employment report, Challenger layoffs) indicate a slightly better situation.

To be sure, 80k-150k is a wide range, but our main point is that yet again, things probably aren’t quite as bad as the employment reports of second quarter would suggest, just as the economy wasn’t growing as quickly as the readings from the first quarter suggested.

This is all super wonky stuff, and probably doesn't really affect the big picture much. The economy is sputtering along in so-so shape, and corrections of this magnitude don't change that. However, if seasonal adjustments really have departed from their historical values, it gives new meaning to the usual advice not to read too much into a single month's numbers. Maybe the new advice should be not to read too much into even a single season's numbers.