Kevin Drum - August 2012

Smart Republicans Not Happy About Going Down With the Paul Ryan Ship

| Tue Aug. 14, 2012 10:57 AM EDT

Both conservatives and liberals are thrilled by Mitt Romney's choice of Paul Ryan as his running mate. Conservatives are thrilled because it suddenly makes the election into a real referendum on hard-nosed right-wing values, including tax cuts for the wealthy and entitlement cuts for the not-so-wealthy. Liberals are thrilled because....it suddenly makes the election into a real referendum on hard-nosed right-wing values, including tax cuts for the wealthy and entitlement cuts for the not-so-wealthy.

Publicly, both sides claim they can win this referendum. In private, one side is apparently not so sure:

Away from the cameras, and with all the usual assurances that people aren’t being quoted by name, there is an unmistakable consensus among Republican operatives in Washington: Romney has taken a risk with Ryan that has only a modest chance of going right — and a huge chance of going horribly wrong.

....It is not that the public professions of excitement about the Ryan selection are totally insincere. It is that many of the most optimistic Republican operatives will privately acknowledge that their views are being shaped more by fingers-crossed hope than by a hard-headed appraisal of what’s most likely to happen.

And the more pessimistic strategists don’t even feign good cheer: They think the Ryan pick is a disaster for the GOP....“Very not helpful down ballot — very,” said one top Republican consultant....Another strategist emailed midway through Romney and Ryan’s first joint event Saturday: “The good news is that this ticket now has a vision. The bad news is that vision is basically just a chart of numbers used to justify policies that are extremely unpopular.” 

I haven't seen a similar story about private liberal reaction, but I'll bet that's because there's no story to tell. Democrats are dancing in the corridors both privately and publicly. As well they should be: conservatives might like to talk a big game about cutting entitlements, but actions speak louder than words. In 2010, when they had a chance to win an election by running a scorched-earth campaign against President Obama's cuts to Medicare, they tossed their conservative principles firmly under the bus because they knew perfectly well that entitlement cuts are a big political loser.

The fever swamp wing of the Republican Party might have worked itself into a frenzy this year, convinced that the American public is totally ready to wipe out its own retirement security, but cooler heads know better. I continue to think that the VP choice doesn't matter a lot, but this election is going to be close and even a point or two matters. And in the bright light of morning, anyone who hasn't drunk the tea party Kool-Aid knows that Paul Ryan will probably cost Republicans a point or two in November.

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Paul Ryan Still Says He Wants to Take Away Some Mysteriously Fuzzy "Tax Shelters" From the Rich

| Mon Aug. 13, 2012 6:38 PM EDT

Here's an excerpt from yesterday's 60 Minutes interview with Mitt Romney and Paul Ryan:

Bob Schieffer: You say of course the wealthiest people pay the larger share, but don't they also pay at a lower rate? When you figure in capital gains and all of that?

Mitt Romney: Well, it depends on the individual, what their source of income is. But if you look at the top one percent or five percent or quartile, whatever, they pay the largest share of taxes. And that's not something which I would propose making smaller.

Paul Ryan: What we're saying is take away the tax shelters that are uniquely enjoyed by people in the top tax brackets so they can't shelter as much money from taxation, should lower tax rates for everybody to make America more competitive.

Needless to say, Bob Schieffer didn't bother following up with the obvious question: "And what tax shelters do you have in mind, congressman Ryan?" You see, the biggest "tax shelters," by far, are the exclusion of health benefits from taxation, the mortgage interest deduction, deferred taxes on retirement plans, and special treatment of capital gains.

In fact, if you take a look at the list of tax expenditures on the right, it's not clear to me that there are more than two or three of them that Ryan and Romney really want to touch in any kind of serious way. But maybe I'm wrong. Maybe they really are willing to hack away at these things, and to hack away only above a certain income level.

If they are, though, they ought to say so, especially since they're so eager to talk in detail about the lower tax rates they endorse for people in the top tax brackets. They never will, of course, because this is all a feint for the rubes. They almost certainly have no intention of touching this stuff. Still, it would have been nice for Schieffer to at least have the basic reporting skills to ask.

Paul Ryan Already Polling Badly

| Mon Aug. 13, 2012 2:31 PM EDT

Hmmm. In a Gallup/USA Today poll taken over the weekend, Paul Ryan's net favorability is -3%. As Dave Weigel points out, even Sarah Palin, who had a famously rocky rollout, had a net favorability of +15% or so by the end of August. This is supposedly due primarily to the fact that Ryan isn't well known, but I'm not so sure about that. Among non-political junkies (i.e., normal people) Jack Kemp wasn't very well known. Cheney wasn't well known. Biden wasn't very well known. And Palin wasn't well known. But initially, they all polled better than Ryan.

Tribalism and Taxes

| Mon Aug. 13, 2012 1:30 PM EDT

What kinds of things are likely to make the federal deficit go up? Larry Bartels breaks down a recent poll on this question and discovers an odd relationship.

Spending is the most obvious suspect. If you think spending will be higher under one candidate or the other, you should think that the deficit will also be higher. And people do think that. But only a little bit.

How about economic growth? The relationship there is stronger. If you believe a candidate will preside over higher economic growth, you also tend to think he'll deliver lower deficits.

But the strongest relationship by far was to taxes. Specifically, to people's expectations about their own taxes:

However, the direction of this relationship was precisely the opposite of what straightforward fiscal logic would suggest: people who expected higher taxes under Obama also expected a bigger budget deficit under Obama, other things being equal, while those who expected higher taxes under Romney also expected a bigger budget deficit under Romney. This...was easily the most important single determinant of deficit expectations even among people with above-average levels of political information.

I'd argue that although logically this doesn't make a lot of sense, it probably does emotionally. Tribalism prods us to believe that one tribe produces only good things and the other produces only bad things. So if you belong to Team Obama, then you figure that Romney will produce entirely bad policies. And since higher personal taxes and higher budget deficits are both bad, they go together. Ditto for Team Romney supporters. Thus does tribalism make fools of us all.

Thermodynamics Question of the Day

| Mon Aug. 13, 2012 12:15 PM EDT

On a hot day, does closing the blinds keep your house cooler? The thermodynamics amateur in me says no: once heat is inside the house, it's inside the house. And yet, people are always recommending this as a way of keeping inside temperatures down during heat waves. Who's right?

Next up: Does evolution violate the second law of thermodynamics? Please provide a minimum of 20 typed, single-spaced pages of word salad to justify your answer.

UPDATE: Let me be clearer. These are interior curtains/blinds. With them open, sunlight streams in and heats up whatever it touches, which is then radiated/convected into the rest of the house. With them closed, sunlight hits the blinds, heats up the blinds, and then the heat is convected/radiated into the rest of the house. Net effect: identical.

If the blinds reflect some of the sunlight back, then that's clearly a plus. But if not, then the total heat energy that enters the house via sunlight is the same either way. Or so it seems to me. But in any case, that's the question.

Barack Obama Has Passed Actual Legislation to Control Medicare; Paul Ryan Just Talks About It

| Mon Aug. 13, 2012 11:27 AM EDT

When I woke up this morning, I thought I'd see if I could get through the day without writing a post about Paul Ryan. After all, this is a guy whose philosophy is pretty simple: Cut taxes on the rich and cut spending on the poor. Everything else is just window dressing.

But so far, in my morning scan of my RSS feed, about 90% of the posts I've seen are about Ryan. Seriously. It might be higher. So I give up. Paul Ryan it is. But which posts should you read? If it's fun you want, check out Jane Mayer's quick summary of Ryan's adolescent attachment to Ayn Rand — an attachment that apparently lasted at least through his mid-30s, waning only when it became politically inconvenient to admit his devotion to an atheist thinker in the tea party era. Dave Weigel has more here.

If it's more serious stuff you're after, Ezra Klein explains the bare minimum you need to know before you can claim to be having a "serious" discussion about Medicare. In a nutshell, this bare minimum is the fact that despite Romney/Ryan's endless claims that President Obama wants to duck "adult" conversations about Medicare, the fact is that exactly the opposite is true:

Ryan’s budget — which Romney has endorsed — keeps Obama’s cuts to Medicare, and both Ryan and Obama envision the same long-term spending path for Medicare. The difference between the two campaigns is not in how much they cut Medicare, but in how they cut Medicare.

This brings us to the big myth of this campaign, or at least of this particular conversation: That Republicans, but not Democrats, have a plan to cut Medicare costs. As Ryan pointedly put it in his first speech as Romney’s vice-presidential pick, “We won’t duck the tough issues. We will lead!”

Obama’s Medicare reform plan isn’t that hard to find. It’s largely in Title III of The Patient Protection and Affordable Care Act.

Obamacare envisions a different mechanism for cost control than Ryan's budget plan, but they both have roughly the same goals:

It’s worth saying there’s no particularly good evidence for either option. Competition hasn’t worked very well in the health-care system. Indeed, Medicare currently includes private options through the Medicare Advantage program. The idea was these private, managed-care alternatives would be cheaper than traditional Medicare. As it turned out, they ended up costing about 20 percent more.

As for the pay-for-quality revolution that the Obama administration envisions, that hasn’t been proven at Medicare’s scale, either.

This is true. Nevertheless, the truth is that Obamacare contains loads of provisions for cost control, far more than anything Ryan has ever produced. Will they work? Nobody knows. And the plain fact is that we won't know until we've given them a serious try. But they're there. And not just in a vague, sound-bite friendly white paper, but in actual legislation, passed only after grueling effort. If anyone deserves credit for tackling the long-term cost problems of Medicare, it's Barack Obama, not Paul Ryan.

However, if you'd like the rare (!) sight of me kinda sorta saying something nice about Ryan's Medicare plan, check out this post from March. I wouldn't support it as-is, but it does demonstrate a welcome movement from his earlier plans. Coming from an ideologue like Ryan, that's not bad.

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Reason #167 to Hate Banks and Credit Card Companies

| Mon Aug. 13, 2012 10:35 AM EDT

Not that you need one, but here's yet another reason to hate banks and credit card companies:

As they work through a glut of bad loans, companies like American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases.

....“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” said Noach Dear, a civil court judge in Brooklyn, who said he presided over as many as 100 such cases a day.

....The errors in credit card suits often go undetected, according to the judges. Unlike in foreclosures, the borrowers typically do not show up in court to defend themselves. As a result, an estimated 95 percent of lawsuits result in default judgments in favor of lenders. With a default judgment, credit card companies can garnish a consumer’s wages or freeze bank accounts to get their money back.

If borrowers usually don't show up, banks have a huge incentive to push the boundaries and simply claim as much as they possibly can with as little evidence as they can get away with. It's a nice position to be in.

Why You Should Be Wary of Price Discrimination in the Retail World

| Mon Aug. 13, 2012 9:13 AM EDT

Adam Ozimek tweets that I have a "well documented hate of price discrimination." That's a little strong, but I'll cop to a fair amount of skepticism about the way price discrimination often plays out in the consumer world.

Price discrimination is one of those things that economists adore. In theory, charging everyone the same price is inefficient. If you price your widget so you make only one penny of profit on each one, you'll attract every possible customer you can, but you won't maximize your profit. If you price the widget so you make ten cents of profit on each one, you'll make more money but you'll also price some customers out of the market. That's bad for you and bad for the customers who don't get widgets. If, instead, every customer is charged the precise amount they're willing to pay — that is, the amount that exactly matches the value they put on your widget — efficiency is maximized. Every possible customer gets a widget, no customer pays more than they think the widget is worth, and you make the largest possible profit. If this works perfectly, it's so efficient that your average widget price might well be less than it would be under a single-price regime. That's a win-win-win.

There are, of course, plenty of problems with price discrimination in practice. For starters, it's hard to know what price everyone is willing to pay. Maybe I'm willing to pay more for an apple than you are, but how is the apple vendor supposed to know that? It's not like he can ask for a copy of my 1040 before he rings up the sale. There's also a PR problem: most of us think it's unfair to be charged more than someone else for the exact same product. So you have to figure out some way to hide what you're doing. And there are practical problems as well. Setting a single price is easy. Keeping track of multiple prices and figuring who gets which price is expensive. Often, it's expensive enough that it outweighs the benefit of broadening your market.

Nonetheless, there are some classic cases where price discrimination works. College tuition is one: if you're rich, you pay full price. If you're middle class, you get grants and loans. If you're poor, maybe you get a full ride. In theory, everyone who's qualified goes to college, and the college itself extracts the maximum possible revenue from its students.

Airlines are another example: people pay widely different prices for the same seat depending on when they fly, whether their ticket includes a weekend stayover, how far ahead they book, etc.

In the case of college, price discrimination is possible because, in fact, colleges can ask for a copy of your 1040 before they ring up the sale. And the end result is widely viewed as fair, since most of us think that poor but qualified students should go to college. In the airline example, price discrimination is accomplished by making the product slightly different. It may seem like a seat is a seat, but in fact, a seat on Friday isn't the same thing as a seat on Saturday. More importantly, a seat on Saturday is far more likely to be a vacationer while a seat on Friday is more likely to be a business traveler, who's willing to pay more.

So far, there's no big problem here. But now let's move along to price discrimination in the retail environment. If a supermarket wants to charge different prices to customers depending on what they're willing to pay, how do they do it? Loyalty cards are one mechanism. Another one, highlighted in the New York Times article that sparked this discussion, is smartphone apps that serve up coupons depending on your purchasing history and where you happen to be standing in the store. So what's the problem with this?

Well, one of the reasons that loyalty cards are worthwhile to supermarket chains is because they allow them to track your consumption habits in detail. They can then sell this information for a fair amount of money. Matt Yglesias suggests that this is "admirably transparent," but I doubt that very much. Most of us overeducated blog-reading types probably know about this, but among the general public I suspect that the number of people who know what Safeway does with their consumption data is very tiny indeed.

But maybe even if they did know, they'd be OK with it. To be honest, that wouldn't surprise me. But aside from personal pique, here's what I dislike about this. As it happens, if I want to be a crank about this stuff, I can afford to be. I earn enough that I can decline to use loyalty cards just because it bugs me to think that anyone with money can buy a detailed history of everything I buy. But you know who can't afford to do that? Poor people. In practice, they don't have the same choice I do. Even if they don't like having their purchases tracked, they simply can't afford to pay the artificially jacked-up prices that supermarkets charge anyone without a loyalty card. (What? You think supermarkets just lower the loyalty price and leave it at that? They don't. Non-loyalty prices go up to compensate.) So they're basically forced to share vast amounts of personal data even if they don't want to.

Likewise, who do you think benefits from all those smartphone apps? If you guessed "computer savvy middle class shoppers," you're right. But you know who doesn't have access to these discounts? Bingo: the poor and the elderly, who aren't very computer savvy.

I won't go on forever about this. I think you get the idea. My problem in general is that price discrimination in the retail world generally benefits the middle class, the non-elderly, and the highly educated. In fact, loyalty card data is often used specifically to attract that class of customers. The lower prices for these groups are subsidized by higher prices charged to the poor, senior citizens, and the not-so-bright. Add to this the possibility that purchasing data can be used to profile consumers — maybe deliberately, maybe accidentally — and suddenly these programs don't look quite so benign. And keep in mind that these are still early days for data gathering programs like this. An unscrupulous marketer data mining this stuff to target people in the early stages of Alzheimer's is just one example of how toxic this kind of profiling could become.

I'll confess that I don't know the magnitude of this problem. Maybe it's fairly trivial. It's even possible, I suppose, that everyone ends up benefiting from these schemes and that your consumption history is, in fact, carefully safeguarded. But I doubt it. There's very little good empirical evidence on the subject, and a big part of the reason is that the retailers who collect all this data are fanatically unwilling to even admit that they do it, let alone cooperate with researchers who want to know what they do with it. It's a trade secret, they say. And so it is. But the bigger reason is that they're afraid of what kinds of questions their customers will start to ask if someone shines a spotlight on their activities.

In any case, this is why I view price discrimination in the retail market with a jaundiced eye. It doesn't benefit you as much as you think; the benefits it does provide are largely subsidized by the groups least able to afford them; and it's normalized the idea that we shouldn't mind if large corporations and governments (who can purchase it just like anyone else) have access to our personal consumption habits. Maybe that doesn't matter to an economist who cares only about some mythical measure of "efficiency," but I think it ought to matter to the rest of us who also care about values and fairness.

In-Person Voter Fraud: It Doesn't Exist, But We Must Stamp it Out Anyway

| Sun Aug. 12, 2012 2:52 PM EDT

I apologize. I wrote a post the other day suggesting that there were no verified cases of in-person voter fraud over the past ten years, but a new study shows that I was wrong:

The analysis of 2,068 reported fraud cases by News21, a Carnegie-Knight investigative reporting project, found 10 cases of alleged in-person voter impersonation since 2000. With 146 million registered voters in the United States, those represent about one for every 15 million prospective voters....One of the instances of voter impersonation fraud occurred in Londonderry, N.H., in 2004 when 17-year-old Mark Lacasse used his father’s name to vote for George W. Bush in the Republican presidential primary. Lacasse’s record was cleared after he performed community service.

So there you have it. One alleged case per year. That may not seem like much, but in the LA Times today, Stephan and Abigail Thernstrom say that doesn't matter:

Without a personal identification card issued by some level of government, you are a second-class citizen. You cannot board an airplane, ride an Amtrak train, buy a six-pack of beer or a pack of cigarettes, open a checking account, enter many public and some private office buildings or even attend an NAACP convention without proving that you are who you say you are.

....These requirements have provoked strikingly little objection from the American public. No one argues that it is grossly discriminatory to deprive people without picture IDs access to this wide range of places, programs and activities.

Those of you who aren't Thernstroms might think that "second class citizen" is an unfortunate turn of phrase when it comes to voting rights. Perhaps voting is a wee bit different from being able to buy a six-pack of beer? The Thernstroms acknowledge this, but then brush it away with the casual observation that "rights are not absolute."

But that's not all! I had to blink a couple of times to make sure they actually said what it looked like they said at the end of their piece, but they did indeed say this:

If, indeed, the voter ID laws inspire drives to register citizens and get them to the polls (and get them photo IDs), won't America be better off? More people will gain the freedom to watch an argument in a court of law, board a train or a plane, and even buy a bottle of Scotch. Democracy will have been enhanced. Sensible civil rights advocates might consider that, and join the drive for ID laws.

That's the latest argument for voter ID laws? That they're really just a big-hearted attempt to get our marginally-attached citizenry more solidly attached to society and therefore more likely to vote? Seriously?

Saturday Pork Blogging

| Sat Aug. 11, 2012 11:08 PM EDT

Okay foodies, I have a question for you. When we were in Denmark a couple of months ago, we visited some friends who served us a pork roast of some kind. It wasn't really like any kind of pork roast we'd had before, but we couldn't find out what cut of meat it was. There was a Danish name for it, but that didn't tell us anything.

In Rome, by coincidence, I ended up eating something very similar at a restaurant in Trastavere. But what was it? It's time to crowdsource an answer, so a picture of the Italian pork is below. Question: What is this? Is it something that's even available in America? If so, what would you ask for from a butcher? Does anyone know?