Kevin Drum - 2012

Single Mothers Now Off the Hook for 70s Crime Wave

| Tue Nov. 27, 2012 1:26 PM EST

Philip Cohen notes today that homicide rates in Washington DC have plummeted over the past couple of decades. The city that used to be the murder capital of the world has seen murder rates fall by three-quarters. At the same time, the rate of single-motherhood has remained steady.

That's surprising, because it was a big part of the story 20 years ago, when D.C. was the murder capital of the country during a national crime wave. I think single mothers—especially those who were raising their kids back in the 1990s—deserve an apology from the conventional-wisdom purveyors of that time.

....Violent crime has fallen through the floor (or at least back to the rates of the 1970s) relative to the bad old days. And this is true not just for homicide but also for rape and other assaults. At the same time, the decline of marriage has continued apace. Looking at two aggregate trends is never enough to tell a whole story of social change, of course. However, if two trends going together doesn't prove a causal relationship, the opposite is not quite as true. If two trends do not go together, the theory that one causes the other has a steeper hill to climb. In the case of family breakdown driving crime rates, I don't think the story will make it anymore.

And I'm open to explanations for why crime has really fallen, even including some minor role for the incarceration craze. But there were a lot of people who were not nearly so circumspect about the soundness of their causal stories when the family-breakdown-crime assumption served their ends. And it would be big of them to own up to it now.

Fascinating! As you can see in the chart above, the violent crime rate (which includes murder, rape, robbery, and assault) has an inverted U shape, so if we're looking for something to explain both the rise and fall of crime, I suppose our first task would be to find something else with an inverted U shape. That wouldn't prove all by itself that this was the cause of the change in crime rates, but it would certainly give us a starting point.

But what could it be? Cohen notes that since the Washington Post is no longer able to blame violent crime on family breakdown, it now attributes declining murder rates to "rising incomes, improved law enforcement technology and community relations, and better trauma care." Maybe so. But just like single motherhood, those are all sociological explanations. I wonder if we should go further afield?

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No, Business Is Not Slowing Down Because of the Fiscal Cliff

| Tue Nov. 27, 2012 12:52 PM EST

In his column today, Neil Irwin quotes the CEO of AT&T claiming that "uncertainty" over the fiscal cliff is restraining business growth. This is a common claim, but Irwin correctly points out that "a slowing in business spending took effect long before the term 'fiscal cliff' had even been coined." He's right. But just saying this doesn't make it clear just how dramatic the slowdown has been. As you can see in the chart on the right, business investment growth has been on a clear downward slope for the past three years. This obviously has nothing whatsoever to do with fear of the fiscal cliff.

I'm a cynic, so I suppose you should take my views on the business community with a shaker of salt. Nonetheless, here's what I think we should conclude from this: Fortune 500 CEOs should never be taken seriously on macroeconomic issues. Their job is to dole out high-grade BS in public, and politics and macroeconomics are just grist for their mill. Every word out of their mouths is special pleading, and that's how the business press ought to treat it. I really have no idea why anyone ever takes them seriously on this stuff.

Financial Catastrophe Apparently No Longer a Republican Concern

| Tue Nov. 27, 2012 12:04 PM EST

From House Speaker John Boehner, on President Obama's request to raise the debt ceiling:

There is a price for everything.

I know this seems unexceptional, but really, it's not. It's gobsmacking. Ever since the election, Republicans have been acting as if financial catastrophe is purely a problem for the president. To listen to Boehner, you'd think that avoiding the austerity crisis (nee fiscal cliff) is a partisan goal, not something that Republicans are supposed to care about for its own sake. Likewise, default on the national debt is the president's problem, full stop. If he doesn't want markets to panic, then he needs to cough up some goodies.

What's even more gobsmacking is that nobody in the press seems to find this at all out of the ordinary. The leader of the opposition basically shrugs his shoulders in public and says that if the president doesn't want the national economy to collapse, he'll have to pay a price. The response is another collective shrug. That's Republicans for you, it says.


Why a Canadian Central Banker Probably Wouldn't Help American Monetary Policy

| Mon Nov. 26, 2012 9:53 PM EST

Mark Carney, a Canadian, was appointed today to head up the Bank of England. This is, needless to say, a surprise, since the the job of UK central banker would normally go to a UK citizen. But Carney is very highly regarded, and Felix Salmon wonders why this kind of cross-border appointment doesn't happen more often:

In general, high-profile public-sector jobs tend to be done better when they’re done by foreign nationals. The logic is simple: if you’re choosing from a global pool of candidates rather than simply a national pool of candidates, you’ll end up with a better person at the end.

Which raises the obvious question: why is such a move still unthinkable in the US? There are lots of big jobs coming up here: Treasury secretary, SEC chairman, Fed chairman — and all of them are going to go, automatically, to US nationals. Think about it this way: Mark Carney is the best central banker in the world, and he would be an amazing replacement for Ben Bernanke. What’s more, given the choice, he would surely plump for the Fed over the Bank of England. So it’s reasonable to assume that if the US wanted him, they could have had him.

Felix is, I think, more or less a proponent of a borderless world, which makes him a bit of an outlier on things like this. Still, it's a good question. Why not hire a foreigner to run the Fed?

First things first: would it even be legal? As it happens, many federal government agencies aren't open to noncitizens, and the annual appropriations act generally prohibits the use of appropriated funds to pay noncitizens. If we were talking about, say, HUD or the Department of Education, a foreigner would probably be out of luck. Luckily for us, the Fed allows employment of foreign nationals with the appropriate work authorization, and presumably that wouldn't be too hard to get. So yes: it would be legal.

But would it be a good idea? I'm more of a nationalist than Felix, and I'm not sure it would be. This is not, after all, just another cog in the civil service bureaucracy. I'd want my president to be a U.S. citizen, for example, because I'd want to be damn sure that the president has the best interests of the United States firmly at heart. Ditto for members of Congress. And ditto again for the most senior, policymaking positions in the federal government. That decidedly includes the Fed chairman.

Beyond that, I'm not really convinced there's any such thing as "the best central banker in the world" anyway. If your problem is that you don't like Ben Bernanke's policy preferences, then you've got a problem with Barack Obama, not Bernanke. There are probably plenty of qualified Americans who share your taste in monetary policy, whatever it happens to be, but apparently Obama didn't want to appoint any of them. Likewise, if your problem is that you think America's regulatory apparatus is too friendly to Wall Street, then you should blame Congress and the past few presidents. They're the ones who deregulated the financial industry and continually reappointed as Fed chairman a guy who was eager to implement this deregulation. Finally, if your problem is that Bernanke hasn't been able to persuade the FOMC to adopt looser monetary policy, what are the odds that a Canadian technocrat would have been any better at it? Slim and none, I'd guess.

I don't doubt that Mark Carney is a terrific central banker. But technical competence isn't that hard to find, and Carney had the advantage of working in a country with a long history of conservative financial regulation. That probably had more to do with Canada's strong performance during the financial crisis than Carney's response to the crisis did. After all, Ben Bernanke provided mountains of liquidity to the financial system, just like Carney, and dropped interest rates to near zero before Carney did. Long story short, the main difference between the U.S. and Canada seems to lie in their respective regulatory regimes before the crisis hit, not the response of their central bankers after the crisis hit.

So there's probably not much point in looking overseas for a Fed chairman. We have plenty of good candidates on offer right here at home. What we really need is a better regulatory regime and a different national attitude toward monetary policy. This is a political problem, not really a central banking problem per se, and the solution isn't a better Fed chairman, it's a political class that wants a better Fed chairman in the first place. Horse, meet cart.

Why Social Security Reform Would Be Good For Liberals

| Mon Nov. 26, 2012 4:00 PM EST

As Atrios notes, he and I have disagreed about the merits of Social Security reform for many years. Today he explains why he doesn't think that fixing Social Security's finances would do any good:

Nothing will take Social Security off the table for decades. They could cut benefits in half and extend the expected solvency of the program for 12 trillion years, and the Washington Post would be back the next day informing us that this was a good down payment, but much more "reform" needs to happen blah blah blah.

They really do want to starve your granny.

This really is the heart of our disagreement. So here's my argument in super-condensed form.

If we extended the solvency of Social Security for the next century, it's true that the Cato Institute would be back the next day complaining that this wasn't enough. After all, they're ideologically opposed to the whole idea of Social Security. It might take the Heritage Foundation a little longer, but they'd get right back into the fight pretty quickly too.

But the Washington Post wouldn't. The Pete Peterson folks wouldn't. The truth is that all the earnest, centrist, Very Serious People who want to reform Social Security don't want to starve your granny. They don't have a problem with the concept of a guaranteed retirement program. They just want it to be properly funded.

So a deal would shut them up. The Post editorial board would be happy. The Pete Peterson fans would be happy. Everyone outside the hard right would be happy. And without the megaphone provided by the VSPs, the hard right simply has no traction on this issue. They could keep griping forever, but it would just be one of their many fringe issues that no one else cares about. Effectively, Social Security would be off the table for decades.

What I mean by this, of course, is that it would be as far off the table as anything ever is in real life. Nothing will make everyone happy. Nothing will fix Social Security forever. Nothing will shut up the Glenn Becks and the Birchers and the libertarian hard cases. But if the VSPs are on board, Social Security would, for all practical purposes, cease to be a subject of controversy for many, many years. I think that would be good for the country, good for seniors, good for the liberal project, and well worth doing. The problem is finding any negotiating partners on the other side who are serious about making a deal.

The Republican Tap Dance on Entitlement Reform

| Mon Nov. 26, 2012 2:32 PM EST

It's a slow news day today, as everyone shakes off their tryptophan-induced comas, and this means that we have to invent things to talk about. Today's invention is about all the Republicans who have bravely suggested they might be willing to raise taxes ("a mob of three or four, at this point," says Ed Kilgore acidly) if Democrats, in turn, are willing to put entitlements on the chopping block.

There are several things to say about this. First, several of these Republicans have claimed an openness to tax increases in the past, so there's a lot less here than meets the eye. Second, none of this claimed openness has actually led to any tax increases in the past. And third, um, just what entitlement cuts are they talking about? Paul Waldman:

The problem with this is that while the Democrats' position is quite clear—the Bush tax cuts should expire for income over $250,000—the Republicans' position is extremely vague, on both the tax side and the entitlement side. Let's take taxes first. [Rate increases? Deduction caps? Or what?]

....Then we get to the price Republicans are going to want to exact for any agreement to stop the Austerity Trap, and this is where they're vague. They want "reform" of entitlements. And what is "reform," you ask? Well, nobody ever says. And the reason is that Republicans know perfectly well that the things they would like to do to Social Security and Medicare are unpopular. We can dispense with Social Security quickly: the program is basically fine, and you could eliminate future shortfalls in benefits with some minor tweaking of the financing, like raising the income cut-off for Social Security taxes, which is currently at $110,100. But the real budgetary challenge is Medicare.

Quite right. On Social Security, I continue to hold the unpopular view that liberals would be well served if they could make a deal. Raise the income cutoff to get more revenue, change the inflation formula to cut benefits a bit, toss in a few other smallish items that would be phased in over 20 years, and you're done. Social Security would be off the table for decades.

The problem, of course, is that this has nothing to do with the deficit over the next few decades, which means there's really no reason to make it a precondition for a deficit deal. So even though I'm in favor of a deal, I can't really think of any good reason to do it now.

But Medicare is different. It's funded partly out of the general fund and its growth projections are plenty scary. It has a lot to do with future deficits, so it makes sense to make it part of a medium-term deficit deal.

The problem is that, unlike Social Security, it's also insanely complicated. There isn't some easy basket of fixes that would restrain its growth, and the prospect of getting some kind of serious deal on Medicare over the next three weeks is laughable.

So we're stuck. Given the political will (unlikely, I admit), Social Security actually could be fixed in three weeks. But if it's the medium-term deficit you're worried about, there's not much point. Medicare and Medicaid, conversely, do have an effect on the medium-term deficit, but they couldn't be fixed in three months, let alone three weeks.

So what exactly are Republicans after? Do they just want the fig leaf of a supercommittee to study entitlements? Are they still obsessed with raising the retirement age and just want to get agreement on that? They can't seriously think that Paul Ryan's vouchercare is anywhere near being on the table, can they?

It's all very mysterious. Just what kind of entitlement reform do Republicans think they can get by December 21? It would be nice to hear at least a hint from them about what they're after.

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Republicans Threaten Senate Meltdown If Filibuster Reform Passes

| Mon Nov. 26, 2012 1:35 PM EST

After noting that Senate Republicans are threatening dire revenge if Harry Reid succeeds in passing filibuster reform, Ed Kilgore asks:

This raises the rather obvious question of exactly what Republicans could do to make the Senate less functional than it already is under the de facto 60-vote requirement for all legislation that they have so recently introduced?

This is a good question. Seriously. I'd like to hear from some of our congressional gurus on this. The Senate, of course, is generally governed by the rule of unanimous consent, which means that nothing can happen if even a single Senator objects. In theory, this gives Republicans lots of non-filibuster avenues for gumming up the works, but as far as I know they're already using them. These days, unanimous consent is just a quaint echo of a bygone era, never granted for even the most routine business.

Now, maybe I'm wrong about that. Maybe unanimous consent could be withheld even more than it is now. And there are other avenues for gumming up the works by insisting on the letter of the rules for things like committee meeting times and so forth. But is there really very much of this kind of thing left? Help us, Sarah Binder and Thomas Mann! Can Republicans really obstruct the Senate even more than they do now if they put their minds to it?

UPDATE: Ian Millhiser provides a handy top-ten list of obstruction tactics here. The first four are basically variations on the filibuster, but the rest of the list demonstrates that there are plenty of other ways to gum up the works too.

The Bizarre Apocalyptic Vision of Right-Wing Fundraisers

| Mon Nov. 26, 2012 1:05 PM EST

Over the years, I've ended up on mailing lists for a variety of liberal and conservative organizations. These are folks who want my money, and I've long been intrigued by the difference between the two.

There is, of course, hyperbole on both sides. Liberal pitches, for example, occasionally imply that Republicans want to forcibly impregnate every woman in America or allow Goldman Sachs to run the Treasury Department. But this is the exception, not the rule, and even where there is hyperbole, it's at least firmly grounded in a genuine, concrete issue of some kind. Republicans really would ban abortion if they had the power, and Wall Street really does have way too much influence on American economic policy.

But right-wing pitches are altogether different. I'll grant you that the stuff I get from official outlets like, say, the National Republican Senatorial Committee, tends to be (barely) on the sane side of things. But by far, most of the mail is from conservative groups that are just flat-out nuts. The United Nations is going to herd us all into urban concentration camps. George Soros plans to destroy the dollar. Obama is turning America into a slave state. The Army will be deputized to go house-to-house searching for guns as soon as Inauguration Day is safely past. Under Obamacare people with the wrong political attitudes will be denied the right to see a doctor. This stuff is simply endless.

Why? Andrew Sullivan links today to a Baffler piece by Rick Perlstein that I missed when it first came out, in which he walks us through the story of right-wing fundraising. It is, he says, a toxic blend of standard come-ons (get-rich-quick schemes, miracle cures suppressed by "the elites," etc.) and political come-ons (send money now to prevent the UN takeover of America):

The strategic alliance of snake-oil vendors and conservative true believers points up evidence of another successful long march, of tactics designed to corral fleeceable multitudes all in one place—and the formation of a cast of mind that makes it hard for either them or us to discern where the ideological con ended and the money con began.

…But the New Right's business model was dishonest in more than its revenue structure. Its very message—the alarmist vision of White Protestant Civilization Besieged that propelled fundraising pitch after fundraising pitch—was confabulatory too…And, in an intersection that is utterly crucial, this same theology of fear is how a certain sort of commercial appeal—a snake-oil-selling one—works as well. This is where the retail political lying practiced by Romney links up with the universe in which 23-cent miracle cures exist (absent the hero’s intervention) just out of reach, thanks to the conspiracy of some powerful cabal—a cabal that, wouldn’t you know it in these late-model hustles, perfectly resembles the ur-villain of the conservative mind: liberals.

In this respect, it’s not really useful, or possible, to specify a break point where the money game ends and the ideological one begins. They are two facets of the same coin—where the con selling 23-cent miracle cures for heart disease inches inexorably into the one selling miniscule marginal tax rates as the miracle cure for the nation itself. The proof is in the pitches—the come-ons in which the ideological and the transactional share the exact same vocabulary, moral claims, and cast of heroes and villains.

Rick is suggesting that rank-and-file conservatives simply have a cast of mind that makes them vulnerable to scary, conspiracy-minded sales pitches, and it doesn't matter much whether the sales pitch is for an investment opportunity to save you from the destruction of the dollar or a political opportunity to save America from the depradations of the UN. And this certainly fits what we know about brain science and ideology: People with a more fearful cast of mind tend to be political conservatives, while people with a more open cast of mind tend to be political liberals.

This explains the fear-based nature of most conservative appeals, but it still doesn't really explain why so many of those appeals are completely batty. Isn't it possible to scare people with (relatively speaking) plausible scenarios? The UN doesn't want to herd us all into cities, but liberals do want to make gasoline more expensive. (It's true! We do!) Likewise, nobody's going to confiscate your guns, but there are plenty of liberals who do want to pass an assault weapons ban.

So why the endlessly apocalyptic tone? Is the real stuff simply not scary enough to be effective? Or have conservatives gotten caught up in an arms race that long ago got out of control? What's the deal here?

It's a Great Time To Be a Banker in America

| Mon Nov. 26, 2012 11:41 AM EST

Matt Yglesias passes along this remarkable chart from Morgan Stanley's Adam Parker showing that 88 percent of all the profit growth in the S&P 500 this year has been concentrated in ten firms in a grand total of two industries: technology and finance. In particular, seven of the ten firms are financial companies. Keep this firmly in mind the next time some Wall Street titan complains yet again that Obama hates banks and is out to destroy them. This is not a sign that Obama has done anything serious to hurt the financial industry; it's a sign that America's bankers are comically thin-skinned whiners.

The Effect on the Rich of a $50,000 Deduction Cap

| Sun Nov. 25, 2012 10:49 PM EST

Greg Mankiw suggests that instead of letting the high-end Bush tax cuts expire, we keep the lower Bush rates on the wealthy but limit their deductions to $50,000:

According to the Tax Policy Center, if we cap itemized deductions at $50,000 and keep tax rates as they are today, we’d raise $749 billion in tax revenue over 10 years. And 96.2 percent of the extra revenue would come from the top fifth of taxpayers, with 79.9 percent from the top 1 percent.

It's an interesting idea. But how would this affect the very wealthiest taxpayers compared to simply letting the Bush tax cuts expire? I was curious, so I took a look at the distributional analysis done a few months ago by the Tax Policy Center.

President Obama has actually proposed several changes aimed solely at high earners. First, he'd let top marginal rates go back up to 36 percent and 39.6 percent. Second, he'd limit deductions and reinstate the personal exemption phaseout. Third, he'd let the long-term capital gains rate go back up to 20 percent and he'd tax dividends at the same rate as ordinary income. So what effect would all this have on earners in the top 1% and top 0.1%?

The first set of numbers was done in 2010, while the deduction cap analysis was done in 2012, so the figures probably aren't precisely comparable. But they're pretty close. Bottom line: Thanks to Obama's proposed changes in taxation of dividends and capital gains, the rich would do slightly worse under his plan than they would with a deduction cap, but not by much. Obama's proposal would also raise a bit more money, but again, not by much. (The Treasury calculates that sunsetting the Bush tax cuts on the rich would raise about $848 billion over ten years.) Lower the deduction cap to $40,000 and both proposals would be very nearly identical.

So assuming I've done the arithmetic correctly, it looks as if both proposals would have a pretty similar effect on the very rich and a pretty similar effect on federal revenue. There might actually be the seeds of a compromise available here.