Kevin Drum - 2012

Chart of the Day: The Great Depression Repeats Itself

| Thu Jan. 26, 2012 12:56 PM EST

Via Paul Krugman, this is kind of fascinating. Jonathan Portes provides us with this chart, which shows the trajectory in Britain of both the Great Depression and the current Great Recession. The red and black lines at the bottom are the ones to look at:

Now, there's a bit of cherry picking going on here, I think, since Britain had a nasty recession following World War I and sluggish growth throughout the 1920s, which meant they simply didn't have as far to fall during the 30s as we did. Unemployment was also worse during the 30s than it is today. So take this with a grain of salt. Nonetheless, it's sobering: in Britain at least, the Great Recession of 2008 is, in some ways, arguably worse than the Great Depression was.

Advertise on MotherJones.com

Romney Strays From the Pure Faith

| Thu Jan. 26, 2012 12:41 PM EST

James Pethokoukis is pretty upset that President Obama is coming around to the idea of mass refinancing of mortgages, and I'm upset too. The difference is that he's upset Obama is thinking about this at all while I'm upset that Obama didn't think harder about it three years ago. But now there's something new to be upset about: it's possible that Mitt Romney is in favor of mass refinancing too as long as it "doesn't add additional government obligation." Pethokoukis:

Now, Romney could have said something like, “The way to boost housing is to boost the economy and speed up the foreclosure process so the market can clear.” But he didn’t say that. He said this: “Clearly, if there is a way of providing a break to homeowners to get lower interest rates, that is something which has always been part of the refinance story. If it can be done in a way that doesn’t add additional government obligation, that’s one thing.”

My guess is that mass refinancing isn't going to happen in any significant way no matter who's president, so on a substantive level I can't get too excited about all this. But it does demonstrate just how unrealistic our rhetorical expectations have gotten. Just as many on the left would like Obama to announce some kind of mass repudiation of debt that would be political poison, Pethokoukis is upset that Romney didn't basically tell homeowners to all fuck off. Romney 2012!

In practice, allowing foreclosures to work their will on the market has been bipartisan policy ever since the housing bubble burst, but everyone sort of pretends otherwise. That's politics. If you want people to vote for you for president, you avoid rubbing people's noses in bad news and then putting your boot on their neck. Even for a guy like Romney, there's a limit to just how much he's willing to shoot himself in the foot to please the purists and the fanatics.

Peak Gingrich Now A Historical Fact

| Thu Jan. 26, 2012 12:05 PM EST

So, how about that Newt Gingrich fellow? He's down, he's up, he's down, he's up, and now he's down again. Quite frankly, you'd almost think he had some kind of fundamental stability problem.

Of course, I guess what he really has is a Super-PAC problem. Spend a gazillion dollars telling voters that Newt is a lunatic, and the voters listen. Either that or the Marianne Gingrich interview on Nightline was a bigger deal than we jaded sophisticates thought. In any case, it now looks like the course of history is reasserting itself and Mitt Romney is likely to win Florida after all.

Davos Man Is Trembling in His Armani Boots

| Wed Jan. 25, 2012 2:06 PM EST

George Soros thinks we're in for some bad times:

He doesn’t just mean it’s time to protect your assets. He means it’s time to stave off disaster. As he sees it, the world faces one of the most dangerous periods of modern history—a period of “evil.” Europe is confronting a descent into chaos and conflict. In America he predicts riots on the streets that will lead to a brutal clampdown that will dramatically curtail civil liberties. The global economic system could even collapse altogether.

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”

Is Soros just a naturally gloomy guy? Or are things really that bad? Felix Salmon is roaming the corridors of the Davos conference and says that gloomy or not, Soros is no outlier:

No one but Soros will actually say these things, at Davos — but everybody here fears them, which is one reason why we have the slightly ludicrous sight of billionaires bellyaching about the global burdens of inequality.

Security this year is tighter than ever — the first rule of security at these events is that it can only get ratcheted up, rather than loosened at all — and there’s a besieged feeling to this Alpine town I haven’t felt before. The financial crisis concentrated minds and was seen as a big problem to be addressed and even maybe solved. But the current breakdown of trust in global institutions cuts at the heart of the World Economic Forum’s founding principle — that if you get a bunch of important people together in the same place, they can actually make a difference.

I doubt that it's time to stock up on canned food or anything, but it's an interesting observation. Are the world's governing elites losing confidence in their own abilities? I wouldn't blame them if they were, considering how they've responded to the events of the past few years. When the big test finally came, they didn't do very well.

Karl Rove Chutzpah Watch

| Wed Jan. 25, 2012 1:30 PM EST

I know nobody cares, but you really have to admire the chutzpah of a Karl Rove Super-PAC running an ad that attacks President Obama because median incomes are down since 2009. The problem isn't that the statement is literally untrue. According to the Census Bureau, the median income adjusted for inflation did indeed drop $368 between 2009 and 2010.

But guess what? Between 2001 and 2009, when Rove's boss was in the White House, median income fell $448. And that's over two entire terms that included six full years of economic expansion. But I guess when you bequeath your successor the biggest economic calamity since the Depression, you need to work pretty hard to rejuvenate your reputation.

How Much Is That Triple Bypass in the Window?

| Wed Jan. 25, 2012 12:12 PM EST

Matt Yglesias directs me this morning to a column by Peter Orszag promoting the cause of greater price transparency in the healthcare arena. As you may or may not be aware, it's almost impossible for consumers to find out the price of various procedures, which in turn makes it almost impossible to shop around. This reduces competitive pressure and keeps prices higher:

Several efforts are therefore under way to provide more transparency about health-care prices, with the goal of helping people become smarter shoppers. The Centers for Medicare and Medicaid Services now collect and publish information on prices for prescription drugs (through the Medicare Plan Finder) and for common health services in various areas (through the Health Care Consumer Initiatives). And more than half of states now have publicly accessible websites offering health-care price information.

These efforts have not been overwhelmingly successful. California’s initiative over the past nine years to require hospitals to make certain price data available, for example, has done little to drive patients toward lower-price competitors or to narrow the price distribution, according to an analysis by the Congressional Research Service. A similar effort to increase price transparency in New Hampshire also had little effect. Simply posting prices online doesn’t seem to do all that much.

Well, of course these efforts haven't been overwhelmingly successful. As Atrios points out, this is partly because most big-ticket procedures aren't really all that discretionary. If you're having a heart attack, you get your bypass surgery from whichever hospital the ambulance takes you to.

But there's another point that's really a lot more important: most people don't buy their own healthcare. They have insurance that pays 90% of their costs. Or they have Medicare. Or they have Medicaid. Or they're too poor to afford healthcare at all. The number of people who literally pay for their healthcare needs on a cash basis and therefore have an incentive to shop around is small. Certainly far too small to have much impact on prices even if they are publicly posted.

I'm in favor of transparency anyway, partly on general principles and partly as an incentive to lower the insane prices that hospitals charge patients who don't have insurance (often 3x-4x the prices they charge insurance companies). And of course, conservatives want price transparency because it's a necessary precursor to their nirvana of HSAs and high-deductible insurance policies, in which consumers really would pay for a lot of healthcare services out of pocket. That's a wet dream that will never happen, but I'm willing to join with them in demanding price transparency anyway. After all, even if there aren't all that many consumers who shop around for healthcare services, why shouldn't they be able to compare prices?

But will it have much impact on the overall cost of healthcare in America? Not a chance.

Advertise on MotherJones.com

Mitt Romney's Kids Pay an Even Lower Tax Rate Than He Does

| Wed Jan. 25, 2012 1:43 AM EST

As we all know, much of Mitt Romney's wealth is derived from "carried interest," a share of the profits from investments that Bain Capital made while he was CEO. This income is taxed at the same 15 percent rate as ordinary capital gains, which is why Romney's tax rate is so low.

But it turns out there's another interesting tidbit about carried interest that I've never heard of before: It's a great way of passing along a huge inheritance to your kids without paying any taxes. David Cay Johnston explains:

Johnston: The Romneys gave $100 million to their sons and paid not one penny of gift tax. They were able to take assets they have that are producing enormous income and, under the law, give that money to their children and not pay any taxes on it.

Sambolin: Is that something you specifically found in what has been released to you?

Johnston: Yes. I have suspected this and written about it in my column that this is what happened, and last night, Brad Malt, the attorney for the Romneys, confirmed to Reuters that we were correct. They have not paid a penny of gift tax. That's because Congress allows a very tiny group of people—the Romneys by their income are in the top 1 percent of the top 1 percent—to not count as having any value the real source of their income, something called carried interest, if they give it to their children.

Welcome to the wonderful world of estate planning for the super wealthy. The Romney kids will have to pay taxes when they start taking income from the trust their father set up for them—at the usual 15 percent rate paid by millionaires, of course—but the inheritance itself is blissfully tax free. It's just another of the many benefits of running a private equity firm.

Obama Goes for the Easy Applause in Tonight's SOTU

| Wed Jan. 25, 2012 12:45 AM EST

I know it's a cliche to say that an election-year State of the Union address is a campaign speech on steroids, but tonight's State of the Union address was.....a campaign speech on steroids. At one point or another, I think I heard a shout out to virtually every conceivable voting bloc in the nation. We need to double work study jobs, double our exports, double tax deductions for domestic jobs, double our trade complaints against China, and double down on clean energy. We need an all-of-the-above energy policy and an all-options-on-the-table policy against Iran. We salute the million soldiers who served in Iraq, we're going to train two million Americans with new job skills, and we're planning to develop enough clean energy to power three million homes. We're going to save $10 billion in regulatory costs and $100 billion in energy costs. We're going to cut the deficit by $2 trillion.

There was even a shout out to process wonks:

Some of what’s broken has to do with the way Congress does its business these days. A simple majority is no longer enough to get anything — even routine business — passed through the Senate. Neither party has been blameless in these tactics. Now both parties should put an end to it. For starters, I ask the Senate to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.

That's not going to happen, but even a couple of sentences in the SOTU is more attention than this usually gets. Still, I wish Obama had explicitly stated that the Senate now requires 60 votes instead of 50 to pass legislation. If he's going to pander to us process wonks, he should at least do it right.

I'm a Democrat and a fan of the president, but even I found this speech formulaic, devoid of interesting ideas, and built almost solely for applause lines. Presumably this means that it's going to poll through the roof. Joe and Jane Sixpack will love it. And with that, Campaign 2012 has officially gotten underway.

Google Decides Evil Not So Bad After All

| Tue Jan. 24, 2012 11:56 PM EST

Here's the latest from the cyberlords who now rule our existence:

Google will soon know far more about who you are and what you do on the Web. The Web giant announced Tuesday that it plans to follow the activities of users across nearly all of its ubiquitous sites, including YouTube, Gmail and its leading search engine.

....Consumers won’t be able to opt out of the changes, which take effect March 1.

Luckily I've mostly resisted the siren call of the Googleverse aside from their search engine. But I guess I'm starting to think that I should be more careful even there. Am I just being paranoid? Or should I start using some kind of add-on to prevent Google from tracking my activity? What says the hive mind?

Mitt Romney's Version of "Self-Deportation" Is Not the Only One

| Tue Jan. 24, 2012 7:18 PM EST

Last night, asked if he favored rounding up illegal immigrants and deporting them, Mitt Romney said no. Instead, he replied, "The answer is self-deportation." This produced a steady stream of jokes on Twitter, but in fact this is a term of art that's long been used by anti-immigration activists. Adam Serwer describes what it means:

What "self-deportation"—the favored approach to immigration of the GOP's right-wing—actually means is making life so miserable for unauthorized immigrants that they "voluntarily" leave. Here's Mark Krikorian of the Center for Immigration Studies (the anti-immigrant think tank that tried to mainstream the "terror baby" conspiracy theory) explaining the concept in 2005:

The solution is to create "virtual choke points"—events that are necessary for life in a modern society but are infrequent enough not to bog down everyone's daily business....The objective is not mainly to identify illegal aliens for arrest (though that will always be a possibility) but rather to make it as difficult as possible for illegal aliens to live a normal life here.

....When Romney is discussing "self-deportation," he's talking about creating a United States where parents are afraid to register their kids for school or get them immunized because they might be asked for proof of citizenship. He's talking about the type of country where local police can demand your immigration status based on mere suspicion that you don't belong around here. "Self-deportation" is just a cleaner, less cruel-sounding way of endorsing harsh, coercive government polices in order to make life for unauthorized immigrants so unbearable that they have no choice but to find some way to leave.

Well, that's what it means on the extreme right, anyway. But the truth is that many on the left, including both Barack Obama and me, support the same idea in a more humane version. Here's me six years ago, for example:

I'm basically in favor of a market-style approach that tweaks incentives to increase the cost of immigrating illegally while decreasing the cost of immigrating legally. At some point, if you can enact the right basket of policies to get the costs right, you'll reduce illegal immigration to a point we can live with.

So: crack down on employers because that's probably the the cheapest and easiest way of discouraging illegal immigration. If it's hard to get a job, you're less likely to cross the border. At the same time, make it easier to immigrate legally with a reasonable path to citizenship. This makes "getting in line" more attractive. Do these things right and there just aren't very many people left who find the illegal route more attractive than coming over legally.

I don't want mass roundups of illegal immigrants (or people who look like they might be illegal immigrants) and I don't want their kids to go without education or healthcare. But I do support the idea of making E-Verify more accurate and more widespread, something that would make it more difficult for illegal immigrants to get jobs and probably lead more of them to leave the country. Like most supporters of comprehensive immigration reform, however, I only support this if it's paired with efforts to make it easier to immigrate legally and to provide current immigrants with a path toward permanent residence. If simple human decency isn't reason enough for this, common sense and self-interest both point in the same direction.  It's simply not plausible that stricter enforcement all by itself will ever work given our country's obvious appetite for the services that immigrants provide. Supply and demand are flip sides of the same coin, and if we want a program that actually works over the long term, we have to address both.