Kevin Drum - 2012

Chart of the Day: Jobs vs. Deficits

| Fri Jan. 13, 2012 10:31 AM PST

Via Suzy Khimm, here's a shocker: according to Gallup, low-income people are worried about jobs. High-income people are worried about the deficit. Naturally, this means that Congress and the media can talk about almost nothing except the deficit these days. Welcome to America.

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Fame and Glory are Mine: I am Finally on the Daily Show

| Fri Jan. 13, 2012 9:15 AM PST

My dream has finally come true: I've appeared on the Daily Show! Sadly, I missed this when it flashed on the screen last night, but apparently one of my blog posts was used as an on-screen example in John Oliver's bit about the rise of incivility in the media.

What's double-plus-great about this is that they took it completely out of context! Not only is that post over a year old, but I'm calling my own side idiots. See, I'm a Democrat. It's true that the post itself asked, "What in God's name are the morons who pass for leaders of the Democratic Party thinking?" And I guess that wasn't very civil. But it was my own peeps I was calling out. Aren't we even allowed to use colorful language within the family anymore?

Anyway, that's irony #1. Irony #2 is that I'm pretty sure I've called Republicans much, much worse on multiple occasions. So why not use one of those posts?

And irony #3? The whole bit was an interview with Froma Harrop, who's apparently in charge of a media initiative to restore civility but nonetheless said last year that tea party leaders have engaged in economic terrorism for holding the debt limit hostage. Pretty uncivil! Well, it turns out that I know Froma. Sort of. We sat next to each other for a couple of hours last June and shared the experience of not winning a Loeb award in the same category. She seemed very nice.

In Praise of Conservative Creativity

| Fri Jan. 13, 2012 8:52 AM PST

Atrios today:

This isn't especially new and original, but I hadn't quite thought of it this way before. It was quite the triumph of conservative propaganda to convince people that the housing bubble was, once again, about poor minorities getting more than they deserved.

It is pretty remarkable, isn't it? I'm routinely impressed by the creativity of conservatives when it comes to stuff like this. It would never occur to me to blame the financial crisis on a piece of legislation designed to help low-income home buyers, especially one passed 30 years ago, but they got right on it. They come up with stuff like this all the time, and it's pretty damn brilliant.

DOJ Recess Appointment Brief May Bring Sanity Back to Confirmation Process

| Thu Jan. 12, 2012 5:22 PM PST

Last week, when President Obama made a series of recess appointments even though the Senate claimed to be technically still in session, I argued that he ought to make his legal reasoning public. Today he did. It turns out that before he acted he did indeed request an opinion from the Office of Legal Counsel, which placed its opinion on the OLC website earlier this morning. Adam Serwer summarizes:

The opinion from the Office of Legal Counsel, authored by Assistant Attorney General Virginia Seitz, argues that these "pro forma" sessions, which have historically been used by both parties to deny presidents the ability to make executive and judicial appointments, can't be used to block appointments unless the Senate is conducting actual business.

....The opinion relies on previous memos written by Republican and Democratic officials, and it does marshal some strong historical evidence for its interpretation. The opinion quotes Alexander Hamilton writing that the recess clause of the Constitution is triggered when the Senate is not "in session for the appointment of officers," a sentiment echoed by a Senate Judiciary Committee letter from 1905 informing President Theodore Roosevelt about the limits of his authority to make recess appointments.

The bottom line is this: The Justice Department takes the view that when the Senate "is not available to give advice and consent to executive nominations," it is effectively in recess and the president can make appointments. Moreover, the opinion states that the Senate's constitutional authority to set its own rules cannot be used to keep the president from making appointments. Key here is that the opinion doesn't prevent the Senate from blocking appointments—it merely states that the Senate has to actually be in session in order to do so.

The full opinion is here, and it's pretty readable. I'm happy with the reasoning, which concludes that the Senate is only in session if the Senate is, in fact, truly in session and able to conduct business, and I'm happy that the opinion has been made public.

So what's next? I'm not especially happy that the appointment wars have been escalated yet again, but at some point Republicans in the Senate have to agree to some kind of reasonable compromise here. "Advise and consent" shouldn't mean flat out refusal to confirm anyone simply because the other party occupies the White House, and if there's a silver lining to this mess (aside from the fact that both the NLRB and the CFPB get to continue functioning) it's the possibility that Obama's actions will get the Senate leadership to the negotiating table. Senators understandably want to keep their confirmation power intact, along with the leverage it gives them, but both sides need to agree on some kind of restraint. Maybe this will involve time limits for confirmations, maybe it will involve a limit on the number of holds or filibusters senators can mount against presidential appointees, or maybe it will involve something else. But a minority in the Senate shouldn't be allowed to unilaterally bring the executive branch to a halt, and that's increasingly what's been happening. It's time to bring some common sense back to the confirmation process.

Chart of the Day: Federal Programs Surprisingly Well Run

| Thu Jan. 12, 2012 12:27 PM PST

Via Siddhartha Mahanta, I see that Mitt Romney is suggesting that social welfare programs ought to be turned over to the states because our bloated federal bureaucracy is — well, so bloated. Unsurprisingly, Romney is wrong. Here's a chart from the Center for Budget and Policy Priorities showing just how much overhead the feds add to a variety of programs:

There's no real way to compare this to the private sector, because the private sector just doesn't run programs like this. The closest you could come is to compare this level of overhead to average SG&A costs — which is at least something Romney would understand — and on that score the federal government looks great and state governments don't look too bad either. Most companies would be pretty happy with SG&A expenses of 5-10%.

It's also worth noting that overhead costs go up precisely when the government does the kinds of things conservatives want it to do. Programs like SNAP and Section 8 housing have fairly stringent means testing rules in order to root out folks trying to game the system, and the result of that is higher admin costs. It's pretty unavoidable. We could probably cut the overhead costs of housing vouchers by simply giving money to anyone under a certain income line and then calling it a day, but we don't. We make sure you really truly qualify, we make sure the vouchers are really spent on housing, and we make sure that landlords aren't scamming either tenants or the taxpayers. This is exactly the kind of thing conservatives are always urging us to do, and it costs money. There's no way around it.

All of these programs could undoubtedly be run more efficiently and I'd love to hear some real suggestions from Romney about how we could do this. But even if his Bain-trained mind does have some good ideas, he's never going to save more than a few percent. That adds up, and I'm all for it, but it's not going to make a serious dent in federal spending and he knows it. There's just no "massive overhead" here and there never has been. The vast bulk of this money goes exactly where it's supposed to: to the people it's meant to help.

Why Women Don't Run for Office (As Much As Men Do)

| Thu Jan. 12, 2012 11:16 AM PST

In the United States, women make up only 16.9 percent of our national legislature (i.e., Congress). That places us 91st in the world. In a new report, Jennifer Lawless and Richard Fox conclude that there are seven big reasons why women continue to lag so far behind men in the political world:

  1. Women are substantially more likely than men to perceive the electoral environment as highly competitive and biased against female candidates.
  2. Hillary Clinton and Sarah Palin’s candidacies aggravated women’s perceptions of gender bias in the electoral arena.
  3. Women are much less likely than men to think they are qualified to run for office.
  4. Female potential candidates are less competitive, less confident, and more risk averse than their male counterparts.
  5. Women react more negatively than men to many aspects of modern campaigns.
  6. Women are less likely than men to receive the suggestion to run for office—from anyone.
  7. Women are still responsible for the majority of childcare and household tasks.

The authors don't rank these items, and I'd guess that No. 2 is probably less important than most of the other items. It's interesting nonetheless, as much for what it says about the media as it does for the population at large—though it's too bad the authors don't tell us how women's perceptions of sexist treatment compared to men's perceptions. (A partisan breakdown would have been interesting too.) All they say is that "women were statistically more likely than men (at p < .05) to contend that Clinton and Palin experienced sexist treatment and/or gender bias."

In any case, the report, which is based on a survey of "lawyers, business leaders, educators, and political activists, all of whom are well-situated to pursue a political candidacy," is interesting throughout. It's worth a read.

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Healthcare Really is Better Today Than it Used to Be

| Thu Jan. 12, 2012 10:12 AM PST

Austin Frakt writes today about a new journal article describing the vast strides we've made in treating heart disease over the past 50 years:

Improvement in care for patients with cardiovascular disease is one of the great medical success stories of the 20th century, complementing great strides in public health. We owe this triumph of medicine to the interdisciplinary efforts at enhancement to the technology of care (from devices to drugs to surgical technique), evidence from clinical trials, and dissemination of best practice and lifestyle improvements via education programs.

And don't forget money! All this interdisciplinary wonderfulness is, needless to say, one of the reasons that healthcare costs so much more today than it did in the 50s. Back then, the article says, patients with acute myocardial infarction "were placed in beds located throughout the hospital and far enough away from nurses’ stations that their rest would not be disturbed. Patients were commonly found dead in their beds, presumably from a fatal tachyarrhythmia."

Not any longer, and because of that survival rates are far higher than they used to be. Ditto for infant mortality, which this post reminded me of. A couple of years ago I posted a copy of the hospital bill for my delivery in 1958, which came to about $1,000 in inflation-adjusted dollars. But as my mother reminded me, that's because the hospital didn't do much of anything back then. When she arrived, they put her in a room that had....a bed, a bedside table, and a telephone. That's it. In the delivery room, there was....a bed and a doctor. No epidurals, no beeping machines, no phalanx of specialists, and no real-time monitoring of every vital sign known to man.

Today an ordinary, uncomplicated delivery costs upwards of $10,000. Is that worth it? Well, as the chart above shows, infant mortality in the United States has dropped from 26 per thousand to about 6 per thousand over the past 50 years. There are multiple reasons for this, but all that technology is one of them. We spend a lot of unnecessary money in our healthcare system, and we tend to (rightly) focus a lot of attention on that. But we also spend a lot of pretty valuable money. That fact that newborns and heart attack patients are both a lot less likely to die these days is pretty good evidence of that.

Mitt Romney, Vulture Capitalism, and GS Technologies

| Thu Jan. 12, 2012 9:35 AM PST

Did Bain Capital under Mitt Romney earn its money fairly, or did they play some of the predatory private equity games that Dean Baker outlined yesterday, loading up on debt, shifting assets around, and defaulting on pension benefits? Probably some of both. Reuters reports that in the case of Kansas City's Worldwide Grinding Systems steel mill, there were a lot of the financial games going on:

[In October 1993] Bain and its partners decided to buy the mill for $75 million. Bain put up about $8 million to gain majority control of the company, renamed GS Technologies Inc....Bain got its money back quickly. The new company issued $125 million in bonds and paid Bain a $36.1 million dividend in 1994.

Pretty sweet. Over the next few months, Bain piled on more and more debt, totalling $378 million by 1995. But they managed the plant poorly and couldn't compete with cheap Asian imports:

GS Industries declared bankruptcy on February 7, 2001, and said it would shut down the Kansas City plant, eliminating 750 jobs. In a press release, the company said the bankruptcy was triggered in part by "the critical need to restructure the company's liabilities."

Workers soon found out what that meant. In April, GS said it was shedding the guarantees it had promised its workers in the event of a plant closure....The U.S. Pension Benefit Guaranty Corp, which insures company retirement plans, determined in 2002 that GS had underfunded its pension by $44 million. The federal agency, funded by corporate levies, stepped in to cover the basic pension payments, but not the supplement the union had negotiated as a hedge against the plant's closure.

Some investments don't work out. That's the free market for you. But does it seem right that Bain and its millionaire investors made a pot of money even though GS went bust and its workers lost a big chunk of their pensions? Maybe it does to Mitt Romney, but I imagine the rest of the country may feel a bit differently about it.

Afghanistan Still Completely FUBAR

| Wed Jan. 11, 2012 11:31 PM PST

Another year, another NIE. And the intelligence community hasn't changed its mind about the war in Afghanistan:

The U.S. intelligence community says in a secret new assessment that the war in Afghanistan is mired in stalemate, and warns that security gains from an increase in American troops have been undercut by pervasive corruption, incompetent governance and Taliban fighters operating from neighboring Pakistan, according to U.S. officials.

....The detailed document, known as an NIE, runs more than 100 pages and represents the consensus view of the CIA and 15 other U.S. intelligence agencies. Similar in tone to an NIE prepared a year ago, it challenges the Pentagon's claim to have achieved lasting security gains in Taliban strongholds in southern Afghanistan, according to U.S. officials who have read or been briefed on its contents.

There has — literally — never been a year in which the American intelligence community has believed that we're making serious progress in Afghanistan. And every year, the military has disagreed.

So far, the intelligence community has been right every time. Anyone care to take a guess about whether they're right this time too?

Mitt Romney is not Gordon Gekko. Or is He?

| Wed Jan. 11, 2012 11:04 PM PST

Is Mitt Romney really the Gordon Gekko of presidential candidates thanks to his years of running Bain Capital? Newt Gingrich and Rick Perry sure seem to think so, accusing him of making his millions by wreaking wholesale devastation on innocent companies and hardworking laborers. This is, as you might expect, just a wee bit over the top. Still, before we dismiss the comparison entirely, Dean Baker lists a few of the Gekko-like behaviors that real-life private equity firms sometimes engage in:

It is standard practice for private equity to load firms with debt. This means that taxable profits are turned into tax-deductible interest payments. The difference can be a gain to Bain and other private equity firms, but it is coming at the expense of taxpayers.

In the same vein, private equity companies often engage in complex asset shifting. This can leave a heavily indebted firm with few valuable assets. If it eventually goes bankrupt, the creditors collect little money because the private equity company has transferred the assets with value into an independent company. This can also mean big profits for Bain and other private equity companies, but this is not a gain to the economy.

Another frequent game of private equity companies is to dump pension obligations on the Pension Benefit Guaranty Corporation. The reduction in liabilities can mean big profits for Bain and other private equity companies, but does not provide any benefit to the economy.

This, then, is the assignment for some enterprising reporter. Did Bain Capital do this kind of thing during Romney's stint there? Or did they really and truly just work hard to try and turn failing companies around by applying state-of-the-art management techniques? I expect answers from our nation's press corps soon, just as soon as they finish spitballing over whether John Bolton's endorsement of Mitt will finally bring the paranoid wingnut vote solidly into his camp.