Kevin Drum - February 2013

Recession? What Recession?

| Wed Feb. 27, 2013 11:46 AM EST

Regular readers of this blog will find this no surprise, but it's nice to see it on the front page of a daily newspaper:

The federal government, the nation’s largest consumer and investor, is cutting back at a pace exceeded in the last half-century only by the military demobilizations after the Vietnam War and the cold war....Federal, state and local governments now employ 500,000 fewer workers than they did on the eve of the recession in 2007, the longest and deepest decline in total government employment since the aftermath of World War II.

....The spending cutbacks and actions to raise taxes could reduce growth by roughly 1.5 percentage points this year, according to the Congressional Budget Office, leaving the sluggish economy operating well below capacity.

The basic chart is below. If the recession of 2007-08 had been a normal one, the cutbacks we're seeing now might have been justified after the initial round of stimulus. But it wasn't a normal one. It was the deepest economic slowdown since the Great Depression. It's suicidal that we pulled back so soon.

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Presidential Non-Power

| Wed Feb. 27, 2013 1:58 AM EST

In his column today, David Ignatius is pretty good about blaming our recent string of fiscal standoffs on the recklessness of congressional Republicans. But then he ends with this:

So how can we get these incapacitated drivers to stop before they do any more damage? If this were really a case of chronic drinkers, the answer would be an intervention to keep them off the road. In politics, the public gets to intervene through elections. We just had one, and the Republicans lost, big time. Yet it didn’t seem to make much difference. The House Republicans are still grabbing for the wheel, and the car is rumbling toward trouble.

Obama tries everything to gain control — except a clear, firm presidential statement that speaks to everyone onboard, those who voted for him and those who didn’t — that could get the country where it needs to go.

A "firm presidential statement"? Seriously? Where do people come up with this stuff? Obama has made dozens of firm presidential statements, and it's had precisely zero effect. Republicans couldn't care less about his firm presidential statements.

There's a lot of this going around these days, the idea that presidents can magically work their will on a hostile Congress if they're simply strong enough. This has never really been true, and it's certainly not true of the 113th Congress, the most hostile in living memory. It's weird that so many people seem to think otherwise.

It Was Eric Cantor Who Killed the Debt Ceiling Deal

| Tue Feb. 26, 2013 7:59 PM EST

Everyone and his brother has already blogged about Ryan Lizza's profile of Eric Cantor in the New Yorker this week, but it's only just now that its real meaning has struck me. Maybe I'm just slow. The subject at hand is the debt ceiling talks in July 2011, and before we get to Lizza, here's the basic timeline:

July 17: Cantor and John Boehner meet in the White House to talk with Tim Geithner about how a tax reform package could raise $800 billion as part of a "grand bargain" deficit reduction plan.

July 19: The Gang of Six in the Senate releases a bipartisan plan that includes over $1 trillion in tax increases.

July 20: Congressional Democrats start to revolt. They figure that if a bunch of Republicans can sign on to a plan with over $1 trillion in tax increases, why is Obama settling for only $800 billion?

July 21: Obama calls Boehner and asks him for $400 billion in additional revenue.

Lizza tells us what happened next:

As Obama waited by the phone for a response from the Speaker, Cantor struck. Cantor told me that it was a “fair assessment” that he talked Boehner out of accepting Obama’s deal. He said he told Boehner that it would be better, instead, to take the issues of taxes and spending to the voters and “have it out” with the Democrats in the election. Why give Obama an enormous political victory, and potentially help him win reëlection, when they might be able to negotiate a more favorable deal with a new Republican President? Boehner told Obama there was no deal. Instead of a Grand Bargain, Cantor and the House Republicans made a grand bet.

Here's why this timeline is important. It's been an article of faith among conservatives that the grand bargain collapsed because Obama got greedy and asked for more revenue. And there's certainly a kernel of truth to that: a $1.2 trillion revenue increase was obviously a tougher lift for Boehner than an $800 billion increase.

But based on Cantor's own testimony to Lizza, that wasn't really what killed the deal. Regardless of the size of the revenue increase, Cantor just flatly didn't want to reach an agreement. He didn't want to give Obama a political win, and figured that a failed deal would hurt Obama enough that Republicans could win the presidency and then write their own bill. He persuaded Boehner to go along, and the deal was dead.

Bottom line: It wasn't Obama's $400 billion that killed the deal. It was Eric Cantor who killed the deal. We now have that straight from the horse's mouth.

Today You Lost Yet Another Shred of Privacy

| Tue Feb. 26, 2013 5:33 PM EST

The Supreme Court refused today to rule on the merits in a case that questioned whether the government can intercept international calls by American citizens:

Writing for the majority, Justice Samuel A. Alito Jr. said that the journalists, lawyers and human rights advocates who challenged the constitutionality of the law could not show they had been harmed by it and so lacked standing to sue. Their fear that they would be subject to surveillance in the future was too speculative to establish standing, he wrote.

In other words, it doesn't matter if the law is actually constitutional or not. So as long as the government does a good job of keeping its wiretaps secret, no one will ever have standing to sue and the law will remain on the books. Nice work. Scott Lemieux has more here.

We're 60 Percent of the Way to Simpson-Bowles!

| Tue Feb. 26, 2013 2:35 PM EST

UPDATE: Sorry, I screwed up here. I didn't account properly for the total ten-year effect of Simpson-Bowles, and I didn't adjust for different baselines. When you do this, SB produces $6.3 trillion in deficit reduction. We're about 60 percent of the way there, not 90 percent. More here.


This is just a quick arithmetic reminder. If the sequester goes into effect, here's how we've done on deficit reduction over the past few years:

  • 2010 continuing resolutions: $450 billion
  • FY2011 budget: $200 billion
  • Budget Control Act: $960 billion
  • Fiscal cliff deal: $840 billion
  • Sequester: $1.2 trillion
  • Total: $3.6 trillion

The original Simpson-Bowles plan, which is Washington's holy grail, called for $4.1 trillion in deficit reduction. All calculations include debt service savings, so this is an apples-to-apples comparison.

If you want to move the goalposts, feel free. But facts are facts: by this time next week we will have achieved very nearly the total amount of deficit reduction that everyone was gaga about a mere two years ago—more than 80 percent of it from spending cuts. It's truly unfortunate that we've been so fixated on this, since we would have been much better off investing for the future and leaving deficit reduction for later, but that's water under the bridge. Love it or hate it, over the past 27 months we've accomplished nearly 90 percent of the deficit reduction everyone wanted.

So we're all happy about this, right? Right?

It's Time to Call a Filibuster a Filibuster

| Tue Feb. 26, 2013 1:54 PM EST

It looks like Chuck Hagel is finally going to be confirmed as Secretary of Defense. Jonathan Bernstein addresses the journalistic conundrum involved in this:

The trick for reporters is how to write about and talk about what's happened.

Was there a filibuster?

Yes. Of course.

One more time: requiring 60 is a filibuster. Every Republican supports that standard. There are no Republicans who believe that 60 should never or only rarely be invoked; the only question is whether, in this particular case, any particular case, they will support the filibuster. That there is a filibuster, on everything, is both assumed and institutionalized.

I would really like to see this become a standard part of usage guides on copy desks everywhere. We can tie ourselves in knots forever explaining the technical aspects of "what really happened" and passing it all off as some kind of arcane procedural issue. It's time to stop it. If the minority party demands a 60-vote margin to pass something, they're conducting a filibuster. In the modern Senate, that's the most sensible way of describing it, and it's the one most comprehensible to the average reader. It's long past time to adopt this as the standard way of describing these things.

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Robotic Surgery and the Low End of the Learning Curve

| Tue Feb. 26, 2013 12:58 PM EST

Austin Frakt points us today to a new study that compares the effectiveness of robotically assisted hysterectomies vs. laparoscopic surgery. "Both approaches provide benefits compared with open surgery," says an editorial in JAMA, "including smaller incisions, shorter hospital stays, less postoperative pain, and possibly quicker return to function." But the robotically-assisted surgery costs more without providing any improvement in outcomes. "On these results alone," says Austin, "the call is a simple one. At current prices and on the basis of health outcomes, robotic hysterectomies are not worth the cost."

Normally, I'd be jumping up and down to agree. But this time, I think there's reason to pause. Why? Because of this from the JAMA editorial:

Robotic surgery may have a shorter learning curve than laparoscopic surgery, making it an enabling technology that allows surgeons otherwise unable to perform minimally invasive surgery to offer this benefit to their patients.

This is the future of surgery, and I suspect there may be a real benefit to rolling it out widely, getting lots of surgeons trained to use it, and producing commercial pressure to constantly improve the technology. I'm not trying to make excuses for rosy advertising promises or hospitals that hype their results to push patients into a more expensive procedure, but at the same time, this strikes me as qualitatively different from, say, billion-dollar proton beam facilities to treat cancer. In the long run, robotic surgery is likely to make medicine cheaper, safer, and more widely available worldwide, and the sooner we get to this future, the better off we are. A bit of a gold-rush mentality while we're still at the low end of the learning curve might be the price we pay for this.

I have a feeling my point is going to be misunderstood here. I also have a feeling it's hopeless to add a whole string of caveats. Just try to take this in the spirit in which it's offered, OK?

Jack Lew's Deal Explained

| Tue Feb. 26, 2013 11:44 AM EST

Yesterday I asked for an innocent explanation of Jack Lew's deal with Citi, which guaranteed him a bonus if he left the company for a senior position with the federal government. Mark Kleiman, who says Lew is an old friend, suggests that it all has to do with the fact that bonuses are normally deferred (paid at the end of the year or even further out), which puts firms in a quandary if someone like Lew leaves for public service. Do they risk looking miserly by refusing to pay out a bonus that's already been earned, or do they make a decision to pay it, which would look a bit like a bribe?

So if a firm hires someone with a public-service background and ambitions to go back into government, it makes sense to negotiate a severance bonus up front, specifically in case the person leaves to take a senior Federal job. That way the person is protected against a big financial hit if such a job comes through....while the firm avoids the problem of voluntarily either paying or not paying a big bonus to someone who will exercise power over it in the future.

That’s the deal Jack Lew negotiated with CitiGroup, and that Rupert Mudoch’s character assassins at the Wall Street Journal want to make a scandal out of. And yet Kevin Drum wonders what the innocent explanation for such a deal might be.

In fact, what would be hard would be inventing a guilty explanation. If Citi wanted to grease the palm of someone departing throug [sic] the revolving door, there would have been no need to make the deal in advance, or in writing. The only purpose of doing so would have been to avoid what otherwise would have been a confict of interest.

That makes sense. And I'd add something to this: if this is the explanation, then it's obviously standard practice on Wall Street, something that the, ahem, Wall Street Journal would know perfectly well. But that didn't stop them.

David Brooks Has a Deal for President Obama

| Tue Feb. 26, 2013 1:43 AM EST

After last week's debacle, where he got hammered for claiming that Barack Obama had no plan to replace the sequester, David Brooks says today that "Humiliation is a good teacher." This means that in this week's column we get a glimpse of the good Brooks.

And the thing is, when Brooks is good, he can be genuinely interesting. Today he goes beyond the sequester to tell us what kind of grand bargain he wishes Obama would fight for. Here it is:

My dream Obama would nurture investment in three ways. First, he would take spending that currently goes to the affluent elderly and redirect it to the young and the struggling. He would build on the means-testing Medicare idea that Yuval Levin described recently in The Times. Older people with higher lifetime earnings would have fewer benefits, and they wouldn’t kick in until age 70. That money could be used to reduce our children’s debt burden and to fund early education, community colleges, research and infrastructure projects.

....Second, Obama could nurture investment by starting a debate on the sort of consumption tax plan Michael Graetz describes in his book “100 Million Unnecessary Returns”: Enact a value-added tax, use money from that tax to finance an income tax exemption of $100,000, cut the corporate tax rate to 15 percent, replace the earned-income tax credit with payroll tax relief and debit cards.

....Third, Obama could talk obsessively about family structure and social repair.

You know what? I'd mostly support this. The devil is in the details, of course, and if Brooks and I really got into the weeds we'd end up disagreeing about a lot. Still, if something like this deal were on the table, I'd probably take it. I'd trade lower benefits for well-off retirees for universal pre-K. A progressive VAT on income up to $100,000 might be a good idea if the system as a whole raised more revenue and were at least as progressive as the current one. And although I don't think presidential yakking really does much good, I'd be perfectly happy to shine the White House spotlight on family structure and social repair (even if I'm not entirely sure what Brooks means by this).

But how do we get there? Brooks thinks it would be hard to get liberals on board with this, and he's probably right about that. But that's hardly worth worrying about, since conservatives would be loudly and adamantly dead set against every single aspect of his proposal. They don't want universal pre-K; they don't want to spend more on a bunch of lefty universities; they don't really care about infrastructure; and they don't want a VAT. Aside from the yakking, which I suppose they'd support as long it was an excuse to decry liberal decadence, there's simply nothing about this deal they'd support.

If there were a Republican version of the DLC, ideas like this might have a place to gain a toehold. Until then, though, conservative reformer types like Brooks, David Frum, and Ross Douthat simply aren't talking to anyone. The actual existing Republican Party is just flatly uninterested in their ideas. Unfortunately, the GOP has almost completely purged the centrist impulse that led Democrats to start up the DLC in the 80s, so it's not clear where one would come from on the right. Maybe that's something Brooks could take up in a future column.

Eat Your Nuts!

| Mon Feb. 25, 2013 8:50 PM EST

Today's newspapers are all running front-page stories about a new study showing the benefits of a Mediterranean diet. However, one of Aaron Carroll's sharp-eyed readers pointed out that Table S5 in the appendix shows that the only truly big difference between the test group and the control group was their consumption of olive oil and nuts, which participants in the test group were given free. Sure, enough, if you read down to the very end of the report, the authors say this:

The interventions were intended to improve the overall dietary pattern, but the major between-group differences involved the supplemental items. Thus, extra-virgin olive oil and nuts were probably responsible for most of the observed benefits of the Mediterranean diets.

I'd add one more thing. The researchers were studying the frequency of "end point" events: heart attacks, strokes, and deaths. Here are the raw numbers: in the test group (Mediterranean diet + nuts), the total number of all those events over the period of the study was 3.8 percent. In the control group it was 4.4 percent.

Now, these are statistically significant and probably represent a genuine result. But don't get too excited. The participants were all over 55 and had either Type 2 diabetes or three major risk factors for cardivascular disease. So you'd expect them to be teetering on the edge of one of these end point events anyway. But even at that, the additional risk over five years from eating whatever you wanted was 0.6 percentage points. That's not really a helluva lot.