Kevin Drum - March 2013

Friday Cat Blogging - 22 March 2013

| Fri Mar. 22, 2013 11:58 AM PDT

Happy vernal equinox! Sure, I'm a couple of days late, but that's cat time for you. They live on their own clock.

Today, I'm giving Domino a break from the rigors of weekly catblogging and highlighting my mother's cats instead. On the left is Ditto (named, as you might recall, because when he was a kitten he looked just like one of my mother's other cats). On the right is his brother Tillamook, whose naming origin should be fairly obvious. These pictures were taken last weekend, but obviously both of them were looking forward to spring even then.

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The Republican Party Might Not Be Quite Dead Yet

| Fri Mar. 22, 2013 11:50 AM PDT

Andrew Kohut, former president of the Pew Research Center, says the Republican Party is in deep trouble:

In my decades of polling, I recall only one moment when a party had been driven as far from the center as the Republican Party has been today....The Republican Party’s ratings now stand at a 20-year low, with just 33 percent of the public holding a favorable view of the party and 58 percent judging it unfavorably.

....While members of the Republican and Democratic parties have become more conservative and liberal, respectively, a bloc of doctrinaire, across-the-board conservatives has become a dominant force on the right....The party’s base is increasingly dominated by a highly energized bloc of voters with extremely conservative positions on nearly all issues.

....I see little reason to believe that the staunch conservative bloc will wither away or splinter; it will remain a dominant force in the GOP and on the national stage. At the same time, however, I see no indication that its ideas about policy, governance and social issues will gain new adherents. They are far beyond the mainstream.

Any Republican efforts at reinvention face this dilemma: While staunch conservatives help keep GOP lawmakers in office, they also help keep the party out of the White House. Quite simply, the Republican Party has to appeal to a broader cross section of the electorate to succeed in presidential elections.

This has practically reached the status of conventional wisdom these days. Republicans are doomed because they don't appeal to the young, or to Hispanics, or to women, or whatever. Their core base of pissed-off white guys is shrinking, and they're inevitably going to shrink along with it. 

That makes sense to me. And yet....there's something about it that doesn't quite add up. Republicans control the House, and no one seems to think that's going to change in the near future. (And no, it's not just because of gerrymandering.) On the other side of Capitol Hill, Democrats seem genuinely concerned about holding onto the Senate next year. As for the White House, Republicans have only lost two presidential elections in a row, both times in years where the fundamentals favored Democrats. And they continue to hold outsize majorities in state legislatures and governor's mansions.

These don't seem like the markers of a party so far outside the mainstream that they're doomed to extinction. Frankly, they seem to be holding on fairly well.

I agree that the Republican Party has some long-term demographic problems that are pretty serious. Nevertheless, it's not clear to me that the American public is ready to throw them overboard. Or, perhaps more accurately, the American public has so far shown little inclination to throw them overboard when their only alternative is the Democratic Party.

This stuff deserves a little deeper look than we've been giving it. The GOP has been steadily moving right for more than 30 years now, and even though it always seems like one more step should make them electorally toxic once and for all, it never does. This time we're convinced once again that they've finally taken that final, fatal step, but have they? I feel like there's more to this story.

Is This the Quote of the Day?

| Fri Mar. 22, 2013 11:09 AM PDT

Here is John Boehner, explaining the Republican plan for negotiating over the upcoming debt ceiling:

I'm not going to risk the full faith and credit of the federal government.

Steve Benen suggests this is a "game over" moment. Sure, Boehner claims that Republicans will raise the debt ceiling only in exchange for big cuts in entitlements, but that's an empty threat if he's serious about not risking America's credit rating. So that means there won't be a big fight over the debt ceiling.

Maybe. Or maybe this is just boilerplate from Boehner and doesn't mean much of anything. I'm not sure. But I agree that Boehner can't have it both ways. Either he's going to insist on dollar-for-dollar entitlement cuts or he's going to back off from debt ceiling hostage taking. He can't do both.

And while we're on the subject, I'd still like to see just what entitlement cuts Boehner and his caucus want. They like to yak about this stuff endlessly, but they sure seem to clam up mighty quick when you ask for actual details.

Newt Gingrich Makes an Elaborate Historical Argument

| Fri Mar. 22, 2013 10:30 AM PDT

Ed Kilgore points to an intriguing Joshua Green story in BusinessWeek today: at a point during the Republican primary when Mitt Romney was struggling, Newt Gingrich and Rick Santorum had serious talks about creating a unity ticket:

The negotiations quickly intensified. “We had a series of closed-door meetings about it,” Conway says. Conway, Walker, and Randy Evans represented Team Gingrich; Brabender spoke for Santorum. “Initially, it was through staff,” Conway says. “Then Rick and Newt did talk by phone for quite awhile.”

Finally, the two candidates spoke face-to-face at an energy forum just before the [Michigan] primary. Gingrich made an elaborate historical argument that....

Hey! Why did I cut off the story? Newt Gingrich made an elaborate historical argument for what? That they should run on a platform of abolishing the Fed? Building alligator-filled moats along the Mexican border? Blasting North Korea to bits with a space-based laser? Paying off the national debt with natural gas royalties?

Not quite. It turns out that Gingrich made an elaborate historical argument for....why Newt Gingrich should head the ticket, with Santorum settling for veep. I'll bet you wish you could have been a fly on the wall for that little lecture, don't you?

This is all sort of fascinating, in a train-wreck kind of way, and I'm glad Green wrote about it. But can I just say that, no, Gingrich and Santorum never really came close to making a deal. The question of who gets to be president and who gets to be VP is the only real question in negotiations like this. If they were arguing about that, they hadn't even gotten started.

The Rich are Getting Richer....And They're Staying Richer

| Fri Mar. 22, 2013 9:47 AM PDT

This isn't going to come as any big surprise, I think, but it turns out that the growth in income inequality over the past 25 years is permanent. A team of researchers sampled tax data going back to 1987 and calculated the variance in earnings between high and low earners. Then they broke that variance into two components: permanent and transitory. This is pretty much exactly what it sounds like. "Transitory" refers to income changes from year to year, for example from increased social mobility as people move up and down the job ladder. Permanent means....permanent. Folks already at the top are just raking in more money.

In any case, the results varied slightly depending on which model they used and what units they studied (individuals vs. households), but the results didn't vary much. As the chart below shows, basically all of the increase in variance was permanent. Transitory changes in income inequality have changed not a whit since 1987. The rich are getting richer, and they're staying richer.

Via Wonkblog.

Here's Why the Budget Deficit is Such a D.C. Obsession

| Fri Mar. 22, 2013 9:05 AM PDT

This news is not new—it's based on a survey done more than a year ago—but it's news worth repeating anyway. Here are Larry Bartels and Benjamin Page in the LA Times today on the political priorities of the very rich:

Our research found that the biggest concern of this top 1% of wealth-holders was curbing budget deficits and government spending. When surveyed, they ranked those things as priorities three times as often as they did unemployment — and far more often than any other issue.

....They were also much less likely to favor raising taxes on high-income people, instead advocating that entitlement programs like Social Security and healthcare be cut to balance the budget.

....While the wealthy favored more government spending on infrastructure, scientific research and aid to education, they leaned toward cutting nearly everything else. Even with education, they opposed things that most Americans favor.

....The wealthy opposed — while most Americans favor — instituting a system of national health insurance, raising the minimum wage to above poverty levels, increasing the Earned Income Tax Credit and providing a "decent standard of living" for the unemployed. They were also against the federal government helping with or providing jobs for those who cannot find private employment.

....Unlike most Americans, wealthy respondents opposed increased regulation of large corporations and raising the "cap" that exempts income above $113,700 from the FICA payroll tax. And unlike most Americans, they oppose relying heavily on corporate taxes to raise revenue and oppose taxing the rich to redistribute wealth.

A large body of research, from Bartels and others, demonstrates that lawmakers respond to the desires of the upper middle class and the wealthy, but not much to anyone else. So if you're wondering why official Washington is all atwitter over budget deficits, but doesn't seem to care much about unemployment, this is why. It's because that's what rich people care about.

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Maybe Germany Actually Wants Cyprus to Leave the Euro

| Fri Mar. 22, 2013 8:23 AM PDT

I was noodling over Cyprus last night and a thought occurred to me. Maybe, from the perspective of Germany and the other core EU countries, a default and exit from the euro would be a good thing.

I'm not really serious about this, but here's the pitch. Cyprus is tiny enough that default and exit wouldn't have any actual effect on the broader EU economy. It would be a rounding error. And because (a) Cyprus is tiny, (b) Cyprus adopted the euro only five years ago, and (c) Cyprus has a unique status as an offshore banking haven for Russian billionaires, it would be fairly easy to convince the financial community that their default is a special case that doesn't have any broader implications for the eurozone.

So the eurozone would be OK. But if Cyprus chooses this route, the Cypriot economy is going to be in shambles. Sure, in the long run, they might do OK by readopting the pound and devaluing it, but in the short term it would be ruinous. Residents wouldn't just lose 6.5 percent of their savings, they'd lose something like a third of their purchasing power thanks to recession and devaluation. It would be a long, grinding disaster.

And perhaps that would be a very pointed object lesson for voters in Greece and Spain and Portugal that default and exit is even worse than the austerity the EU is insisting on. The implicit message would be: You might not like it, but you better go along if you know what's good for you. Just look at what happened to Cyprus.

So....from the German perspective, Cyprus could provide a very cheap demonstration of the dangers of calling their bluff. Who knows? Maybe they think that would be worth it. This should give Cypriots pause for thought.

Can Republicans Trust Obama to Make a Deal?

| Thu Mar. 21, 2013 11:03 PM PDT

John Dickerson argues that if President Obama wants to make a grand bargain with Republicans, he needs to stop saying nasty things about them. I don't happen to agree about that,1 but it's a reasonable enough suggestion. It's easier to do a deal if you're not constantly trash talking your opposition.

But this I don't get:

The premise of the president's recent outreach to Republicans is that he might be able to build connections that would lead to a grand budget bargain. This relationship relies on trust. Republicans must trust that if they take a political risk to support changes in the tax code that would bring in revenue for deficit reduction—which will hurt them with their supporters—the president won't undermine them further with their voters by making them look like chumps.

....Speaker Tip O’Neill and President Ronald Reagan were often pretty mean in public....But the two men could work together because they had a certain level of trust. In today’s world, this is how a Republican senator can say glowing things about New York Sen. Chuck Schumer. Schumer may regularly demagogue Republicans, but in a deal his word is solid. He can be trusted.

Wait a second. Dickerson is saying it's OK for Schumer to be nasty because, apparently, being nasty doesn't reduce trust. What reduces trust is going back on your word, and Schumer doesn't do that.

Presumably the same is true of Obama. So what makes Dickerson think Obama has broken his word? His entire case is built on the claim that when Obama met with Senate GOP leaders a couple of weeks ago, he said he'd reduce his attacks on Republicans. Then, a couple of days later, he accused them of wanting to "gut Medicare or gut Social Security or gut Medicaid." That's an attack! It proves he can't be trusted to keep his word.

This is pretty thin gruel. Here's what Obama actually said:

You know, what I’m saying to them is I am prepared to do some tough stuff. Neither side's going to get 100%. That’s what the American people are looking for. That’s what’s going to be good for jobs. That’s what’s going to be good for growth.

But ultimately, it may be that the differences are just too wide. It may be that ideologically, if their position is, “We can’t do any revenue,” or, “We can only do revenue if we gut Medicare or gut Social Security or gut Medicaid,” if that’s the position, then we’re probably not going to be able to get a deal.

That's not an attack. Obama wasn't accusing Republicans of wanting to gut entitlements, he was just saying that if that's where they end up, then a deal probably won't get done. I don't think that even John Boehner could work up any fake outrage over that.

Look: Republicans are going to pretend to be offended at everything Obama says. That way, if there's no deal, they've got a ready made excuse. But nobody should take this faux offense at face value. It's all part of the game.

Trust, on the other hand, is lost when people don't keep their word. And maybe the Obama administration hasn't done that. But if so, I'd sure like to see the evidence. As near as I can tell, both sides have been relatively trustworthy in the usual sense of the word. They just disagree really strongly, and that's prevented them from making a deal. There's no need to look for anything more complicated than that.

1Why not? Two reasons. First, I think political deals are mostly the result of horsetrading, outside pressure, and ideological positioning. Rhetoric doesn't play much of a role. Second, being nasty is part of making Obama's case with the public, and if he deploys his attacks effectively that puts pressure on Republicans. I suspect this outweighs the downsides of being nasty.

Cyprus Needs to Lay Its Hands on One-Third of Its GDP By Monday

| Thu Mar. 21, 2013 2:43 PM PDT

There are lots of places you can go to get all the latest messy details about Cyprus—Felix Salmon's take is good—but the nickel version is that everyone is fed up. The Cyprus legislature has refused to approve the EU/IMF bailout plan, and so far both the EU and the IMF are refusing to sweeten the deal. Maybe Russia could help, but they probably won't. So we're in a standoff:

The euro currency union, a centerpiece European policy for a generation, edged toward a rupture on Thursday when the region’s central bank said it was ready to pull the plug on Cyprus.

The stark ultimatum came in a terse statement from the European Central Bank’s governing board that on Monday it would cut off the flow of euros to Cyprus’s financial system unless the country’s leaders reach terms with the International Monetary Fund and other European nations on an international bailout.

Just to give you an idea of what all the numbers mean, the EU/IMF plan requires Cyprus to come up with about $7.5 billion as its share of the bailout. That's roughly a third of their GDP. To put that into local terms, it would be as if the United States were being asked to pony up $5 trillion. This is about equal to all government spending—federal, state, and local—for an entire year.

No country in the world has ready access to that kind of dough, which is why the original plan relied on taxing bank deposits. There just weren't a lot of other options.

My guess is that, as usual, some kind of deal will be cobbled together and announced a few minutes before the markets open on Monday morning. But maybe not. And if not, Cyprus's banks will implode, taking Cyprus along with them. An exit from the euro would be all but certain.

If that happens, EU leaders will really have to start working overtime to convince everyone that Cyprus is still unique, and its implosion means nothing for the rest of the currency union. Maybe that will work. After all, there are some good arguments that Cyprus really is unique. It's just not clear that those arguments are quite good enough to convince everyone. And you really do have to convince everyone....

Today's Mini Rant About Online Ads

| Thu Mar. 21, 2013 12:35 PM PDT

Every day, the Wall Street Journal plasters a demand at the bottom of my screen that I try Portfolio, their fabulous new investment tracker. I have no interest whatsoever in this. When I go to the LA Times website to get the day's crossword puzzle, I first have to sit through a 30-second video ad. I subscribe to both of these newspapers.

Is it too much to ask that if I spend several hundred dollars a year on your product, my online access should be at least as convenient and non-annoying as the print version? I don't think so! But maybe I'm just a fossil.