Kevin Drum - April 2013

I Am Tired of People Calling Me On the Phone

| Thu Apr. 25, 2013 1:42 PM PDT

I've been getting a ton of telemarketing calls lately. They're all over the map: some are from people I've done business with before, some are cold calls, some are illegal robocalls, some are from opinion pollsters, etc.  But one way or another, I get at least half a dozen every day, and sometimes as many as twice that number.

I'm curious: is this just me? Or are lots of people noticing a big uptick in this stuff?

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George Bush Was No Dummy, But How About if We Leave it at That?

| Thu Apr. 25, 2013 10:30 AM PDT

Thanks to the opening of his presidential library, this is officially "Be Nice to George Bush Week," and we've had quite a few entries in an ongoing competition among conservatives to persuade us that Bush was really a whole lot better than we used to think he was. One of the most widely linked is an essay by Keith Hennessey titled "George W. Bush is smarter than you."

And that may well be. I always thought Bush was a reasonably smart guy, and anyway, above a certain level it doesn't matter much. Other character traits become a lot more important. Still, Hennessey is trying to convince us that Bush is really, really smart, and I'm afraid I remain unconvinced. Here are three examples he provides to demonstrate Bush's high IQ:

[He] was incredibly quick to be able to discern the core question he needed to answer. It was occasionally a little embarrassing when he would jump ahead of one of his Cabinet secretaries in a policy discussion and the advisor would struggle to catch up.

....We treat Presidential speeches as if they are written by speechwriters, then handed to the President for delivery. If I could show you one experience from my time working for President Bush, it would be an editing session in the Oval with him and his speechwriters. You think that me cold-calling you is nerve-wracking? Try defending a sentence you inserted into a draft speech, with President Bush pouncing on the slightest weakness in your argument or your word choice.

....On one particularly thorny policy issue on which his advisors had strong and deep disagreements, over the course of two weeks we (his senior advisors) held a series of three 90-minute meetings with the President. Shortly after the third meeting we asked for his OK to do a fourth. He said, “How about rather than doing another meeting on this, I instead tell you now what each person will say.” He then ran through half a dozen of his advisors by name and precisely detailed each one’s arguments and pointed out their flaws. (Needless to say there was no fourth meeting.)

This is really unpersuasive. The first example suggests not smarts, but impatience. Bush always thought of himself as a conviction politician, so it's natural that he'd frequently want to skip the policy details and instead focus exclusively on what he considered the "core" question.

The second example doesn't even come close to demonstrating smarts. It demonstrates, once again, impatience. Bush is the kind of guy who wants to say what he wants to say, and he doesn't want a speechwriter trying to twist his words or add some nuance he's not interested in.

The third example—surprise!—also demonstrates impatience (justifiably, it sounds like). In this case, Bush has been in three meetings over the course of two weeks, and his advisors are wrangling over the same issues again and again and again without making any progress. So he's tired of it. He repeats their arguments back to them, says he doesn't need to hear them yet again, and heads off to make a decision.

None of this suggests that Bush is a dumb guy. But it doesn't demonstrate a ton of analytical depth either. It suggests that (a) he has a good memory, (b) he's perfectly able to understand policy arguments when he wants to, but (c) most of the time he had little patience for this stuff and instead simply wanted to do what his political instincts told him to do. He's smart enough, but his intellectual curiosity was limited, and his willingness to allow his instincts to be overridden by policy concerns was minimal.

Maybe you think that's good, maybe you think it's bad. But it is what it is. There's really no need to pretend that Bush was some kind of unappreciated intellectual superman.

The Real Problem With Obamacare

| Thu Apr. 25, 2013 8:59 AM PDT

Last night I read a Politico article about Congress trying to exempt itself from Obamacare. I couldn't make heads or tails of it. Obamacare doesn't even apply to big employers, so what's to exempt?

Well, it turns out that Congress wrote a special provision into the law that ended its own participation in the Federal Employees Health Benefits Program and instead requires anyone working on Capitol Hill to buy health insurance through an Obamacare exchange. So that explains that. But it still wasn't clear what the problem was. As the law stands, they have to choose a health plan through the exchange. So what?

This morning, Ezra Klein explains. The whole thing started back in 2009 when Republicans decided to embarrass Democrats by proposing an amendment that forced members of Congress to use Obamacare. Democrats then surprised them by agreeing to it. The problem, it turns out, is that because the amendment was originally intended to be only for show, it was poorly drafted. Big employers aren't even allowed to use the Obamacare exchanges until 2017, so there are no rules for how to handle their premium contributions:

That's where the problem comes in....It's not clear that the federal government has the authority to pay for congressional staffers on the exchanges, the way it pays for them now in the federal benefits program. That could lead to a lot of staffers quitting Congress because they can't afford to shoulder 100 percent of their premiums.

....You'll notice a lot of hedged language here: "Ifs" and "coulds". The reason is that the Office of Personnel Management — which is the agency that actually manages the federal government's benefits — hasn't ruled on their interpretation of the law. So no one is even sure if this will be an issue. As the Politico article notes, some offices, like that of Rep. Henry Waxman (D-Calif.), interpret the language of the law such that there's no problem at all. Others are worried it could be an issue, and are trying to prepare ways around it. The staffs I talked to stressed this worrying was preliminary, and felt the Politico article was jumping the gun. "This whole Politico story is based on a ruling that hasn't even come down yet," one griped.

So there you have it. But why am I spending time this morning providing you with an explanation for a problem you probably didn't even know existed? Because it allows me to make a point, of course.

But which point? Jon Chait, for example, pairs this up with another story and suggests that Politico is a little too dedicated to covering politics as theater and should try a wee bit harder to understand the actual policy it writes about. Fair enough!

But the point I want to make isn't about Politico, it's about Obamacare itself, and my biggest fear for its future. My biggest fear is not about the various implementation problems that Obamacare is going through right now. Conservatives are making plenty of hay over these obstacles right now, but the truth is that any big law will go through growing pains. When you dig into them, it turns out that most of the problems conservatives are crowing about are either (a) bogus or (b) not really very serious. A single small union complaining about the law, for example, is just not that big a deal, no matter how much Rush Limbaugh tries to pretend otherwise. Ditto for Max Baucus's concerns about marketing; conflicts with university health plans; a supposed increase in workers being forced into part-time work, and so forth.

No, my biggest concern is what happens after 2014. No big law is ever perfect. But what normally happens is that it gets tweaked over time. Sometimes this is done via agency rules, other times via minor amendments in Congress. It's routine. But Obamacare has become such a political bomb that it's not clear that Congress will be willing to fix the minor problems that crop up over time. There's simply too big a contingent of Republicans who are eager to see Obamacare fail and are actively delighted whenever a problem crops up. This has the potential to be a problem that no other big law has ever had to face.

We'll see how this works out. Maybe after 2014 things will cool down a bit and normal horse trading will start up again. But I'm not so sure anymore. After all, I figured that might happen after the November election, and when John Boehner acknowledged that "Obamacare is the law of the land," it seemed like a good sign even with all the hedging he put around it.

But nothing has changed. Republicans are still fervently determined to destroy Obamacare any way they can, and this means that tweaks and fixes are unlikely. Instead, they're going to dig in their heels and gleefully watch as people suffer because of minor implementation glitches that could be easily avoided. In the end, I suspect this strategy won't work. But you never know. It might.

Banks Continue to Scaremonger Over Nonexistent Down Payment Requirements

| Thu Apr. 25, 2013 8:01 AM PDT

Are banks refusing to make loans unless buyers put up a big down payment? Apparently so. Will this hurt the recovering housing market? Maybe. Is this all due to restrictive Dodd-Frank rules that ought to be discarded? Nope. Read on for the real story.

It turns out that Dodd-Frank allows banks to make any kind of loans they want. What it does say, though, is that if a loan fails to conform to its rules—one of which is a 20 percent down payment—then the issuing bank can't just bundle up the entire loan and immediately sell it off. It has to keep a 5 percent stake. Felix Salmon comments:

The question about high down payment mortgages is a relatively arcane backwater of financial underwriting, and we can leave it to the statisticians and bond investors to decide just how much, if at all, such down payments reduce defaults. Instead, we should be concentrating on the banks here, the institutions which seem to be entirely unwilling to underwrite any mortgage at all, unless and until they’re allowed to flip the entire thing, 100%, to bond investors, for a quick, risk-free profit.

This violates common sense. If the bank is underwriting the loan, the bank should retain at least a tiny amount of the risk in that loan. Indeed, if I were a bond investor, I would as a matter of course require extra yield on any loans which were sold by a bank without any skin in the game at all. After all, there’s not much point in being assiduous about your underwriting if you’re just going to sell the entire loan anyway.

Right. The whole point here is not to prevent banks from making whatever kind of loans they want. The point is to force them to have some skin in the game. If they want to lower their underwriting standards, that's fine. But if they do, they have to keep some of the risk for themselves. This acts as an incentive to be careful about who they make loans to, instead of returning to the Wild West of the aughts, when underwriting standards went completely to hell and fraudulent loans were made by the millions. That happened because the loan issuers didn't care: they were just going to bundle up the loans and sell them off anyway. Now they can't. As Felix says, if banks don't like this, we really ought to be asking, "Why not?"

Finally, Congress Finds Something to Agree About

| Wed Apr. 24, 2013 9:18 PM PDT

Congress is finally being roused to do something about the sequester. Part of it, anyway:

Complaints about air-travel delays in recent days have prompted Democrats in Congress to reconsider their strategy for dealing with across-the-board spending cuts.

...."We have to admit that some things are very problematic," said Sen. Amy Klobuchar (D., Minn.), who on Wednesday introduced a bipartisan bill with Sen. John Hoeven (R., N.D.) designed to give the Department of Transportation more flexibility to manage the cuts with the goal of reducing furloughs at the FAA....Another Democrat, Sen. Kirsten Gillibrand of New York, on Wednesday announced legislation that would reinstate air-traffic controllers using funds generated by ending a tax break for corporate jets. Democratic Sen. Tom Carper of Delaware said he would prefer to generate additional user fees to keep the travel system running at full capacity for the next five months.

"The public's going to be furious when they find out that this could have been prevented," said Sen. Dan Coats (R., Ind.), who supports the bipartisan proposal to give the Department of Transportation more flexibility in dealing with the FAA cuts. The aviation agency has said it can't avoid furloughs in the course of complying with the mandated budget cuts.

The tediously obvious point to make about this is that Congress can't do much more than yawn about cuts to services for the poor, but a few days of air traffic delays and they're practically tripping over themselves to offer up solutions. Why is this? Here are a few possibilities:

  • Flight delays affect lawmakers themselves, and they're not happy about being personally inconvenienced.
  • Flight delays affect the rich and the upper middle class, and as Larry Bartels and Martin Gilens have taught us, these are the only voters that legislators actually care about.
  • Flight delays affect the media, so they write about it relentlessly.
  • Flight delays are an annoyance for everyone who flies. Other cutbacks are parceled out differently: most beneficiaries continue to get full benefits, while a small percentage lose access completely.
  • Flight delays are random, which adds to their annoyance.
  • Airport havoc is just generally more visible than most things.

You will be unsurprised to learn that I mostly chalk this up to items 1-3, especially item 2. Feel free to argue in comments.

Why Obama Fails to Get Republican Votes, Part Infinity

| Wed Apr. 24, 2013 2:17 PM PDT

Today, Dave Weigel reads Olympia Snowe's upcoming memoir so we don't have to. In particular, he highlights just how hard President Obama worked to win her support for Obamacare:

As woe-is-the-Republic texts by retired moderates go, it's got nothing on 2012's Arlen Specter offering....But it does tell us just how hard the president flop-sweated to bring Snowe into the cloture vote for health care. Snowe recounts a conversation with POTUS after she approved of the Baucus version of reform in committee....Obama kept calling, reaching Snowe "more than a dozen times," meeting with her in person eight times. The final meeting occured five days before the Senate's cloture vote, in 2009.

That's more than 20 meetings with Snowe! And she was a famous moderate. But she voted against the bill anyway.

Is this because Obama didn't twist her arm hard enough? Wasn't willing to cut a deal with her? Or because he just sucks at persuading people? Maybe. But you wilfully ignore Occam's razor at your own risk. The more likely answer, if you want to avoid being cut to ribbons, is simply that no Republican was ever going to vote for Obamacare, full stop. No amount of sweet talking, not from Obama, not from Joe Biden, not from Harry Reid, and not from anyone else, was ever going to change that. It explains everything that happened in the simplest and most persuasive manner possible.

Rinse and repeat for nearly every other piece of significant legislation of the past four years. And now, grasshopper, at last you understand.

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Washington Post Wastes $125! News at 11!

| Wed Apr. 24, 2013 10:45 AM PDT

Here's the lead headline at the Washington Post right now:

Feds spend at least $890,000 on fees for empty accounts

This kind of stuff drives me crazy because it preys on the innumeracy of the general public. Should agencies be more careful about shutting down bank accounts they no longer use? Sure. And does reporter David Fahrenthold acknowledge that the money involved is "a tiny fraction of the federal budget"? Yes he does.

But seriously, folks, "tiny fraction" barely even begins to describe this. In numbers, it represents about 0.000025 percent of the federal budget. But even that's too small a number to really get a feel for, so let's put this into terms that the Washington Post can understand.

Annual revenues at the Washington Post hover somewhere around $500 million. So how much is 0.000025 percent of that? Answer: $125. Would the Washington Post run a lengthy story about two empty bank accounts that the Washington Post hasn't closed yet, which cost the Washington Post's shareholders $125? No. The story is so self-evidently ridiculous that they'd laugh at anyone foolish enough to even mention it.

Look, I get it. The empty bank accounts are just being used as an example of "old bugs, built into the machine of government, that make spending money seem easier than saving it." The problem is that dumb stuff like this is what convinces people that government is wantonly wasteful, when the fact is that every corporation in America has inefficiencies this large. It's just part of human beings running a human organization.

And focusing on this stuff is lazy. If you want to demonstrate that the federal government wastes money, then write a story about actual, substantial waste. Is that too hard? If the government truly is wasteful, it shouldn't be. In a $3.5 trillion operation there ought to be dozens, even hundreds, of easy examples that cost real money. If there aren't, then perhaps the real story is that the federal government is actually about as efficient as any other big organization.

The basic problem here is that it's hard to grapple with the sheer size of the numbers involved. Any corporation in America that kept wasteful spending down to 1 percent would be pretty happy. That number represents a tightly run ship. But the federal government is so large that 1 percent waste amounts to about $35 billion. That's a scary sounding number, but in fact, it's pretty small. The truth is that if you can't dig up at least that amount in wasteful spending—not spending you dislike, but actual wasteful spending—you don't have much of a story.

House Republicans Introduce Yet Another Cunning Plot to Destroy Obamacare

| Wed Apr. 24, 2013 9:15 AM PDT

Ed Kilgore points us today to the latest state-of-the-art healthcare thinking from conservatives. House Republicans have a plan to take money away from Obamacare implementation and shift it to a high-risk pool that's currently underfunded. Some conservatives are apparently objecting to this because they think it "fixes" Obamacare and they want nothing to do with that. One of the bill's supporters sets them straight:

Instead, it effectively cannibalizes ObamaCare to impede its implementation. The bill would transfer $4,000,000,000 (four billion dollars) from an ObamaCare implementation slush fund to a program called the Pre-Existing Condition Plan, or PCIP. The slush fund is a big pot of money the Administration is using to set up exchanges in states that refuse to set them up (a resistance we've strongly encouraged). 

....PCIP is not, in itself, a good program. But if Congress had enacted only PCIP in 2010, instead of ObamaCare, America would be in a much, much better place today. Now, I agree with those conservatives who hold that preex pool programs should be state- rather than federally run. But the harm here is slight, because PCIP is scheduled to expire on December 31st of this year. It’s a temporary subsidy, remember.

There's an almost charming honesty to this. Here's the plan:

  1. Take money away from the program to set up federal exchanges.
  2. Use the money to temporarily fund an admittedly crappy program.
  3. Victory! By 2014, the crappy program will be gone and federal exchanges won't exist. Obamacare will be in tatters.

I can't respond too much better than Ed: "Pretty plain, eh? Give sick people without insurance temporary access to crappy private plans at exorbitant rates as part of a strategy aimed at pulling the rug out from under them entirely at the end of the year, all the while mewling about one's concern for sick people."

I hear a lot these days about "reformist" conservatives who are trying to move the Republican Party in a new, more serious direction. I've become pretty skeptical of this whole movement, which seems to be about an inch deep, but I'd be a lot less skeptical if they took on nonsense like this and actually fought it.

Sunnis Are Awakening Once Again in Iraq

| Wed Apr. 24, 2013 8:45 AM PDT

The latest from Iraq:

Security forces for the Shiite-led Iraqi government raided a Sunni protest camp in northern Iraq on Tuesday, igniting violence around the country that left at least 36 people dead.

The unrest led two Sunni officials to resign from the government and risked pushing the country's Sunni provinces into an open revolt against Prime Minister Nouri Maliki, a Shiite. The situation looked to be the gravest moment for Iraq since the last U.S. combat troops left in December 2011.

...."A minority of hard-liners are using these protesters as human shields and have infiltrated these demonstrations. They want to drag the country into a civil war between the Sunni and Shiites," said lawmaker Sami Askari, who is close to Maliki. "The majority [of Iraqis] reject this."

But even as Askari and others vowed to stave off disaster, the government appeared hobbled by mistrust. Kurds have boycotted the Cabinet along with most Sunnis. The Sunni education minister, Mohammed Tamim, resigned Tuesday after trying to broker a peaceful resolution between the protesters and security forces in the hours before the early-morning raid. The minister of technology, Abdul Kareem Samarrai, also resigned.

This is all Obama's fault, amiright? George Bush—currently enjoying a sudden resurgence of love from conservatives this week—was right on the verge of working everything out and bringing peace and harmony to Iraq when Obama was elected and ruined everything. That's the story I've been hearing for the past couple of years from the neocon rump, anyway.

SEC Asked to Require Companies to Disclose Political Donations

| Wed Apr. 24, 2013 7:51 AM PDT

The New York Times reports today on a petition asking the SEC to require public companies to disclose their political donations. Needless to day, business lobbying groups are unamused:

Earlier this month, the leaders of three of Washington’s most powerful trade associations — the U.S. Chamber of Commerce, the National Association of Manufacturers and the Business Roundtable — issued a rare joint letter to the chief executives of Fortune 200 companies, encouraging them to stand against proxy resolutions and other proposals from shareholder activists demanding more disclosure of political spending.

....“The Chamber believes that the funds expended by publicly traded companies for political and trade association engagement are immaterial to the company’s bottom line,” said Blair Holmes, a spokeswoman for the business group, who added that the advocates’ “apparent goal is to silence the business community by creating an atmosphere of intimidation under the cover of investor protection.”

You have to admire the chutzpah, don't you? Who else but the Chamber of Commerce would have the balls to claim that corporations don't believe that political donations have any effect on their earnings? I mean, that's pretty much the whole point of political donations, no?