Kevin Drum - July 2013

Rich Conservative Elites Start New Group Called "Groundswell"

| Thu Jul. 25, 2013 12:24 PM EDT

David Corn has a new piece up today about Groundswell, a shiny new right-wing organization apparently set up to compete with groups like Grover Norquist's Americans for Tax Reform, which Groundswell's founders—including prominent loons like Frank Gaffney, Ginni Thomas, and Allen West—seem to consider ideologically unreliable these days. Their main goal, as near as I can tell, is to invent new talking points that can be spread far and wide by conservative media types who belong to Groundswell. For example:

At the March 27 meeting, Groundswell participants discussed one multipurpose theme they had been deploying for weeks to bash the president on a variety of fronts, including immigration reform and the sequester: Obama places "politics over public safety." In a display of Groundswell's message-syncing, members of the group repeatedly flogged this phrase in public. Frank Gaffney penned a Washington Times op-ed titled "Putting Politics Over Public Safety." Tom Fitton headlined a Judicial Watch weekly update "Politics over Public Safety: More Illegal Alien Criminals Released by Obama Administration." Peter List, editor of LaborUnionReport.com, authored a RedState.com post called "Obama's Machiavellian Sequestration Pain Game: Putting Politics Over Pubic Safety." Matthew Boyle used the phrase in an immigration-related article for Breitbart. And Dan Bongino promoted Boyle's story on Twitter by tweeting, "Politics over public safety?" In a message to Groundswellers, Ginni Thomas awarded "brownie points" to Fitton, Gaffney, and other members for promoting the "politics over public safety" riff.

Nice work! But at the risk of being a little bit of a dick, here's my favorite part of the story:

Notes from a February 28 Groundswell gathering reflected both their collective sense of pessimism and desire for aggressive tactics: "We are failing the propaganda battle with minorities. Terms like "'GOP,' 'Tea Party,' 'Conservative' communicate 'racism.'" The Groundswellers proposed an alternative: "Fredrick Douglas Republican," a phrase, the memo noted, that "changes minds."

Note to Groundswellers: You might change a few more minds in the black community if you knew enough black history to spell Frederick Douglass' name correctly. Just sayin'.

Truthfully, these guys sound more like Keystone Kops than a serious threat to the political balance of Washington, DC. Still, it's remarkable that even after the rise and triumph of the tea party movement within the Republican Party, there continues to be a sizable and influential bunch of wingers who remain convinced that the GOP is right on the edge of acquiescing in the liberal destruction of the American way of life. Read the whole thing.

Advertise on MotherJones.com

Today's Health Care Refresher: Here's Why We Need the Individual Mandate

| Thu Jul. 25, 2013 11:47 AM EDT

We haven't done this for a while, but with all the anti-Obamacare agitprop about to go into high gear, it's worth reprising the reason that Obamacare includes the hated individual mandate. Here's the nickel explanation of the "death spiral" that occurs if you want to make sure that everyone can get health insurance, even those with preexisting conditions:

  1. Obamacare requires insurance companies to sell coverage to all comers, even those with preexisting conditions. This is called "guaranteed issue."
  2. For this to be workable, the price of insurance has to be about the same for everyone. Otherwise insurance companies will simply set prices high enough to exclude anyone with a preexisting condition. This is called "community rating."
  3. If you do this, the sickest people will all queue up for insurance. Healthy people won't bother. They'll just wait until they get sick and then sign up.
  4. But insurance companies depend on the law of averages: they need a large pool of customers, figuring that only a certain percentage will get sick each year. If their customer base is made up almost entirely of sick people, they'll quickly go out of business. This is the death spiral.
  5. The answer is to make sure that insurance companies continue to have a broad pool of customers, some of whom are healthy and some fraction of whom will get sick.
  6. The only way to do this effectively is to require that everyone buy health insurance. This is the "individual mandate."
  7. Poor people can't afford this, so you have to provide tax credits to help them out. These are the "subsidies."

This is just the Cliff's Notes version, in case anyone needs a reminder of why the individual mandate is part of Obamacare. There's more to the law than just this, of course. There are rules that mandate coverage levels, since otherwise insurance companies could exclude certain expensive preexisting conditions. There are new programs meant to lower the growth of health care prices. There's an expansion of Medicaid for the very poorest. There's an end to "mini-med" policies.

But the core of the law is (1) guaranteed issue, (2) community rating, (3) individual mandate, and (4) subsidies for low-income families. Everybody loves #1—even conservatives usually claim to support it—but it's impossible to have it without all the other stuff. The individual mandate follows as inescapably as morning follows the dawn. If you support the idea of requiring insurance companies to cover people with preexisting conditions, then you also have to support the individual mandate. There's no way around it.

FreedomWorks Plans Push to Persuade People Not to Get Health Insurance

| Thu Jul. 25, 2013 10:18 AM EDT

Here's the latest conservative brainstorm to make Obamacare fail:

With the Obama administration poised for a huge public education campaign on healthcare reform, Republicans and their allies are mobilizing a counter-offensive including town hall meetings, protests and media promotions to dissuade uninsured Americans from obtaining health coverage.

...."We're trying to make it socially acceptable to skip the exchange," said Dean Clancy, vice president for public policy at FreedomWorks, which boasts 6 million supporters. The group is designing a symbolic "Obamacare card" that college students can burn during campus protests.

"Socially acceptable" indeed. So not only are they going to be encouraging people to break the law, they're literally going to be encouraging people not to buy health insurance. Nice. I wonder if FreedomWorks plans to help out the first person who takes them up on this and then contracts leukemia? I'm guessing probably not.

What's next? A campaign to get people to skip wearing seat belts? To skip using baby seats in cars? To skip vaccinations for their kids? It's times like this that words fail those of us with a few remaining vestiges of human decency.

Amash Amendment to Defund NSA Phone Program Fails in House

| Wed Jul. 24, 2013 8:22 PM EDT

Rep. Justin Amash's amendment to defund the NSA's bulk collection of domestic telephone records failed in the House this afternoon. That's probably not too surprising given the full court press coming from the president, the leadership of both parties, and the intelligence community. But take a look at the vote count. When was the last time we saw something so genuinely bipartisan? In the end, 94 Republicans and 111 Democrats voted in favor, and the leaders of both parties—John Boehner, Eric Cantor, Nancy Pelosi, and Steny Hoyer—all joined with President Obama to oppose the amendment and keep the NSA program in place. Despite disagreements at the margin, support for the fundamental structure of the modern national security state truly spans both parties.

On a side note, I'm not sure how to interpret the closeness of the vote. It's possible that House leaders whipped a bare opposition majority in the short time they had and didn't bother putting any pressure on the remaining Yes votes. If they had, maybe the vote would have been more lopsided. On the other hand, maybe they got all the votes they could and this was genuinely a close run thing. With a little more work, maybe the Yes side could have won.

And on the bright side, I note that our nation's major newspapers all deigned to report this on their front pages today. That's something, at least.

Reports of the Death of Peak Oil Have Been Greatly Exaggerated

| Wed Jul. 24, 2013 5:10 PM EDT

A week or so ago, there was a mini-flurry of blog posts announcing that peak oil was dead. Thanks to shale oil, tar sands, heavy oil, deepwater oil, and all the other kinds of oil that the peakists didn't know about, the world was now practically drowning in the stuff.

The whole thing was very strange for several reasons. First, the peak oil community not only knows about all those kinds of nonconventional oil, its forecasts have always included them in minute detail. The question isn't whether they exist, it's when production declines in existing mature fields will outpace the modest amounts of new oil we're getting from nonconventional sources and new drilling technologies. Second, the world isn't drowning in oil. There's no dispute that shale oil has ramped up over the past few years, but it's added only a couple of million barrels a day to worldwide production and it's likely to start declining pretty quickly (within five or ten years or so). It's really not that big a deal on a global scale. Third, peak oil has never been only about the exact date that production of oil hits its highest point. It's been about how long production will plateau; how steep the subsequent decline will be; how expensive it will be to extract nonconventional oil; and how much oil prices will spike up and down as demand bumps up permanently against supply limits.

Hell, a few years ago even the International Energy Agency‌—which historically had refused to acknowledge production limits even theoretically—finally admitted that peak oil was a reality. When you lose the IEA to the dark side, you really ought to just admit defeat.

That said, for the past few years I haven't been following peak oil in minute detail. I've written occasional blog posts on related topics, but that's about it. So I didn't respond to the peak oil flurry because I no longer have detailed, up-to-date knowledge of where we are. However, Chris Nelder does, and he has a long blog post today that will bring you up to speed if you're interested in the latest data. Pay particular attention to the distinction between "crude oil" and "petroleum liquids." They're both worth tracking, but they're different things and they serve different needs. Liquids are useful for a variety of purposes, but if you want gasoline for your car, the only thing you care about is the supply of crude oil.

For what it's worth (which isn't much), I note that Nelder and I happen to agree on the overall shape of things: Crude oil production has been almost flat over the past decade, and the likely date of the overall global peak is sometime between now and 2020. After that, we'll be in irrevocable decline.

Chart of the Day: The War on Dodd-Frank

| Wed Jul. 24, 2013 3:52 PM EDT

Dodd-Frank was not exactly a brutal piece of financial regulation even when it first passed. In fact, it was so watered down that its overall effect was always likely to be pretty modest. Since then, though, it's gotten watered down even more. Why? Because banks are very, very rich and very, very connected, while financial reformers....aren't. The chart below tells the story at a glance, showing the number of meetings to discuss regulatory interpretation and implementation over the past three years. As you can see, the reform groups never had a chance.

This comes via Erika Eichelberger, who has more here. Note that Goldman Sachs alone accounts for 222 of these meetings.

Advertise on MotherJones.com

Why Obama Should Have Gone Big in Galesburg

| Wed Jul. 24, 2013 12:50 PM EDT

Dana Milbank complains today that President Obama's new plan to focus on the economy shows that he's "fresh out of ideas." We now have copies of Obama's big speech in Galesburg today, so let's check it out. He says he has a five-point plan:

I’ll push new initiatives to help more manufacturers bring more jobs back to America. We’ll continue to focus on strategies to create good jobs in wind, solar, and natural gas that are lowering energy costs and dangerous carbon pollution....We’ve got more than 100,000 bridges that are old enough to qualify for Medicare.....And yet, as a share of our economy, we invest less in our infrastructure than we did two decades ago. That’s inefficient at a time when it’s as cheap as it’s been since the 1950s.

.... The days when the wages for a worker with a high-school degree could keep pace with the earnings of someone who got some higher education are over....Which brings me to the second cornerstone of a strong middle class: an education that prepares our children and our workers for the global competition they’ll face....high-quality preschool available to every four year-old in America....spur innovation in our schools....high-speed internet....train workers for changing jobs....the soaring cost of higher education.

....A home of your own has been the clearest expression of middle-class security....Already, I’ve asked Congress to pass a good, bipartisan idea....to give every homeowner the chance to refinance their mortgage and save thousands of dollars a year.

...The fourth cornerstone....is a secure retirement....As we work to reform our tax code, we should find new ways to make it easier for workers to put money away, and free middle-class families from the fear that they’ll never be able to retire. And if Congress is looking for a bipartisan place to get started, they don’t have to look far: economists show that immigration reform that makes undocumented workers pay their full share of taxes would actually shore up Social Security for years.

....Fifth, I will keep focusing on health care, because middle-class families and small business owners deserve the security of knowing that neither illness nor accident should threaten the dreams you’ve worked a lifetime to build.

I hate to say it, but Milbank has a point. Obama's manufacturing emphasis has always been a little quixotic, though I'm all in favor of investing in infrastructure and promoting green policies. Universal pre-K is a great idea, but there's not all that much more the federal government can do on the education front. Homeownership is a nothingburger. Retirement is also a nothingburger if all it means is yet another tax-favored savings plan. And healthcare is already a done deal. Basically, Obama's plan boils down to infrastructure and pre-K. I approve, but it's not going to set hearts aflutter.

That said, I continue, as always, to wonder what prompts guys like Milbank to write stuff like this:

But while that message remains relevant, Obama is now facing a Republican opposition that, by House Speaker John Boehner’s own account, is measuring its success by how many laws it can undo....If he’s to break through the resistance, Obama will need some bold new proposals. That’s why his speech returning to the oldies would seem to confirm that the White House has given up on big achievements.

In what possible universe would bold new proposals break through the brick wall of modern Republican opposition to anything that's not a tax cut for the rich? Obama could announce that John Galt has invented a free energy machine and just needs a small federal grant to commercialize it, and Republicans would oppose it. Obama could announce anything at all, and Republicans will reflexively oppose it.

The reason Obama should be bolder is not because it might "break through the resistance." He should be bolder precisely because it wouldn't make any difference. If you're going to meet an adamantine wall no matter what you do, why not shoot for the stars? At least that way you've made it clear whose side you're on. Obama's speech got in some good shots at the Republican Party's continuing economic derangement, but he needs more than that.

Raise the minimum wage to $12! Split up the big banks, tax hedge funds at regular rates, stomp on derivatives and commodities trading, and increase capital requirements to 20 percent! Raise Social Security payments! Guarantee universal pre-K/childcare starting at three months! Invest a trillion dollars in infrastructure! Mandate four weeks of vacation for all employees! Eliminate software patents! Increase the capital gains tax to 40 percent!

None of this has the slightest chance of passage. But when you're competing with a party whose message is about as subtle as a blood-and-guts slasher pic, you need something equally dramatic to show everyone what your party stands for. Dana Milbank still wouldn't be happy, of course. He'd call you crazy. But that's better than having him call you lifeless, isn't it?

For Pity's Sake, Let's Not Nominate Larry Summers to Run the Fed

| Wed Jul. 24, 2013 11:18 AM EDT

For reasons not entirely clear to me, the entire world seems to have decided over the weekend that Larry Summers is likely to be President Obama's choice to succeed Ben Bernanke as Fed chair. I can't tell if this is because Obama has truly made up his mind, or if it's mostly due to the awesome agenda-setting power of Ezra Klein. But either way, it's the talk of the moment among the tiny fraction of the population that cares about the Fed.

There's not much point in recounting the entire conversation of the past few days. It boils down to a couple of pretty simple points. (1) Larry Summers is really smart, but he's also something of an asshole and a loose cannon. (2) Janet Yellen, the other serious contender, has lots of experience, a better bedside manner, terrific qualifications in monetary policy, and a pretty good track record of being right on the big issues. In other words, Yellen is really the obvious choice.

I agree, but for a different reason. When Ben Bernanke's first term was up, I opposed his renomination not because I thought he had done a terrible job, but because I thought the next few years called for someone with a real dedication to regulating the financial industry. Bernanke had simply never shown any enthusiasm for this. But as Felix Salmon notes this morning, Larry Summers is far worse on this dimension:

Summers is, to put it mildly, not good at charming those he considers to be his inferiors, but he’s surprisingly excellent at cultivating people with real power.

What’s more, the move would be a calculated snub to bien pensant opinion. Never mind the utter shambles that Summers made of Harvard, or the way he treated Cornel West, or his tone-deaf speech about women’s aptitude, or the pollution memo, or the Shleifer affair, or the way he shut down Brooksley Born at the CFTC, or his role in repealing Glass-Steagall, or his generally toxic combination of ego and temper — so long as POTUS likes Larry, and/or so long as Summers is good at working key Obama advisors like Geithner, Lew, and Rubin, that’s all that matters.

The choice of Summers would also be the clearest signal yet that Obama feels that he did what needed to be done to deal with the financial crisis, and that financial reform is, for the rest of his presidency, going to be a very low priority. Summers is a deregulator in his bones; he didn’t like the consumer-friendly parts of Dodd-Frank, and his actions have nearly always erred on the side of being far too friendly to Wall Street. He considers monetary policy to be largely irrelevant in a zero interest rate environment, and there is no chance whatsoever that he would take a robust leadership role with respect to the Fed’s other big job, which is regulation.

Congress isn't likely to approve any new financial regulations over the next few years, which makes the Fed chairman's role even more important than usual. She'll be responsible for a tremendous amount of regulatory interpretation, goal setting, and resource allocation based on existing law. My sense is that although Yellen might not be a barn burner on this stuff (though who knows?), Summers would almost certainly be terrible. He's just constitutionally hostile to the idea of reining in the free operation of the financial sector.

Even if there were no other reasons, this makes Yellen the better choice. Obama might personally like Summers, but he's the president of the United States, not president of the senior class. He should pick the best candidate, not his best pal.

Republicans Double Down on Plan to Screw the Poor and Aid the Rich

| Wed Jul. 24, 2013 9:32 AM EDT

According to Jonathan Weisman of the New York Times, the Republican budget goal for next year is simple and clear: if President Obama is for it, they want to cut it. "His priorities are going nowhere," said Rep. Harold Rogers, chairman of the House Appropriations Committee. But there's obviously more to it. Here's a quick taste:

On Tuesday, a House Appropriations subcommittee formally drafted legislation that would cut the Environmental Protection Agency’s budget by 34 percent....education grants for poor students will be cut by 16 percent....The House transportation and housing bill for fiscal 2014 cuts from $3.3 billion to $1.7 billion the financing for Community Development Block Grants, which go mainly to large cities and urban counties for housing and social programs, largely for the poor....The Securities and Exchange Commission, which has been flexing its muscle against hedge fund managers and insider trading schemes, would see financing cut 18 percent from the current level....the Internal Revenue Service would be cut by 24 percent....clean water grants from the Environmental Protection Agency would be slashed by 83 percent.

I assume everyone can see the principle at work: If it helps the poor, slash it. If it reins in the rich, slash it. If it's defense related, leave it alone. And if we don't get 100 percent of everything we want, burn the government to the ground.

Here's a simpleminded—but fair—summary of the past year: Republicans ran on a platform like this in 2012 and the American public rejected it. The deficit is already on a steep downward slope, which gives us a lot more breathing room than we had in the past. And the economy is still fragile, which makes even deeper austerity insane. In other words, pretty much every macro trend argues against either the need or the public desire for massive new spending cuts.

And yet Republican spending mania has gotten nothing but worse. They've gone from fanaticism to....what comes after fanaticism? Is there even a word? Nihilism? They obviously don't genuinely care about the long-term deficit, since that's almost solely a product of higher health spending and low tax rates. They just care about screwing the poor and helping the rich. Is there anything else left that animates them?

How a Trade Pact Between Europe and America Might Really Be Aimed at China

| Wed Jul. 24, 2013 12:04 AM EDT

I've mentioned before that TTIP—the trade pact between Europe and America that's currently under negotiation—is likely to have a fairly modest impact on trade itself. That's because trade between Europe and America is already pretty free. Rather, the most important effect of TTIP is likely to be in the areas of regulatory harmonization and the removal of various non-tariff barriers, including some contentious negotiations over IP law.

Dan Grant agrees, but suggests a way of looking at this that I haven't seen elsewhere:

So if the TTIP isn’t especially controversial and its member states seem inclined to smooth off its rough edges, why is it significant?

China.

The TTIP isn’t just about lowering trade barriers between America and Europe; it’s also about setting rules. It will harmonize regulations for the entire trade area....America and Europe will set the rules for the global standard of free market enterprise.

....China’s trade record with other countries has been marred by claims of dumping, unsafe products, and consistent complaints over intellectual property rights violations, but the consequences to Beijing have been marginal. The creation of a massive trade bloc has the potential to change this dynamic. A robust TTIP advantages U.S. and EU companies, boosting their competitiveness and expanding their market share. Billions of dollars worth of Chinese products would be less competitive in the U.S. and EU markets. China could see its exports bottled up within its shores.

....Even though the Western press has largely overlooked this dimension of the TTIP, Beijing most assuredly has not. Intermittent claims of a potential trade cold war are bubbling up in Chinese media, and they’re likely to intensify as the TTIP negotiations advance....In light of such points, it’s important to note that the establishment of the TTIP should not be interpreted as an overtly aggressive move against China. Instead, it’s an opportunity for Beijing to formally make common cause with the developed economies of the world.

I don't have the foreign affairs chops to really evaluate this, but it's an interesting idea. Click the link to read Grant's entire argument.

UPDATE: Evan Soltas has more on this subject here.