Kevin Drum - September 2013

Mid-Cap Executives Are Only a Little Worried About a Debt Default

| Fri Sep. 27, 2013 10:57 AM EDT

I'm not quite sure how seriously to take a poll by the National Center for the Middle Market, which focuses on companies with between $10 million and $1 billion in annual revenues, but I suppose it's as good as any. Today, Jim Tankersley highlights an NCMM poll about the debt ceiling, which NCMM headlines, "Few believe a government default is a real possibility in the near future."

But that's not quite how I read it. The chart on the right suggests that 38 percent of the executives who responded think a default is likely. 38 percent! That's a fair amount, and it's likely to increase as we get closer to October 17. Unfortunately, it's not clear exactly what this means. Does "defaulting on debt obligations" mean defaulting on treasury bonds? Does it mean holding up Social Security checks? Or does it mean not paying a few bills in a timely manner? These are very different things. Defaulting on treasurys would be catastrophic, and if that's what these guys think might happen, they're certainly a lot calmer about it than I would be.

Still, it's true that 63 percent think this is all a big snooze, and that Congress will come to its senses after everyone has blown off a little steam. Unfortunately, this is why business leaders aren't doing much to push for a solution, and it's possible that the very fact of their listless attitude might be increasing the odds that they'll be wrong.

So what will it take to end the debt ceiling crisis? Here's a guess: a stock market crash. If we really and truly breach the debt limit without a resolution, markets will probably go crazy. In fact, they might go especially crazy because they seem so sure that it won't happen. But that's the one thing that always seems to get everyone's attention. You can have failing banks, massive ranks of the unemployed, and auto giants going bankrupt—and Congress will twiddle its thumbs. But let the Dow fall a thousand points or three, and suddenly they spring into action. There are lots of ways this could end, but I wouldn't be surprised if that turns out to be the winner.

Advertise on MotherJones.com

Budget Temper Tantrum Slogs On For Another Day

| Fri Sep. 27, 2013 10:17 AM EDT

Today the Senate will pass a clean budget resolution and send it back to the House. Then what? Nobody knows. The temper-tantrum caucus in the House refuses to consider it, and John Boehner isn't (yet) willing to cross them. The business community is snoozing, so there's no help from that quarter. And obviously a bill that defunds Obamacare is off the table. So what's next?

It is unclear what the Republicans want, other than a complete repeal of the health law. Senior House Republicans continue to assess their options as the Senate prepares to vote on Friday, and are likely to insert any changes over the weekend, when the House plans to be in session.

One idea, according to a Republican who had spoken to the leadership, would be to put an amendment in the Senate budget bill that would eliminate health insurance subsidies for members of Congress and many of their aides, who must purchase their insurance on the exchanges that are part of the new law.

And the point of this is....what? Nobody knows. It's just an action of pure spite, a howl of frustration from children who have been denied ice cream for lunch and are looking for some way to lash out. So now they're thinking that maybe a bit of self-mutilation is in order. Maybe that will make everyone pay attention to them.

Or something. I don't know what to think anymore. I don't know if this behavior is sociopathic, or just sad, or merely embarrassing, or what. I just don't know.

The US Is Drifting Farther and Farther Apart From the Rest of the World

| Thu Sep. 26, 2013 7:16 PM EDT

Here's a fascinating chart from Erik Voeten. It's sort of the international equivalent of those charts that track congressional votes to show how Democrats and Republicans have become more polarized over the years. In this case, Voeten is looking at votes in the UN, and tracking how far apart the U.S. is from everyone else.

When the Iron Curtain fell, Eastern Europe almost immediately adopted the views of the West. Aside from that, however, the lines show that the U.S. has been steadily moving in one direction while every other region has been moving in the opposite direction. In the 1950s, the US, Africa, Latin America, and Western Europe were all quite close. Today, Western Europe has drifted away, and Africa and Latin America are actively opposed to US positions.

You can't really blame this on the end of the Cold War, either. All of these trends have been steadily visible for over half a century. Voeten surveys a few possible explanations for this, but none of them are entirely persuasive. In the end, it's a little bit of a mystery why this has happened.

We Can Reduce Poverty If We Want To. We Just Have To Want To.

| Thu Sep. 26, 2013 4:34 PM EDT

Jared Bernstein makes an important point today: Several Nordic countries have made great strides in ending poverty, but it's not because they have some kind of magic bullet. It's because they give poor people more money and more services.

The chart on the right shows raw poverty levels in blue. The Nordic countries are basically about the same as the United States. There's no Scandinavian miracle that provides high-paying jobs for everyone. However, once you account for government benefits, the poverty rate in the Nordic countries is about half the rate in America. Universal health care accounts for some of this, and other benefits account for the rest. Some are means-tested, others are universal. There's no single answer. The only thing these countries have in common is a simple commitment to taking poverty seriously and doing something about it. Bernstein approves:

In the age of inequality, such anti-poverty policies are more important than ever, as higher inequality creates both more poverty along with steeper barriers to getting ahead, whether through the lack of early education, nutrition, adequate housing, and a host of other poverty-related conditions that dampen ones chances in life.

This situation is only going to get worse as automation improves. Still, we're plenty rich enough to address it if we want to. There's nothing stopping us except our own will to do it.

A Question for House Republicans

| Thu Sep. 26, 2013 1:54 PM EDT

I'm curious about something. House Republicans have issued a list of demands that they want met before they'll agree to raise the debt ceiling. Obviously President Obama is opposed to all their demands. So has anyone asked any of these House Republicans why they think Obama should accept their proposal?

To be clear, my question to them is: Why should Obama care about raising the debt ceiling? Why not just let it stay where it is? Has anyone asked them this?

Yet Another Heartwarming Tale of Corporate Virtue

| Thu Sep. 26, 2013 12:59 PM EDT

Suppose you were a manufacturer of OxyContin, and you had strong evidence that certain doctors were illegally selling huge quantities of your pills to all comers. Keith Humphreys asks, What Would You Do?

  • (A) Report these doctors to the authorities?
  • (B) Insulate yourself by not sending your representatives to these doctors anymore, but continue to pocket the huge profits they generate from writing countless prescriptions for your products?
  • (C) Keep a secret list of these doctors but publicly promote the idea that painkiller abuse is not driven by wayward doctors but by other sources, such as pharmaceutical robberies?
  • (D) Reveal the list of doctors to authorities years later only because at that point it could stop a competitor from introducing a new generic medication that might cut into your own sales?
  • (E) A combination of B, C and D, but certainly not A.

You've already guessed the answer, haven't you? I can't put anything over on you guys. Click the link if you want the gory details.

Advertise on MotherJones.com

Republicans Are Blowing Up Yet Another Governing Norm

| Thu Sep. 26, 2013 12:28 PM EDT

I was chatting with a friend last night about the breakdown of governing norms in American politics. You know the drill: routine filibusters, mid-decade redistricting, flat refusals to allow votes on executive appointments, etc. But now there's a new one on the scene. It's a little more subtle than the others, though, so permit me an analogy.

If I ask my neighbor for a cup of sugar and he tells me to get lost, everyone agrees that he's being a dick. Under our usual social norms, that's a pretty reasonable kind of favor to ask. On the other hand, if I ask him to give me his car because I totaled mine, everyone agrees that I'm the one being unreasonable. That goes well beyond the kind of favor you'd normally expect from a neighbor.

The problem with this norm is that it's not really provable. Is asking for a cup of sugar really a reasonable request? Says who? Conversely, why can't I have your car? I say that's perfectly reasonable. Sometimes stuff like this ends up in court, but for the most part we rely on a social norm of reasonableness to adjudicate things like this. It's the only practical way to keep society humming along.

But this is the latest norm to go down for the count in Washington DC. House Republicans have decided to issue a laundry list of demands in return for raising the debt ceiling that go way, way beyond the usual bargaining norms of Washington. If they had proposed, say, a cut in SNAP funding, that would be politics as usual, to be fought along the usual lines. But demanding the elimination of a historic piece of social welfare legislation? Or the absurd ransom note on the right, courtesy of Steve Benen? That's just not the same thing and everyone knows it. Unfortunately, the norms of the press don't really allow them to say that. So you get story after story about all the previous government shutdowns, or about the various hobbyhorses that have been attached to debt ceiling legislation in the past, with the strong implication that, really, what's happening today isn't all that unusual.

It is, though, and everyone knows it perfectly well. But you can't prove it. So reporters end up in he-said-she-said mode and the public ends up evenly divided about whether Republicans are bargaining in good faith.

And with that, yet another governing norm is on life support. The problem is that in any complex culture, norms are every bit as important as formal rules—something that, in other contexts, conservatives harangue us about constantly. They should think a little harder about why they feel that way as they go about their business of blowing up Capitol Hill. There might actually be a good reason that all these norms have evolved organically over the past couple of centuries.

Repeat After Me: The Deficit Is Falling. The Deficit is Falling.

| Thu Sep. 26, 2013 11:30 AM EDT

Dave Weigel notes a conundrum today: according to a new poll, 54 percent of the public disapproves of Barack Obama's handling of the deficit. And yet, as the chart on the right shows, the deficit is shrinking dramatically. Last year it dropped by $200 billion, and this year, thanks to a recovering economy, lower spending from the sequester, and the increased taxes in the fiscal cliff deal, it's projected to fall another $450 billion.

Weigel notes that this has deprived conservative yakkers of one of their favorite applause lines: "You don't hear Republicans lulz-ing at Obama for failing to 'cut the deficit in half in my first four years,' because he basically did this, albeit in four and a half." That's true. It's also true that contrary to Republican orthodoxy, it turns out that raising taxes on the rich does bring in higher revenues and therefore reduces the deficit.

Bottom line: It's unfortunate that the deficit is falling so fast. It's a headwind against the recovery that we don't need. Nonetheless, the deficit is falling fast, and no one seems to know it yet. The chart above is one that deserves much wider distribution. Be sure to show it to your conservative friends at every opportunity.

$25 Billion Mortgage Relief Program Hasn't Worked Out So Great

| Thu Sep. 26, 2013 10:31 AM EDT

Remember that $25 billion mortgage settlement with five big banks last year? The idea was to use the money to help underwater homeowners, and the best way to do that is via debt forgiveness. So how did that work out? A new report from UC Irvine law professor Katherine Porter, who was appointed to study the issue by California's attorney general, says that the program hasn't worked out so great:

The vast majority of the aid to borrowers, it turns out, came in the form of short sales and forgiveness of second mortgages. Just 20% of the aid doled out under the national settlement went to forgiveness of first-mortgage principal, the kind of help most likely to keep troubled borrowers in their homes. In terms of borrowers helped, just 15% of the total received first-mortgage forgiveness

The five banks collectively delivered twice as much aid using short sales, in which owners sell their homes for less than the amount owed and move out, with the shortfall forgiven.

....Bruce Marks, founder of Neighborhood Assistance Corp. of America, a major housing counseling group, had a [harsh] assessment of the lack of aid to keep people in their homes. "It just shows you that the banks are running the government," Marks said. "There's virtually no benefit to borrowers, and yet you give the banks credit for short sales and getting second liens wiped out — something they were going to have to do anyway."

In the end, this was better than nothing, but not nearly as good as it could have been. I'd be rich if I had a nickel for every time I'd said something like that.

Here's a Kinda Sorta Map of All the Nearby Earthlike Planets

| Thu Sep. 26, 2013 12:52 AM EDT

Here's a cool graphic from New Scientist with their best estimate of how many habitable planets there might be in the galaxy. They started with the 3,588 planets discovered by the Kepler space telescope and then pared this back to only smallish planets in the "habitable zone"—not too near their star to boil over and not too far away to be iceballs. That got them down to 51 planets. But that only counts the planets we could see because our view from Earth was directly on their ecliptic. Extrapolating to all the rest produces 22,500 Earthlike planets. And since Kepler only covered 0.28 percent of the sky and only looked out 3,000 light years, extrapolating yet again produces a final estimate of 15-30 billion possibly Earthlike planets.

That's too many to show, so the picture below is a guesstimate of all the Earthlike planets "visible with a good pair of binoculars on a dark night." The grid in the lower right is the area of the sky mapped by the Kepler telescope. The rest is extrapolation. It probably doesn't mean much, but it's kind of a pretty picture.

But if there are really that many planets, where are all the people?