Kevin Drum - November 2013

America Got a Bit More Liberal This Week

| Thu Nov. 7, 2013 2:33 PM EST

E.J. Dionne says the country became a lot more liberal this week:

Republicans took a big step back from the tea party. An ebullient progressive was elected mayor of New York City. And a Democrat was elected governor of Virginia after campaigning unapologetically as a supporter of gun control and a liberal on social issues

The one bright spot for Republicans, Chris Christie’s landslide reelection in New Jersey, was won precisely because Christie ran briskly away from the party’s right wing....And in the one direct intraparty fight over the GOP’s future, a tea party candidate lost a primary in Alabama to a more traditional conservative.

That's....plausible. The number of data points is small enough that I'm reluctant to draw any broad conclusions here, but at the very least, it's true that the tea party wing of the GOP had very little to celebrate on Tuesday. There are now a growing numbers of signs that Republicans have finally bumped up against a wall on their right flank and have to pull back a bit if they want to stay electorally relevant. If that's true—a big if—it would be a fairly historic development for a party that's moved steadily to the right for more than 40 years and has prospered the entire time.

I might add that they've prospered despite persistent warnings from us lefties, who have spent virtually this entire period convinced that Republicans couldn't possibly get any more conservative than they already were. We've been wrong every single time so far, so I'd take this time with a grain of salt too.

Still, there has to be a limit somewhere. Maybe 2010 really did represent peak conservatism after all, and 2013 is yet another tidbit of evidence that moderation is the only strategy left to the Republican Party if it wants to keep winning elections. Wait and see.

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Quote of the Day: Ethics Violations Now Part of Standard Career Track for Conservatives

| Thu Nov. 7, 2013 1:19 PM EST

From Dan Drezner, commenting on the twin cases of Rand Paul and Elizabeth O'Bagy:

It seems a bit odd that it's apparently impossible for someone on the right to commit a serious ethical breach and go 48 hours without... landing a cushy new gig.

Quite so. At least Eliot Spitzer waited nine months before giving birth to his Slate gig. Show some contrition, people.

Medical Innovation is Sluggish, But Don't Blame Obamacare

| Thu Nov. 7, 2013 12:50 PM EST

Megan McArdle is concerned that the price controls in Obamacare might stifle the pace of medical innovation. Today, she passes along a report in the Wall Street Journal about health care startups:

The only way to find out, of course, is to wait (though really, we’ll still end up arguing: If medical innovation falls, the law’s supporters can always say it would have fallen anyway; if it goes up or stays steady, the opposition can always argue that it would have risen further). But here’s one sign to watch: Venture-capital investment in medical technology seems to be falling fast.

Is this related to Obamacare? Frustratingly, it’s hard to tell. It’s not mentioned among the reasons cited in the Wall Street Journal article. But that doesn’t mean that it’s not among the reasons that venture capitalists are disinvesting; it just means it wasn’t mentioned. And one supposes that a tax on medical devices and a more stringent cost-control environment could hardly help.

I agree that innovation is a canary in the coal mine for the health care industry, and it's one we should keep a close eye on. But I don't think the evidence suggests that Obamacare is playing any role in our current investment slowdown.

Take a look at the two charts on the right. The top one is from the Journal article about venture capital investment, and as you can see, VC funding in biotech (the pink line) and medical devices (the dark blue line) peaked in 2007 and then started declining. There's really no way that Obamacare can be at fault for that.

The bottom chart comes from Research America, and it's an estimate of total health care investment. Again, as you can see, investment from private industry (the red line) flattened out starting in 2008. If these numbers were adjusted for inflation, they'd probably show a small drop.

But again, a trend that started in 2008 can hardly be blamed on Obamacare. The far more likely culprit here is a combination of well-known problems in health care research, which has been suffering from innovation problems for a while, and the recession, which slowed investment in a lot of areas. The federal government might have picked up some of the slack in basic research, but after a short-lived stimulus burst in 2009, federal research funding has been declining too, thanks to budget cutbacks and the sequester.

Pharmaceutical R&D has been troubled for some time, as significant new developments have become harder and harder to come by. That's a problem. To add to that, the financial crisis has slowed down business investment in recent years. That's also a problem. But it's a stretch to suggest that Obamacare is related to either of them.

POSTSCRIPT: It's worth mentioning that pretty much everyone agrees that we need to control the spiraling growth of health care spending. It's like motherhood and apple pie. But one man's growth is another man's profit. Regardless of how we do it, if health care spending slows, then investment in the health care sector is likely to slow down too. I'm not sure how you get around that, aside from funding more R&D via the federal government.

Chart of the Day: GDP Growth, Once Again, Is Fair to Middling

| Thu Nov. 7, 2013 11:31 AM EST

In the third quarter, GDP increased 2.8 percent from last year. Federal government cutbacks reduced growth by 0.13 percent, which means that without the sequester and other fiscal headwinds the economy probably would have grown more than 3 percent last quarter.

Once again, the best word for this is meh. Business and consumer spending slowed, and much of the Q3 growth was driven by increased inventory stockpiling, which isn't sustainable. Overall, this report was an improvement from earlier in the year, but basically about average for the past three years. It could be worse, but we're still nowhere near a truly robust recovery.

White House Hoping Cosmetic Change Will Satisfy NSA Critics

| Thu Nov. 7, 2013 1:22 AM EST

Here's the latest on the NSA surveillance front:

National Security Council officials are scheduled to meet soon to discuss the issue of separating the leadership of the National Security Agency and Cyber Command....The administration is also discussing whether the NSA should be led by a civilian.

Officials said privately that the changes could help tamp the current furor over the NSA’s sweeping powers by narrowing the authorities assigned to its director. Because of heightened political sensitivities, what might ordinarily be an internal Defense Department policy matter is now being coordinated by the White House, said officials who spoke on the condition of anonymity to discuss internal deliberations.

Um....no. Seriously. Just no. This won't tamp down anything. It might be a good idea, but it's not going to fool anyone into believing that the actual substance of NSA policy is changing. I'm afraid that will require changing the actual substance of NSA policy.

Is It Time To Do Away With the Congratulatory Phone Call?

| Wed Nov. 6, 2013 7:36 PM EST

Here's the latest on the Virginia gubernatorial race:

Attorney General Ken Cuccinelli (R) had not called Democrat Terry McAuliffe after losing the Virginia gubernatorial race and had no plans to do so as of late Wednesday morning, according to a report in The Washington Post.

....At a press conference later on Wednesday McAuliffe said he had still not heard from Cuccinelli. "I have not had the opportunity yet to speak to the attorney general," McAuliffe said.

Let's see a show of hands on this. How many people think we should do away with the whole tradition of a congratulatory phone call from the loser of a political campaign? Is it an insincere gesture that's nonetheless useful as a public way of bearing witness to the peaceful transfer of legitimate power in a democracy and keeping up a facade of civility? Or is it just a pointless and humiliating ritual that's long since worn out its welcome? What say you?

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Today in Weird Financial Comparisons: Fighter Jets vs. Postage Stamps

| Wed Nov. 6, 2013 5:41 PM EST

The New York Times reports today that the Postal Service's financial crisis continues to drag on:

Last year, the Postal Service’s operating revenue was $65 billion, but its operating expenses were $81 billion. To put that in context, $65 billion is about the amount the Pentagon has spent so far on the F-35 fighter jet program.

I'm curious: is it just me, or does this kind of comparison do nothing to put this into context for anyone else either? Speaking personally, it actually makes things less clear, since the cumulative budget of the F-35 fighter jet means nothing to me. Comments?

Tea Leaves Say Yellen Might Push for Looser Monetary Policy

| Wed Nov. 6, 2013 2:53 PM EST

Jon Hilsenrath reports on a new Fed study suggesting that monetary policy ought to remain loose for a very long time:

The Federal Reserve could help drive down unemployment faster if it promised to keep short-term interest rates near zero for longer than currently envisioned by officials or investors, according to a new research paper by a top central-bank staff member

....The research paper—written by William English, the head of the Fed's monetary-affairs division and two other authors—argues the Fed's unemployment threshold for rate increases would be more effective if it were lower than 6.5%, possibly as low as 5.5%. In effect that would mean waiting until the job market got much better before raising rates.

....As part of the exercise, Mr. English relied heavily on computer forecasting models known as "optimal control" programs. That's notable because these programs have also been cited by Janet Yellen, the president's nominee to lead the Fed after Mr. Bernanke's term expires, in speeches to defend the central bank's easy-money policies.

I guess this falls into the category of tea-leaf reading, trying to figure out what kind of policies Yellen will push if she's confirmed as the next Fed chairman. Take it for what it's worth.

No, Crime Is Not Going to Start Soaring Under Bill de Blasio

| Wed Nov. 6, 2013 1:18 PM EST

The Economist warns New York's mayor-elect Bill de Blasio not to screw things up:

New York has been well run for 20 years. It used to be one of America’s most dangerous big cities; now it is one of the safest. Crime has fallen faster in the Big Apple than elsewhere, thanks to police reforms begun by Rudy Giuliani (the mayor from 1994 to 2002) and continued by Mike Bloomberg, his successor.

Can we please, please, please stop this? I almost don't care anymore if you accept the hypothesis that reductions in childhood lead exposure are primarily responsible for America's dramatic decline in violent crime over the past two decades. But can we at least get our facts straight? Lots of big cities have seen drops in their violent crime rate. At least three others—Chicago, Dallas and Los Angeles—have seen declines as big as New York's. Others, like Phoenix and San Diego, now match New York's crime rate. They did this without Giuliani and Bloomberg. They did it without CompStat. They did it without broken windows. Hell, even New York did it for four years without these things: Its crime rate started plummeting in 1991, long before these reforms showed up.

There's a considerable controversy around all of these policing reforms, and my semi-informed belief is that they probably played a role in reducing crime. But honestly, the data simply doesn't support the notion that they played a primary role. Neither the time frame nor the evidence from other cities fits. Rather, they rode the tailwind of something else—probably reduced childhood exposure to lead—and helped things along. Unless Bill de Blasio starts up a city program to seed the clouds with lead dust, he doesn't really have anything to screw up.

In Virginia, the Business Community Abandons the Tea Party

| Wed Nov. 6, 2013 12:11 PM EST

I don't know enough about Virginia (or New Jersey or New York City) to have much to say about their elections yesterday. So I was hoping that one of my Virginia friends would come through with a long, thoughtful email about the McAuliffe-Cuccinelli race, which I considered by far the most interesting of last night's races.

In that race, Terry McAuliffe won a close victory even though the polls had him well ahead.1 Does this bode ill for Democrats? Sure, maybe. On the other hand, McAuliffe was an unusually unsympathetic candidate, and Republicans still couldn't beat him in a state that looks increasingly like the country at large. On balance, then, this really seems like bad news for Republicans no matter how they try to spin things.

However, one of my liberal Virginia pals had an interesting take on why Cuccinelli lost:

I agree with Erickson and First Read regarding a lot of the race-specific reasons for Cuccinelli's loss. But, to me, the biggest mistake that Cuccinelli made was his initial tentative step toward making this a Tea Party campaign that downplayed economic messages in favor of his hot buttons — which, by the way, far and away most animated him on the stump (reminiscent of Santorum, almost).

This just doesn't fly with the NoVa business interests. They'll support any right wing crank as long as there is no daylight between them on business interests, taxes, etc. But Cuccinelli had the unnerving tendency to go headlong and unapologetically into his crusades at the expense of all else (e.g., massive and expensive witch hunt against UVA professor for climate change views, unqualified support for anti-abortion and contraception laws, and, of course, leading the doomed Obamacare challenges). In none of his crusades would business benefit in any significant way if he were successful. At the end of the day, he was spending significant resources to prove ideological points. Further, his attempted course corrections at trying to put his economic message front and center just lacked authenticity — more pro forma than passion. The business lobby wants the Governor out there selling Virginia, attracting business and jobs. Cuccinelli just seemed to be the worst salesman for this.

This speaks to all the recent chatter about whether the business wing of the GOP is finally fed up with the tea party and willing to do something about it. The message here isn't that Cuccinelli was anti-business, but simply that he was so plainly animated by crusades on social issues that the business community didn't trust him. They were afraid that at worst he might actively scare away business, and at best he'd never put any real energy into attracting it. McAuliffe, by contrast, is all about attracting business to Virginia. So the usual business-tea party partnership broke down.

I just thought I'd share this. Cuccinelli might be a bit of a unique character, but he's not that unique. The business community might have fired a shot across the tea party bow last night.

1Will this be a boon for the folks who are convinced that mainstream polls are all skewed against conservatives? Maybe!