Kevin Drum - 2013

America is the Stingiest Rich Country in the World

| Tue Nov. 26, 2013 1:21 PM EST

Over at the Economist, Steven Mazie directs me to a recent New Yorker piece on income inequality by John Cassidy. Its most revealing chart, Mazie says, is one that compares raw income inequality in various rich countries (as calculated by GINI scores) to income inequality after taxes and government transfers. In other words, it helps us see which countries do the most to fight the relentless rise in income inequality over the past three decades.

But I wanted to see that more directly, so I re-charted the data. All I did was calculate how much taxes and transfers reduced inequality in every country that had high inequality to begin with. Unsurprisingly, whether you use raw number or percentages, the United States is #1:

The United States is one of the richest countries in the world, with a top 1 percent that's seen its income triple or more in the past three decades. And yet, we also do the least to fight the rising tide of income inequality. Government programs in America reduce the level of inequality by only 26 percent. Nobody else is so stingy.

Happy Thanksgiving.

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Obamacare is a Done Deal

| Tue Nov. 26, 2013 11:52 AM EST

Ezra Klein gives us a progress report on Obamacare:

A spin through HealthCare.Gov this morning went smoothly. The site loaded quickly. The process progressed easily. There were no error messages or endless hangs....My experience isn't rare. There are increasing reports that HealthCare.Gov is working better — perhaps much better — for consumers than it was a few short weeks ago. "Consumer advocates say it is becoming easier for people to sign up for coverage," report Sandhya Somashekhar and Amy Goldstein in the Washington Post.

....Reports from inside the health care bureaucracy are also turning towards optimism. People who knew the Web site was going to be a mess on Oct. 1st are, for the first time, beginning to think HealthCare.Gov might work....The Obama administration is certainly acting like they believe the site has turned the corner. Somashekhar and Goldstein report that they're "moving on to the outreach phase, which had taken a back seat as they grappled with the faulty Web site.

....It's clear that HealthCare.Gov is improving — and, at this point, it's improving reasonably quickly. It won't work perfectly by the end of November but it might well work tolerably early in December. A political system that's become overwhelmingly oriented towards pessimism on Obamacare will have to adjust as the system's technological infrastructure improves.

I think the best translation of that last sentence is, "Republicans will soon have to find something else to gripe about." But it won't work. Conservatives have always known that once Obamacare is up and running, it will become a popular program that's impossible to repeal. That's one of the reasons they've been so frantic to stop it before January 1. And they've been right about this. People respond far more passionately to the prospect of losing something than they do to gaining something, and once they have Obamacare they'll fight to keep it. In a few months, it will be nearly as enshrined in the American social welfare firmament as Social Security and Medicare.

Republicans have run out of time, and they know it. Their fixation on Obamacare already looks sort of balmy—this weekend's deal with Iran was designed to draw attention away from Obamacare? Seriously?—and it's only going to look loopier as time goes by. Getting Obamacare to the end zone wasn't easy, and Obama almost fumbled the ball at the one-yard line, but he's finally won. There's nothing left for conservatives to do. Love it or hate it, Obamacare is here to stay.

California Bullet Train Might Be Breathing Its Last

| Mon Nov. 25, 2013 8:59 PM EST

Sacramento Superior Court Judge Michael Kenny, following up on a ruling earlier this year, might have finally put a stake through the LA-San Francisco bullet train:

Kenny ruled that the state does not have a valid financing plan, which was required under the 2008 bond measure, Proposition 1A. The measure included provisions intended to ensure the state did not start the project if it did not have all of the necessary funds to complete a self-supporting, initial operating segment.

The state rail agency created a funding plan, but it was an estimated $25 billion short of the amount needed to complete a first working section of the line. Kenny ruled that the state must rescind the plan and create a new one, a difficult task because the state High-Speed Rail Authority hasn't identified sources of additional revenue to allocate to the project.

As near as I can tell, the HSR authority's plan all along has been to simply ignore the law and spend the bond money on a few initial miles of track. Once that was done, no one would ever have the guts to halt the project because it would already have $9 billion sunk into it. So one way or another, the legislature would keep it on a funding drip.

It's a time-tested strategy, and it might have worked if not for a meddling judge. But I don't see how Kenny could have ruled any other way. The bond measure is clear about the financing requirement, and the authority's flouting of the requirement is equally clear. Not only does it not have a plan to fully fund even a part of the HSR project, there's no remotely plausible plan they can put forward. The federal government is plainly not going to provide any further money, and the prospect of private funding is laughable. No one in his right mind believes either the authority's ridership projections or its cost projections anymore.

I've been a skeptic of this project from the start. Its numbers never added up, its projections were woefully rose-colored, and it was fanciful to think it would ever provide the performance necessary to compete against air and highway travel. Since then, things have only gotten worse as cost projections have gone up, ridership projections have gone down, and travel time estimates have struggled to stay under three hours.

I've said it before and I'll say it again: this is the kind of project that gives liberals a bad name. It's time to kill it. For a whole bunch of reasons, LA to San Francisco just isn't a good choice for high-speed rail.

How Not to Argue With Your Crazy Relatives at Thanksgiving

| Mon Nov. 25, 2013 4:50 PM EST

Can I waste some time venting about a teensy little pet peeve of mine? Thanks. Here's a brief Twitter conversation I just had with Chris Hayes:

Hayes: Devoting our whole show on Wednesday to how to talk about politics, news with conservative family members. Should be fun!

Drum: Will be interesting if it's real. Usually this stuff isn't. Needs to be arguments that actually address conservative worldview.

Hayes: Oh, I don't think it will be useful. No one ever persuades anyone of anything. But will be fun!

I don't really mean to fire off any cruise missiles at Hayes or anyone else over this, but every year there's a spate of blog/magazine pieces about how to discuss the political hot potato du jour with your crazy right-wing relatives at Thanksgiving. And every year they're fake. Mostly they provide stock liberal responses to imaginary conservative talking points, and as Hayes says, they don't really do any good.

Now, maybe there's no help for this. Liberals and conservatives have been arguing for centuries, and so far neither side has convinced the other to surrender. Still, wouldn't it be more interesting to at least try and write something real? That is, come up with the kinds of comments that your Fox-watching aunts and uncles are really likely to drop into the conversation, and then come up with replies that might actually persuade someone who's a conservative. The downside is that this isn't as much fun: there will be no killer facts and figures in this list that demolish Uncle Joe's Obamacare tirade and leave a smoking crater in his place. (In our collective imaginations, anyway.) Instead, we'll have a collection of items that turn the battleship a few degrees at best. No one's going to suddenly decide that Paul Krugman has been right all along, but maybe you'll be able to seed a few doubts about Sean Hannity's commitment to the straight dope.

This would be hard work. You'd have to actually watch Fox News for a while to make sure you know what's really on conservatives' minds these days. Listening to a bit of talk radio and reading some chain emails would help too. And that's not all. You'd almost certainly have to team up with an actual conservative to help you understand both the worldview at work and the kinds of arguments that might appeal to his ideological comrades-in-arms. And why would a conservative help you with this project? Beats me. Maybe you could trade: you get some arguments that appeal to actual conservatives and he gets some arguments that appeal to actual liberals.

Anyway, somebody ought to do this. I'm a hermit, and my entire family is pretty liberal, so I'm not a very good candidate. But someone out there is. Who wants to do the country a public service?

Americans Are Surprisingly Clear-Eyed About American Health Care

| Mon Nov. 25, 2013 2:42 PM EST

Austin Frakt draws my attention to a new Gallup poll with this tweet: "Consistent with my hypothesis that people think their care is good/efficient, others is bad/wasteful." Here's the poll:

I'd draw a different conclusion. For starters, keep in mind that public sentiment on this question hasn't changed much over the past decade. There are some ups and downs in recent years about the quality of national health care coverage, possibly based on the ups and downs of Obamacare, but it mostly looks like noise to me.

More importantly, though, I don't interpret this as a belief that coverage for other people is either bad or wasteful. I interpret it as a surprisingly accurate assessment of U.S. health care. About two-thirds of Americans have either Medicare or company-provided health care (or something similar), and they correctly tell Gallup that their own personal coverage is pretty good. And it is! At the same time, most people also think that overall health care coverage in America is pretty mediocre, and that's true too. How can you call national coverage good or excellent when 50 million people are uninsured and have crappy access to medical care?

If Gallup had called me, this is precisely the response I would have given them. My own personal coverage is quite good. Thanks, MoJo! However, I'd also say that overall coverage in the U.S. is terrible. Obamacare will, perhaps, upgrade that to merely unsatisfactory, but that's about it.

The Kids Are Alright, Video Game Edition

| Mon Nov. 25, 2013 1:09 PM EST

This post comes with an even stronger warning than usual that a single study is just a single study; correlation is not causation; and even well-done studies can't account for every possible confounding factor. In other words, You Have Been Warned.

And yet, this study is pretty interesting!

Typical daily hours viewing television and playing electronic games at age 5 years were reported by mothers of 11,014 children from the UK Millennium Cohort Study....Change in adjustment from age 5 years to 7 years was regressed on screen exposures; adjusting for family characteristics and functioning, and child characteristics.

RESULTS: Watching TV for 3 hours or more at 5 years predicted a 0.13 point increase [] in conduct problems by 7 years, compared with watching for under an hour, but playing electronic games was not associated with conduct problems. No associations were found between either type of screen time and emotional symptoms, hyperactivity/inattention, peer relationship problems or prosocial behaviour. There was no evidence of gender differences in the effect of screen time.

This comes via Aaron Carroll, who adds this comment: "Yes, these are young kids, and it’s unlikely that they have been playing much GTA 5 or Battlefield 4. So I’ll look forward to more data. But that this point, it’s hard to point to a large study like this and find a smoking gun. Figuratively or literally."

In other words, if it's a choice between letting your young kids watch more TV or play more video games, go with the video games. Until some other study comes out, anyway.

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Conservatives Have No Incentive to Support a Deal With Iran

| Mon Nov. 25, 2013 12:04 PM EST

Dan Drezner says he understands why conservatives might not be crazy about the interim nuclear deal that Western nations cut with Iran over the weekend. But freaking out about it? That's just dumb:

Seriously, game this out. Let's assume you implacably oppose the negotiations going forward. If the deal holds up — and before you laugh, consider that Netanyahu is now describing the much-derided-at-the-time Syria deal as a "model" to follow — then you've undermined your reputation before the really big negotiations start. So whatever justified opposition you might have to such a deal will be largely discredited. On the other hand, if the deal falls apart — and there's a decent chance of that — then you'll get blamed for obstructionism for reflexively opposing it from the get-go.

Now say you announce that despite your reservations, you'll support the Obama administration's steps towards peace provided the necessary security guarantees are procured, etc. In this universe, if the deal falls through, it's on the Obama administration, and you get to shake your head sadly and cluck about how you should have known better than to trust them. If the deal succeeds but a comprehensive deal fails, that's also on the Obama administration, nothing has been lost, and you look like a sober statesman. Finally, if a comprehensive deal really is reached, you can oppose it then. Indeed, your opposition will be bolstered by the fact that you supported the interim negotiations, suggesting that you're not opposing diplomacy like a knee-jerk automaton.

Drezner asks at the end, "Am I missing anything?" Why yes, Dan, you are! Republicans are concerned with at least two meta-issues:

  • Showing that they can't be suckered. This has been a key part of the conservative mentality for a long time, and it's only grown more intense in recent years. To go along, even tentatively, with this interim deal would suggest a softness that the Republican base can't abide. In poll after poll, they're the ones who oppose compromise of any sort.
  • Opposing President Obama on all things at all times. At this point, I wouldn't be surprised if Sarah Palin wrote a Facebook post denouncing the presidential turkey pardon later this week. Why is Obama trying to shove his vegan socialist agenda down America's throat?

If a Republican supports the interim deal and it then falls apart, they're unmasked as a sucker, both for trusting the Iranians and for trusting Obama. If they support an interim deal and it produces a permanent deal, they've helped facilitate surrender to the enemy—for you can be sure that any permanent deal with Iran will be viewed as a sellout. The sad truth is that supporting the interim deal, even tentatively, is a lose-lose proposition for most Republican politicians these days. They don't care about you or me or the Beltway consensus. They care about the base. And the base has no interest in seeing Satan make a deal with the devil.

If California Can Make Obamacare Work, Anyone Can

| Mon Nov. 25, 2013 1:58 AM EST

I've mentioned before that Obamacare's rollout problems really are all about the website. Rate shock and network shock may be real problems for some people, but they aren't deal breakers and they aren't as serious or as widespread as Fox News is trying to make them out to be. Fix the website and Obamacare will be in pretty good shape.

Paul Krugman produces some pretty good evidence for this today: California. It is, he says, an excellent test case:

First of all, it’s huge: if a system can work for 38 million people, it can work for America as a whole. Also, it’s hard to argue that California has had any special advantages....[It] came into health reform with 22 percent of its nonelderly population uninsured, compared with a national average of 18 percent.

Finally, the California authorities have been especially forthcoming with data tracking the progress of enrollment. And the numbers are increasingly encouraging.

For one thing, enrollment is surging. At this point, more than 10,000 applications are being completed per day, putting the state well on track to meet its overall targets for 2014 coverage....Equally important is the information on who is enrolling. To work as planned, health reform has to produce a balanced risk pool — that is, it must sign up young, healthy Americans as well as their older, less healthy compatriots. And so far, so good: in October, 22.5 percent of California enrollees were between the ages of 18 and 34, slightly above that group’s share of the population.

What we have in California, then, is a proof of concept. Yes, Obamacare is workable — in fact, done right, it works just fine.

I'd add that California is hardly anyone's idea of the most efficient bureaucracy in the country. During the aughts, for example, California spent a quarter billion dollars trying to build a new payroll system and failed utterly. In Los Angeles, a $100 million DWP billing system has been an epic disaster. California knows how to screw up IT projects.

So the fact that our implementation of Obamacare is working pretty well means that it doesn't require a team of programming supergeniuses to get it off the ground. All it requires are decent coding and project management skills. Krugman is right: If California can do it, so can the federal government.

We Should Pay Less Attention to Seniors and More Attention to Workers

| Sun Nov. 24, 2013 9:55 PM EST

Our story so far: a few days ago I wrote a post describing the Social Security Administration's MINT forecast of retiree income. As the chart on the right shows, they project that retiree income will continue its steady rise, increasing from $20,000 in 1970 to $46,000 in 2041 (adjusted for inflation). Based on this, I questioned whether the much-talked-about "retirement crisis" was for real.

Dean Baker responded to my post, for which I'm grateful. He basically made five points:

  1. Social Security is a big part of the reason for rising retiree income. No argument there.
  2. Income replacement rates have declined from 95 percent for Depression-era workers to 84 percent for future retirees. This is true. However, as I explained on Friday, this is more because of sluggish income growth among workers than it is because retiree incomes are in any real trouble.
  3. 65-year-olds are living longer and are more likely to be working these days, which is part of the reason for strong incomes among seniors. Again, no argument there. But income is income, regardless of where it comes from. (It's also worth noting that longer lifespans are primary a phenomenon of the well-off, not those with lower incomes.)
  4. Medicare premiums are increasing, which is an added expense for seniors.
  5. The MINT projections include imputed rent as part of income. In some cases this is fine, since living rent-free in a paid-off house does indeed have the same effect as cash income. In other cases, where retirees live in large houses with large imputed rents, it can give an inflated idea of how well off a retiree is.

The first three of these items don't really change the picture. They're just observations about the nature of the income that retirees are likely to have. Item #4 is relevant, but I think it's cherry picking. Every age group has expenses that others don't, and those expenses rise and fall differently. The only way to judge this fairly is to look at overall inflation rates for various age groups, and most efforts to do this have yielded only modest and ambiguous results. Finally, item #5 is a good point. It probably inflates the MINT projections modestly.

Overall, then, I don't think this affects my point too much. If you revised the MINT projections to take into account CPI-E and made an adjustment for possible overestimates of imputed rent, the projected income line would probably go down a bit. But not very much. We'd still be looking at a world in which, relatively speaking, retirees are doing quite a bit better than current workers. In fact, their incomes are growing more strongly than pretty much any other age group.

This is why I'm not on board with calls to expand Social Security. Rhetoric and pretty charts aside, I simply don't see any real evidence of a looming retirement crisis that urgently needs to be addressed, and I think focusing on it just distracts us from our real problem: sluggish wage growth among workers. And the funny thing is that Baker basically agrees:

Seniors income has been rising relative to the income of the typical working household because the typical working household is seeing their income redistributed to the Wall Street crew, CEOs, doctors and other members of the one percent....We can argue about whether young people or old people have a tougher time, but it's clear that the division between winners and losers is not aged based, but rather class based.

That's precisely right. I'm not willing to dismiss the relative problems of young and old quite as quickly—I think the young are being pretty badly screwed these days, and unlike seniors they have no one in Congress who really cares about them—but this is essentially a class problem, not an age problem. We should be doing everything possible to raise low and middle incomes regardless of age. If we do that, retirees will benefit, but so will everyone else.

This is obviously a lot harder than a simple crusade to expand Social Security. But the latter helps plenty of people who don't really need it, while the former helps those who do. If part of helping those with low and middle incomes means changing Social Security payouts to reduce the future growth rates of high earners and increase the future growth rates of lower earners, that's fine with me. But if I can borrow Baker's headline, we need to keep our eye on the ball here. Let's stop inventing crises that don't really exist. If we want to move the Overton Window, let's move it for the thing that really matters: the fact that the fruits of economic growth now accrue almost entirely to the rich, with the rest of us treading water at best. That's the transcendent economic problem of the 21st century.

Western Powers Sign Historic Interim Nuclear Deal With Iran

| Sun Nov. 24, 2013 12:59 AM EST

I wasn't too bothered when negotiators failed to reach a deal with Iran over its nuclear program last week. An interim deal is only worthwhile if it's clear that both sides are likely to progress to a final deal, and Iran's position didn't really inspire a lot of confidence on that front. Today, though, a deal was announced, and it appears to be a good one:

  • From the New York Times: "According to the agreement, Iran would agree to stop enriching uranium beyond 5 percent... All of Iran’s stockpile of uranium that has been enriched to 20 percent, a short hop to weapons-grade fuel, would be diluted or converted into oxide so that it could not be readily used for military purposes." However, Iran can continue to enrich uranium to 3.5 percent.
  • From the Washington Post: "Iran also agreed to halt work on key components of a heavy-water reactor that could someday provide Iran with a source of plutonium. In addition, Iran accepted a dramatic increase in oversight, including daily monitoring by international nuclear inspectors, the officials said." This was a key concern of the French last week, and with good reason. A deal on uranium isn't much good if a plutonium reactor continues to run in the background.
  • From the Guardian: An Obama administration official said Iran has "agreed to intrusive inspections."

In return, the Western allies have agreed to soften their existing economic sanctions to the tune of about $7 billion.

It's too soon to tell whether this will lead to a permanent deal. Iran hasn't agreed, even in principle, to stop enriching uranium, and for our part, the sanctions relief is fairly minor. Still, my sense is that this is the kind of interim deal you might see from two sides that genuinely want to reach a final deal, so we should take it as tentative good news.

It's too early to have much in the way of reactions to this news, but I think we can assume that Benjamin Netanyahu is still unhappy about it. We can probably also assume that Republicans will be unhappy too. Because, you know, they're Republicans. Steve Benen amusingly points out that Sen. John Cornyn (R-Texas), a man who obviously doesn't ever want to be off message, tweeted this reaction: "Amazing what WH will do to distract attention from O-care." Amazing indeed.

A State Department fact sheet on the deal is here. President Obama's remarks are here.