Kevin Drum - January 2014

The Noose Tightens Yet Again Around Chris Christie

| Fri Jan. 31, 2014 5:28 PM EST

David Wildstein, the executive who was said to be Chris Christie's "eyes and ears" at the Port Authority of New York and New Jersey, is deeply implicated in last year's scheme to close the Fort Lee lanes of the George Washington Bridge in order to conduct a "traffic study." He has since resigned, and the Port Authority is refusing to pay his legal bills. Apparently this has pissed him off. Today he sent a letter asking them to change their mind, which included this lovely little nugget:

Even if it's only a threat, Wildstein can hardly refuse to provide this evidence now that he's publicly said it exists. That just can't be good news for Christie.

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Friday Cat Blogging - 31 January 2014

| Fri Jan. 31, 2014 2:54 PM EST

It rained yesterday here in Southern California. I'd put the total damage at a hundredth of an inch, and wunderground.com says I have it about right. It was more like a heavy fog than real rain. But just like those Atlantans freaked out by two inches of snow, it was enough to send Domino scurrying for the warmth and protection of a blanket, which someone had considerately put right on top of her faux sheepskin pod. It turned out to be a great way to ride out the storm.

Chart of the Day: Everyone Agrees That Iraq Was a Disaster

| Fri Jan. 31, 2014 2:44 PM EST

A new Pew poll shows that there's no longer any difference between Democrats and Republicans on Iraq: huge majorities agree that the war was a failure.

What's interesting is the inflection point in 2008: Democrats became suddenly more optimistic about Iraq and Republicans became more pessimistic. This was before Barack Obama won the election, so it's not directly because of that. But by mid-2008, negotiations over withdrawal had stalled and it was clear that the end of the US troop presence was near. It was also increasingly clear that Obama was likely to win the presidency. Those two things combined might account for the partisan differences.

By 2012, with US troops gone, those partisan differences started to disappear. By 2014, they were gone. Hardly anyone could fool themselves into thinking that the Iraq War had succeeded in any way: there were no WMDs; there wasn't much oil flowing; Iran's influence had increased; and sectarian violence was once more on the rise. A third of the country can still be described as dead-enders on this score, but that's it. Everyone else has finally faced the facts.

Quote of the Day: Why Immigration Reform Is Probably Going Nowhere

| Fri Jan. 31, 2014 1:18 PM EST

In the Republican Party, immigration reform is basically a battle between the tea party, which opposes it, and the Chamber of Commerce wing, which supports it. In a nutshell, Dave Weigel explains why this means it's doomed:

The chamber wing does want immigration reform, badly, but not as intensely as it wants to defeat Democrats in 2014. So it's easy for the party to fall into a holding pattern, with new rhetoric, without actually passing a bill.

I guess anything is possible, and immigration reform has always been the one big legislative priority that I give a nonzero chance of passing Congress. But Weigel is right. The business wing of the GOP just doesn't want it badly enough to risk starting a bloody, party-rupturing fight with the social conservatives. For once, I'd say that Ted Cruz probably has the right take on this.

If Bing Wants to Attract Power Users, It Needs an Advanced Search Page

| Fri Jan. 31, 2014 12:52 PM EST

Matt Yglesias embarks on a short tour d'horizon of Microsoft's future today and ends with Redmond's white whale of a search engine:

And then there's Bing. I am obsessed with Bing. Not because I use Bing or because Bing is a commercially important product but because Bing is a socially important product. Steve Ballmer's heroic determination to compete with Google on search has helped us resolve a lot of very thorny issues that would arise if Google Web Search became a monopoly product. But while we all (in some ways even including Google) owe Ballmer a debt of thanks for doing this, it's far from clear that it's been a smart business decision for Microsoft. All the "Scroogled" ads in the world aren't going to turn this into a market-leading product, and Google at this point seems to be benefiting from both superior engineering and strong network effects. But what will we do if Bing goes away?

I've used Bing. It works fine. In some ways it's better than Google. In others it's not. But there's a very specific reason I've never switched: Bing has no advanced search page. Oh, you can do an advanced search if you care to remember the syntax for all the operators, but like millions of other people, I don't care to do that. Google, conversely, makes it easy for me to do an advanced search. They also allow me to restrict a search to a date range, which is very, very handy.

Now, it's true that most people don't ever do an advanced search of any kind. They just type a few words into the search box and press Enter, which is one of the reasons that 99 percent of the world is hopelessly incompetent at searching the internet. But serious users use it, and it's serious users who can end up being evangelists for your products. So why not add an advanced search page? The cost is basically zero, so it's not like there's really any downside. What's the holdup?

Here's Yet Another Obamacare Non-Horror Story

| Fri Jan. 31, 2014 12:12 PM EST

Here in California, we keep feeling the hammer blows of Obamacare. Thanks to the new law, our state's largest individual health insurer is being forced to jack up insurance premiums for thousands of — oh wait. Let's read the fine print here:

Thousands of Anthem Blue Cross individual customers with older insurance policies untouched by Obamacare are getting some jarring news: Their premiums are going up as much as 25%....Anthem Blue Cross said its plan to raise rates reflects that escalating healthcare costs are an economic reality industrywide.

The company said customers do have new options thanks to the healthcare law. "Many of the members affected here may be eligible for federal subsidies via the Covered California exchange and may have lower premiums if they decide to switch to an Affordable Care Act-compliant policy," company spokesman Darrel Ng said.

Roger that. Premiums are skyrocketing for policies that have nothing to do with Obamacare. What's more, Anthem Blue Cross is recommending that affected customers might want to check out the Obamacare exchange to see if they can get a better deal there.

This is yet another reason to be skeptical of claims that Obamacare is responsible for rate shock all over the country. It's not a myth. It really has happened to some people. But the truth is that it affects only a small number of people; the horror story anecdotes routinely turn out to be either exaggerated or flatly false; and insurance companies have been jacking up rates for years anyway. They were going to do it in 2014 whether Obamacare existed or not.

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Here's a New Attempt to Fight the Scourge of Publication Bias

| Fri Jan. 31, 2014 11:37 AM EST

Tyler Cowen points today to a wonky but interesting new paper about publication bias. This is a problem endemic to virtually all scientific research that's based on statistical analysis. Basically, researchers only publish something if their results are positive and significant. If their results are in the very large "can't really tell for sure if anything is happening" space, they shove the paper in a file drawer and it never sees the light of day.

Here's an example. Suppose several teams coincidentally decide to study the effect of carrots on baldness. Most of the teams find no effect and give up. But by chance, one team happens to find an effect. These statistical outliers happen occasionally, after all. So they publish. And since that's the only study anyone ever sees, suddenly there's a flurry of interest in using carrots to treat baldness.

The authors of the new paper apply a statistical insight that corrects for this by creating something called a p-curve. Their idea is that if the true effect of something is X, and you do a bunch of studies, then statistical chance means that you'll get a range of results arrayed along a curve and centering on X. However, if you look at the published literature, you'll never see the full curve. You'll see only a subset of the curve that contains the results that were positive and significant.

But this is enough: "Because the shape of p-curve is a function exclusively of sample size and effect size, and sample size is observed, we simply find the free parameter that obtains the best overall fit." What this means is that because p-curves have a known shape, just looking at the small section of the p-curve that's visible allows you to estimate the size of the full curve. And this in turn allows you to estimate the true effect size just as if you had read all the studies, not just the ones that got published.

So how good is this? "As one may expect," say the authors, "p-curve is more precise when it is based on studies with more observations and when it is based on more studies." So if there's only one study, it doesn't do you much good. Left unsaid is that this technique also depends on whether nonsignificant results are routinely refused publication. One of the examples they use is the question of whether raising the minimum wage increases unemployment, and they conclude that after you correct for publication bias the literature finds no effect at all (red bar). But as Cowen points out, "I am not sure the minimum wage is the best example here, since a 'no result' paper on that question seems to me entirely publishable these days and indeed for some while." In other words, if a paper that finds no effect is as publishable as one that does, there might be no publication bias to correct.

Still, the whole thing is interesting. The bottom line is that in many cases, it's fairly safe to assume that nonsignificant results aren't being published, and that in turn means that you can extrapolate the p-curve to estimate the actual average of all the studies that have been conducted. And when you do, the average effect size almost always goes down. It's yet another reason to be cautious about accepting statistical results until they've been widely replicated. For even more reasons to be skeptical, see here.

There's Not Much Point in Pretending to Care About the New Republican Health Care Plan

| Fri Jan. 31, 2014 10:32 AM EST

I have been derelict in my duty. A team of Republicans introduced a genuine alternative to Obamacare earlier this week, and I haven't blogged about it. I'll be honest: I just couldn't work up the energy for several reasons.

  • Even on fleeting inspection, it's obviously a feeble plan. It would cover very few people; most of the people it does cover couldn't come close to affording it; and its policies would offer benefits so meager as to be almost useless.
  • The small amount of good it does is funded by reducing the tax deduction for employer health care. This is a joke. It would meet with massive resistance from virtually every Republican constituency. In particular, Grover Norquist would score it as a tax hike (which it is) and that means it would be DOA in the Republican caucus.
  • Even without the tax hike, this bill is going nowhere. I'll give props to Tom Coburn and his friends for at least taking a semi-serious shot at health care reform, but no one seriously thinks it would have any chance of garnering even majority Republican support, let alone passing Congress.

As Dylan Scott reports, the sponsors of this bill have already watered down the tax hike. It barely took them a day. The new wording is a little vague, but it most likely eliminates the new funding entirely. And without funding, the bill is even more of a joke than it was to begin with.

It's really kind of pointless to pretend that this is a real plan with real prospects of getting Republican support, but if you want to read all the details of the plan anyway, Jonathan Cohn has you covered here. As always, Cohn is very gentlemanly about the whole thing, but his bottom line is accurate: "The authors of the Patient CARE Act and many of their allies are acting as if conservatives have some magic elixir for health care problems—a way to provide the same kind of security that the Affordable Care Act will, but with a lot less interference in the market and a lot less taxpayer money. It's all the goodies of liberal health care reform, they imply, but without the unpleasant parts. They're wrong."

Uncle Sam's Retirement Largesse Goes Mostly to the Affluent

| Thu Jan. 30, 2014 6:53 PM EST

On Tuesday, President Obama proposed a "starter" retirement account for folks who don't have IRAs or 401(k)s. Like a lot of people, I was pretty unimpressed. Today, Matt Bruenig reminds us of another reason to be unimpressed: we already spend a helluva lot of money on tax-favored retirement accounts, and nearly all of the benefit goes to the well off:

The richest fifth pulled down 66 percent of them, while the poorest fifth pulled down just 2 percent of them....Needless to say, this system of retirement tax subsidies is totally ridiculous and is just another of the submerged ways that we funnel huge sums of money to the rich in this country. If we really want to pump up the retirement savings of the poor, one obvious way to start is to take the next decade's $1.4 trillion of retirement tax expenditures and distribute them in a different way than the manner detailed in the graph above.

And what might that "different way" be? Unlike Atrios, I'm not yet convinced that it's fair to describe the 401(k) system as a "failure which offers some nice tax breaks to relatively wealthy people and hasn't led to sufficient retirement savings for everybody else." The thing is, the old-school pension system that we all profess to miss so much also benefited primarily the well off and also provided insufficient retirement savings for everyone else. And it was doomed anyway, thanks to increasing investment risk in the post-Bretton Woods era and lack of portability between jobs in an era when fewer and fewer people work for the same company their entire careers.

What's more, I honestly don't know if the current system is better or worse. I would love, love, love for someone to produce a reliable distributional estimate of defined-benefit pensions circa 1975 to defined-contribution pensions circa today.1 This would give us an idea of how much things have changed and who's benefited the most from these changes. Unfortunately, no one seems to have done this. Maybe the data just isn't there and it can't be done. I don't know. But at this point it's all but impossible to say that our current DC pension system is really any worse than the old DB pension system.

That said, one thing is pretty easy to agree on: our pension system is, and always has been, miserly toward the poor. That's true of Social Security; it's true of old-school pensions; and it's true of 401(k)s. If we want to reform our pension system, we should reform Social Security in a way that increases benefits for the folks at the bottom of the scale who are trying to scrounge a living on $1,100 a month. That probably means cutting benefit growth for those above the median, and it also means phasing in higher Social Security revenues over the next two or three decades. Unfortunately, although that would be the decent thing to do, it might mean that America's best off have to pay slightly more in taxes by the time 2030 rolls around. And we can't have that, can we?

LINGO DIGRESSION: "Defined benefit" refers to an old-school pension. Those are the ones where your monthly retirement benefit was guaranteed regardless of how much you contributed to it. "Defined contribution" is what most of us have now. We make specific contributions to personal accounts, and the payout during retirement depends on how well our investments do.

Why the Rich Feel Besieged: A Checklist

| Thu Jan. 30, 2014 2:03 PM EST

What is it that has the Davos set so freaked out these days? I'm not talking about Wall Street Journal editorials decrying the evils of class warfare. That's pro forma stuff, not to be taken seriously. I'm talking about the fact that an awful lot of people claim that rich people are really and truly feeling besieged. It's not an act and it's not just paranoia—they're even seeking therapy to deal with it. As Ben White puts it today, "Economists, advisers to the wealthy and the wealthy themselves describe a deep-seated anxiety that the national — and even global — mood is turning against the super-rich in ways that ultimately could prove dangerous and hard to control."

But why? The rich have done pretty well lately—certainly a helluva lot better than the working class. So what's the problem? Do they genuinely believe that their wealth might be confiscated in the near future? That's hard to credit. Eliminating the carried interest loophole or increasing top marginal rates by a few points just doesn't have that big an effect, and even the most paranoid rich folks can't believe there's much more than that on the horizon. So what is it? I don't know, but I want to toss out a few bullet points just to stir up discussion:

  1. Over the past few decades, the rich have been accustomed to being lionized: splashed on the covers of magazines as the movers and shakers of the economy and feted in ballrooms for their philanthropy. That's largely a thing of the past. You don't have to feel sorry for them to understand that once you get used to something like that, it's unnerving when it goes away.
  2. Even worse, the rich have come in for a lot of abuse since the financial crash. Fairly or not, they feel increasingly socially ostracized, and few things promote a feeling of indignation and persecution more than that.
  3. Most of them have a feeling that they personally have done nothing wrong. Even within the financial industry, 98 percent of the players can argue that the bad actors were limited to the mortgage side and the derivatives brokers. The rest of them have clean hands. They were just playing by the rules, and they happen to have gotten rich fair and square.1
  4. They have a belief that the protestors against the 1 percent are mostly just unreconstructed lefties who want to demonize the business class and shake them down for a handout. It's the Sixties all over again.
  5. They've been made to feel guilty for their success. Hell, even the pope is lecturing them. Again, fairly or not, nobody likes feeling guilty. It almost universally provokes defensiveness and defiance against the guilt-mongers.
  6. Some of them have a genuine belief that the government is trying to intimidate them from speaking out. This is what's behind their mania for keeping political contributions secret.

I'd emphasize #3 as an underdiscussed factor. It's not hard to understand, either. I'm not part of the 1 percent, but I'm probably part of the 5 percent, and I'd feel pretty put upon if I spent several years hearing about how terrible I am. After all, I didn't personally do anything wrong. I just had a lucky life that's allowed me to live comfortably. What's wrong with that?

Multiply that by a thousand and this is how a big chunk of the plutocrat set feels these days.

1Yes, this ignores their role in setting those rules in the first place. But most of them never really think about that.