Kevin Drum - February 2014

If the Supreme Court Strikes Down Campaign Contribution Limits, It Might Help Kill Off the Tea Party

| Mon Feb. 24, 2014 12:52 PM EST

The Supreme Court will soon hand down its ruling in McCutcheon v. Federal Election Commission, a case that could finish up what Citizens United started by striking down virtually all individual limits on campaign contributions to candidates and parties. Rick Hasen suggests there might be a silver lining to a decision that erased existing limits:

If the aggregate donation limits fell, party leaders would regain some advantage. They could start collecting huge checks from donors eager to have more direct influence than is possible when giving to outside groups. Party leaders would then be able to dole that money out to candidates and party committees. They would have more tools to control members scared of, or beholden to, super PACs. Republican leaders could fight back against tea party campaigns.

....Strong political parties have more incentive to cooperate than oppose each other under certain circumstances because they care about their electoral prospects. Look at how Speaker John Boehner pushed through a “clean” debt-limit increase with the help of Democrats in the House and how Senate [Minority] Leader Mitch McConnell voted to break a Sen. Ted Cruz filibuster of this legislation. Party leaders know that it is in their interest to cooperate and keep the government moving so that voters do not abandon them as obstructionist.

I don't know if I buy this, but I figured I'd pass it along. There's a good chance the Supreme Court will indeed finish the job of gutting campaign finance limits, and if that happens we'll all need a bit of solace. This might be the best we can do.

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Here's How to Think About the Netflix-Comcast Deal

| Mon Feb. 24, 2014 12:07 PM EST

Over the weekend, Netflix decided to cave in to demands from Comcast that it pay an additional fee to guarantee fast service for its streaming video service. Since then, I've been scratching my head trying to figure out if this really matters. You can read Tim Lee here for a technical explanation of what this all means, and Tyler Cowen here for a theoretical economic argument about why it's not a big deal.

In a nutshell, here's what happened. In the past, big internet backbone carriers all interconnected to each other free of charge. Maybe CNN connects to the internet via AT&T and the New York Times via Verizon, but AT&T and Verizon don't keep detailed track of this traffic and then bill each other. They just figure it will all net out over time.

That approach works fine between carriers that are roughly the same size and pass roughly the same amount of data back and forth. But in the past, Netflix has connected its servers to the internet backbone via several middle tier carriers, most notably one called Cogent. This means that Cogent dumps a ton of data onto the internet, thanks to its contract with Netflix, but since Cogent is otherwise only mid-sized, it doesn't receive very much traffic in return. Because of this, Verizon and others are increasingly unwilling to simply assume that everything nets out over time. Obviously it doesn't.

So Verizon wants fees from Cogent to pay for all the Netflix traffic it dumps on their networks. That dispute is still pending, but in the meantime, Netflix is increasingly bypassing backbone carriers like Cogent and trying to build direct connections to ISPs like Comcast. That's where Netflix's customers are, after all. This has become more urgent as Netflix performance has deteriorated over the past few months, and this weekend Netflix finally caved in and agreed to pay Comcast in order to allow its servers to connect directly to Comcast's network. And presumably, since they agreed to pay Comcast special fees, they'll agree to pay fees to the other big ISPs too.

Aside from theoretical economic arguments, three things strike me as the most important issues to think about here:

  • The old "peering" agreements, in which backbone carriers carried each others' traffic free, has never been a deep principle of internet operation and has nothing to do with net neutrality. It was just a convenience between carriers that passed roughly similar amounts of incoming and outgoing traffic to each other. It's like two roommates sharing an electricity bill on the assumption that both are using about the same amount of energy because they live in the same apartment. But if one of the roomies gets a big space heater and suddenly starts running up the bill, that agreement might break down. That's what happened with Cogent, and paying access fees in cases like this is common practice. There's nothing inherently wrong with charging a carrier based on the amount of data they dump on your network.
  • Other big companies like Microsoft and Facebook are already paying fees to ISPs for direct connections. Netflix isn't breaking any new ground here.
  • On the other hand, video is special. In the case of, say, Facebook, it's pretty likely that ISPs really are just charging for data flow and can be trusted to charge competitive prices. But in the case of video, there are reasons to think they might not. Comcast, after all, isn't just a ISP that ships anonymous bits to its customers. It also owns a cable TV franchise and doesn't really want competition from internet video services like Netflix. Ditto for Verizon. Will they treat Netflix as just another stream of bits, or will they do whatever they can to degrade Netflix service and overcharge them for access in order to preserve the monopoly profits they get from their own video businesses?

The first two of these are reasons not to worry too much about the Netflix deal. It's just a routine business decision that makes sense. The third of these, however, points in the opposite direction. Video is special thanks to cable TV monopolies, and it's not clear if backbone carriers can be trusted to treat video streams fairly.

I'm still noodling over this, and I feel like I need to understand more about the players and their markets before I can really decide what I think about it. In the meantime, this is the basic framework I'm using to think about it so far.

UPDATE: There were several problems with the original post. I've rewritten various pieces to clean things up, but the rewrites are too spread out to flag each one without making the whole post unreadable.. Apologies for the original errors.

Friday Cat Blogging - 21 February 2014

| Fri Feb. 21, 2014 4:08 PM EST

The weather is still great around here, and that means we get another outdoor pic of Domino this week. Today, she's posing as Queen of the Garden. If you look closely, you'll see that she's plonked herself on top of a sprinkler head, and since these are on a timer I always figure she's going to regret that someday. But not yet. So far, a sprinkler has never gone off while she's sleeping on it. Nine lives indeed.

Chained CPI Was Never Going to Happen, And Now It's Still Never Going to Happen

| Fri Feb. 21, 2014 4:00 PM EST

Chained CPI is the dog that didn't bark. President Obama's latest budget proposal doesn't include a switch to chained CPI, and this absence has put chained CPI back in the news. Does that make sense?

Probably not. In any case, you probably don't care much about what chained CPI really is. I'm sure I've written up a technical explanation in the past, but I'm too lazy to—oh hell. Hold on. Here it is if you're interested. Or you can just google it. Long story short, it slightly reduces the way we calculate inflation. And since Social Security benefits are indexed to inflation, it would slightly reduce future Social Security payouts.

Obama has proposed in the past that we adopt chained CPI. On its own, this is a terrible idea. However, under certain circumstances, it might be a good thing. At a minimum, those circumstances are threefold: (1) There would be some kind of adjustment to prevent low-income retirees from taking a hit. (2) It's part of some broader deal on Social Security. (3) It's adopted everywhere, including in the tax code, where it would raise taxes slightly by slowing down the inflation indexing of tax brackets. Hey, if it's good for the goose, it's good for the gander. Chained CPI is either more accurate or it's not, and if it is, then we should use it everywhere.

If these circumstances were met, I'd have a certain amount of sympathy for switching to chained CPI beyond the purely wonkish consensus that it's a more accurate measure. One reason is that it forces everyone to put their money where their mouths are. And by "everyone" I mean today's retirees. You see, one of the things that pisses me off about discussions of Social Security is that it's always future retirees who are supposed to take one for the team. We're supposed to believe that Social Security is in crisis mode, a true threat to the republic, and therefore we have to cut benefits. But look. If this is really such a huge crisis, then we should all pitch in to save Social Security, including current retirees. If current retirees think their existing benefits are too generous, then they should support cutting them. If they don't think that, then why should they get to keep their current benefits but cut them for future retirees?

They shouldn't. Either benefits are too high or they aren't. And one of the features of chained CPI is that it would have a small but immediate effect on benefits, cutting future COLA increases slightly every year. If that's acceptable to current retirees, then I figure I can accept a cut too. If not, then I want the same benefits they're getting. Deal?

In any case, none of this matters, because Republicans have never shown the slightest willingness to cut a broader deal. They want chained CPI, but they want it only for future retirees and they want it only for Social Security. They are willing to make precisely zero concessions in return for this. So as Jonathan Chait points out, it really doesn't matter if Obama includes chained CPI in his budget proposal:

In reality, the fundamentals of the situation have not changed at all. Last year, Obama was willing to adopt C-CPI in return for concessions Republicans would never, ever make. This year, Obama is still willing to adopt C-CPI in return for concessions Republicans would never, ever make. Putting the compromise in his budget was merely Obama’s way of locating the blame for the reality that Republicans in Congress will never, ever, ever strike a fiscal deal with him. The disappointed deficit scolds sitting just to Obama’s right, and the joyous progressives just to his left, are committing the same fallacy. They are mistaking a step premised on an impossibility for a semblance of reality.

One thing I'm curious about in an academic sort of way is whether Obama ever really truly supported chained CPI. He's enough of a wonk that he might have. Or, it might merely have been a bargaining chip that he knew would never go anywhere. We'll probably never know.

Want Better Broadband? Unbundle the Local Loop.

| Fri Feb. 21, 2014 2:43 PM EST

Felix Salmon says we have plenty of bandwidth in America. Contra Tyler Cowen, we don't need to spend a bajillion dollars rolling out a new nationwide network based on new pipes or new technology:

What we do need, on the other hand, is the ability of different companies to provide broadband services to America’s households. And here’s where the real problem lies: the cable companies own the cable pipes, and the regulators refuse to force them to allow anybody else to provide services over those pipes. This is called local loop unbundling, it’s the main reason for low broadband prices in Europe, and of course it’s vehemently opposed by the cable companies.

Local loop unbundling, in the broadband space, would be vastly more effective than waiting for some hugely expensive new technology to be built, nationally, in parallel to the existing internet infrastructure. The problem with Cowen’s dream is precisely the monopoly rents that the cable companies are currently extracting. If and when any new competitor arrives, the local monopolist has more room to cut prices and drive the competitor out of business than the newcomer has.

Cable companies have a thousand ready-made technical incantations to explain why they can't possibly open up their networks to competitors. To listen to them, you'd think this would be akin to letting a five-year-old mess around with your electric wiring. This is delicate stuff! You can't just let anyone start sending bits around on it.

It's all special pleading, of course, of the same type that Ma Bell engaged in when people wanted to start putting answering machines on their phone lines. But everyone understands there would be technical requirements they'd have to meet, just as answering machines had to meet reasonable technical requirements back in the day. Regulators would have to be involved to make sure everyone plays nice with each other, but that's far from impossible.

No, this is all about money, as you already guessed. Allowing other companies to use their last-mile pipes would (a) take away some of their broadband rents, (b) force cable companies to genuinely compete on price and features, and (c) allow competitors onto their network who couldn't care less about cannibalizing TV business. If I were a cable company, I'd fight that tooth and nail too.

But that doesn't mean the rest of us have to take their arguments seriously. The rest of us should be in favor of competition, not the profit margins of local cable TV monopolies.

The Story Behind Barack Obama's Latest Assault on Our Precious Freedoms

| Fri Feb. 21, 2014 1:10 PM EST

I have sneaking admiration for the conservative movement. Collectively, they have a power of imagination that would make them millionaires if they ever decided to compete with Stephen King and Dan Brown.

The latest example requires a bit of background. The FCC, as you may know, is required by law to be concerned about community needs and whether broadcasters are meeting them. They don't actually care about this as much as they used to, but the law's the law, and they still care. So two years ago, while they were prepping their "Section 257 Report" to Congress, they commissioned USC's Annenberg School for Communication and Journalism to produce a literature review of existing research about "the critical information needs of the American public and the barriers to participation in the communications industry that might limit the extent to which critical needs are met."

Wait! Don't fall asleep yet. It gets better.

Anyway, this is every bit as much of a snooze fest as it sounds like, and no one cared at the time. Nonetheless, the good folks at USC duly convened a "a multi-disciplinary team of communication experts, journalists, legal scholars, and social scientists" and produced the requested review. Again, nobody cared. In September 2012, the FCC took the next step, contracting with Social Sciences International to "design a research model that would provide the Commission with a tool for understanding access to and barriers in providing critical information needs in diverse American communities." Yet again, no one cared.

Dammit! I can see you falling asleep again. Buck up, folks!

In April 2013, the consultants at SSI proceeded to produce a jargon-filled, mind-numbingly boring 78-page proposal that included surveys to (a) assess the "Critical Information Needs" of the American public, and (b) assess whether our nation's local broadcasters were meeting these needs. Among other things, this project would include interviews with a few news directors, general managers, and so forth, asking them probing questions like "What is the news philosophy of the station?" and "Who decides which stories are covered?" They also proposed to ask HR managers about the demographic makeup of each station's staff.

Once again—you guessed it—no one cared. Public comments were officially solicited, and eight sleepy months later Republicans on the House Communications and Technology subcommittee sent the FCC a letter protesting the study. Beyond that, no one cared. SSI had actually planned to have the study finished by then anyway, but their schedule was contingent on receiving "expedited approval," which apparently they didn't get. That's unfortunate for them, because a few days ago, after two years of not caring, some bright spark in the conservative movement suddenly decided to care. This project, which could mostly be faulted for almost certainly being doomed to produce nothing of real value, was suddenly a threat to the Republic.

It all started last week, when Ajit Pai, a Republican FCC commissioner, wrote an op-ed in the Wall Street Journal warning that the SSI study was tantamount to reinstating the Fairness Doctrine, a right-wing bugaboo of long standing. For several days, this still didn't catch anyone's attention, even though Pai had provided the ammunition.1 Then it exploded. A pair of Republican congressmen warned that any attempt to revive the Fairness Doctrine, "through study or any other means, should not be attempted by the FCC or any other government agency." The professional right jumped in immediately. "Now we see the heavy hand of the Obama administration poised to interfere with the First Amendment rights of journalists," thundered Jay Sekulow of the American Center for Law and Justice, which circulated an online petition demanding an end to President Obama's plan to "put monitors in the newsrooms of every major media outlet in the country."

Monitors in the newsroom! And that was that. Starting Wednesday, this assault on the First Amendment from the Oppressor-in-Chief has been on a 24/7 loop at Fox News. It's the latest example of Obama the tyrant, desperately trying to shut down conservative voices in the media.

Amazing, isn't it? Thus my sneaking admiration. In a million years, I would never have read the SSI proposal and done anything but yawn. If I'd been feeling really energetic, I might have been annoyed that my tax dollars were being spent on a pro forma project that, frankly, even the SSI folks seemed to be phoning in. But a threat to the First Amendment? I just never would have dreamed that up.

But that's why I'm not Stephen King. No imagination. Movement conservatives, on the other hand, find stuff like this all the time. How do they do it?

1This is actually kind of mysterious. Pai's op-ed hit all the right hot buttons, but Fox News didn't take the bait. Even with an FCC commissioner laying out the whole thing, they apparently didn't see anything there to drive the outrage machine. Then, a few days ago, someone turned this into "federal agents in the newsroom" and everyone went crazy. But who did this? Which organization was responsible for this stroke of genius?

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Rand Paul is the P.T. Barnum of the Modern Senate

| Fri Feb. 21, 2014 12:03 PM EST

Paul Waldman is impressed by Rand Paul:

Rand Paul continues to win my admiration, I have to say. There are people who come into the Senate with a kind of celebrity status and get lots of good press—one Barack Obama comes to mind—but I can't think of anyone who has gotten so much good press through their own initiative, coming up with one clever way after another to get people to pay attention to them in ways that are almost always positive. His latest move required a subtle ideological tightrope-walk, one that Paul played perfectly. And all it took was a tweet.

It's true. Rand Paul has a sort of Palinesque native genius for self-promotion. This isn't going to get him any closer to the Oval Office than St. Sarah, mind you, but it's still damn impressive. Like Waldman, I was nodding my head in admiration when I saw his tweet about Ted Nugent last night, because I knew instantly that it was perfectly suited to get him a whole gob of attention for a day or two. If he's lucky, maybe even longer. For a tweet about Ted Nugent!

It's genius, I tell you. He knows how to play both his own base and the media like a Stradivarius.

Today We Bring You a Nerd's Eye View of the Olympics

| Thu Feb. 20, 2014 9:02 PM EST

A couple of days ago I whined about the annoyingly widespread humanization of Olympic athletes. Enough! We all know that what's really important about sporting events is statistics, and the more obscure the better. So here are my candidates for nerdiest Olympic coverage so far. First up is Ryan Wallerson's look at the best athletes of the Sochi games. Not by measuring scores or times or anything normal like that, but by measuring which athlete scored the most standard deviations from the mean in their event. The winner is Poland's Kamil Stoch in ski jumping:

Next up is a look at which countries have done the best. Not by crudely counting medals or per capita medals or any of that nonsense. This chart looks how countries have done so far compared to how many medals they were predicted to win. The big winner, at 183 percent, is the Netherlands, thanks to their kick-ass performance in speed skating. The most dismal performance so far is from South Korea, at 31 percent. But there are still two days left!

We Can't Raise the Social Security Retirement Age to 67. We Already Did.

| Thu Feb. 20, 2014 6:22 PM EST

Apropos of this, I sometimes wonder if people even realize that the full Social Security retirement age for everyone under age 55 is now 67? There's still a small chunk of people between 55-65 for whom the full retirement age is 66, but they're the last of the Mohicans. Once they've aged out, the retirement age will be 67 for everyone.

So when you hear people talk about increasing the retirement age, keep in mind that it's already 67. If for some insane reason you still think that increasing the retirement age is the best way to deal with Social Security's finances, keep in mind that you'd need to bump it up to 70 to really make a difference. Does anyone think that makes sense?

I'm just guessing here, but I suspect one of the reasons this remains widely unrecognized is that so many people retire early. And you can still do that. The age for early retirement is still 62. The difference is that back when 65 was the full retirement age, you got 80 percent of your normal benefit if you retired early. These days it's 75 percent. A decade from now it will be 70 percent. What this means is that for people who retire early, monthly benefits will have been reduced by about $150 over the first two decades of this century.

That's a pretty substantial cut for someone in the working class who probably doesn't have much in the way of savings. Does anyone really think we need to cut benefits for these folks even more?

There Probably Isn't Very Much We Can Do About Ukraine

| Thu Feb. 20, 2014 2:55 PM EST

Matt Steinglass ruminates on the proto-civil war that's broken out in Ukraine:

What can Americans do with this conflict that it cannot win? The most useful thing, I think, is to use it to understand the nature of the threat to freedom we're seeing these days, in Ukraine and around the world. Viktor Yanukovich is a democratically elected president who has used his powers to eliminate liberal-rights safeguards and jail political opponents on dubious charges. He has reinforced his political position by building cronyistic relationships with powerful business figures. In this system the state creates economic rents and awards them to favoured business interests, who in turn buttress the state's political power, all while maintaining the trappings of democracy.

In other words, Ukraine looks a lot like Russia or Egypt; more significantly, it looks like other states that are in the early stages of similar threats to liberal democracy, such as Turkey and Hungary. The enemy of liberal democracy today is more often kleptocracy, or "illiberal democracy" (as tiger-mom Amy Chua put it in her book "World on Fire"), than ideological totalitarianism. The threat is less obvious than in the days of single-party states and military dictators. But it ends up in the same place: economic stagnation, a corrupt elite of businessmen and politicians, censored media, and riot police shooting demonstrators.

It is not clear that America has the political appetite to do much more than watch and deplore what's happening in Kiev. It is not clear that the country could accomplish much anyway....So we are left watching the latest in a years-long string of depressing, violent reversals of democracy around the world, from the defeat of the green protests in Iran to the failure of Egypt's peaceful democratic revolution and the endless succession of red-yellow street battles in Bangkok. The crackdown in Kiev is perhaps the most depressing of all: the memory of the 2004 Orange Revolution drives home the point that peaceful democratic transitions often don't stick, and that the spread of the zone of liberal democracy is not inevitable. The most we can do is recognise what the threat to freedom looks like today, impose sanctions, offer asylum to political refugees and make it perfectly clear where we stand, however ineffectually.

This is undeniably depressing. It's also probably true.