Kevin Drum

Chart of the Day: The Economy Continues to Plod Along

| Thu Jul. 30, 2015 10:51 AM EDT

GDP was up in the second quarter, but our economy is still not exactly a house afire. Preliminary results indicate an increase of 2.3 percent:

The BEA explains where last quarter's growth came from:

The acceleration in real GDP growth in the second quarter reflected an upturn in exports, an acceleration in PCE, a deceleration in imports, and an upturn in state and local government spending that were partly offset by downturns in private inventory investment, in nonresidential fixed investment, and in federal government spending and a deceleration in residential fixed investment....Real personal consumption expenditures increased 2.9 percent in the second quarter, compared with an increase of 1.8 percent in the first.

Really, the chart tells the whole story. As you can see, 2.3 percent growth is about....average since the recession ended. Not great, not horrible. Every time we manage to get into third gear for a little while, we hit a bump and end up back in second. It's now been eight years since the economy imploded, and we're still just muddling along. It's not clear what it will take to improve things.

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Opposition to Iran Nuclear Deal Just Keeps Getting Weirder and Weirder

| Wed Jul. 29, 2015 5:25 PM EDT

The congressional hearings into the Iran nuclear deal continue apace. Steve Benen points us today to this lovely exchange between Sen. Lindsey Graham and Defense Secretary Ashton Carter:

Graham: Does the Supreme Leader's religious views compel him over time to destroy Israel and attack America?

Carter: I don't know. I don't know the man. I only —

Graham: Well let me tell you, I do. I know the man. I know what he wants. And if you don't know that, this is not a good deal.

Graham: Could we win a war with Iran? Who wins the war between us and Iran? Who wins? Do you have any doubt who wins?

Carter: No. The United States.

Graham: We. Win.

So there you have it: (a) the Ayatollah unquestionably wants to destroy Israel and attack America, and (b) there is no doubt America would win this war. This sounds like mighty poor strategic thinking on the Ayatollah's part to me, since presumably he knows as much as Lindsey Graham about the relative military strength of Iran and the United States. But I guess his pesky religious views compel him to commit national suicide anyway.

Now, you might be skeptical that Graham knows the Ayatollah as well as he thinks he does, or knows his religious views in any depth either. But even if we give him the benefit of the doubt on that score, his apparent view of things still doesn't make sense. If the Ayatollah is as committed to war as Graham thinks, why would he bother with this deal in the first place? According to conservatives (I'm not sure what the CIA thinks these days), Iran is currently less than a year from being able to build a nuclear bomb. So why not just build a few and start the war? It can't be because the sanctions matter. If war is inevitable thanks to the Ayatollah's religious views, but America is going to win the war by reducing Iran to a glassy plain, who cares about a few more years of sanctions? Most Iranians are going to be dead a few hours after the war starts anyway.

So....it's all still mysterious. Conservatives don't like the deal Obama negotiated. Fine. But we can't go back to the status quo. If we pull out of the deal, economic sanctions will decay pretty quickly and Iran will have lots of additional money and be a year away from building a bomb. The only other alternative is war. Graham is more open about this than most conservatives, but even he realizes he has to be cagey about it. He can't quite come out and just say that we should go to war with Iran before they build a bomb. So instead he tosses in an oddly pointless question about who would win a war between Iran and America. Why? Some kind of dog whistle, I guess. Those with ears to hear understand what it means: Graham wants to see cruise missiles flying. The rest of us are left scratching our chins.

It all just gets weirder and weirder. The deal on the table, imperfect as it might be, doesn't restrict American freedom of action at all. Plus it has a pretty stringent inspection regime and would prevent Iran from building a bomb for at least ten years—probably longer. That's better than what we have now, so why not go ahead and sign the deal and then use the next ten years to figure out what to do next? What's the downside?

I can't really think of one except that it makes a shooting war less likely over the next decade. I call that a feature. I guess Graham and his crowd call it a bug.

Millennials Living In Their Parents' Home Is Finally Starting to Taper Off

| Wed Jul. 29, 2015 1:47 PM EDT

Pew has a new report out showing that even five years after the recession ended, more young adults are living with their parents than before the recession. This is despite the fact that unemployment among 20-somethings has dropped dramatically. What's more, this trend is pretty widespread:

The decline in independent living since the recovery began is apparent among both better-educated young adults and their less-educated counterparts....This suggests that trends in young adult living arrangements are not being driven by labor market fortunes, as college-educated young adults have experienced a stronger labor market recovery than less-educated young adults.

Trends in living arrangements also show no significant gender differences during the recovery. However, in 2015, 63% of Millennial men lived independently of family, compared with 72% of Millennial women. But a similar gender difference existed during the Great Recession, and both young men and young women are less likely to live independently today than they were five years ago.

But the news might not be quite as bleak as Pew suggests. Take a look at the arrows in the chart on the right. The upward trend in living at home continued to rise through 2013, but it finally began to drop a couple of years ago. That's not surprising since it's pretty likely that there's a certain amount of hysteresis in this phenomenon; that is, a lag between the economy improving and kids moving into their own places. This might be because wages remained low for several years after the technical end of the recession. It might be because higher debt levels took a while to pay down. It might be that it simply took a few years for recession-induced fear to end. Why move out if you're not sure the economy is really on a long-term roll?

There's not much question that 20-somethings of this generation have it worse than my generation, which in turn had it worse than the previous generation. That means the recession hit them especially hard. But if these trends are right, it looks like optimism about work and income is finally starting to slowly improve. It's not great news, but it's good news.

There's a New Planned Parenthood Video, But There's Just Nothing There

| Wed Jul. 29, 2015 11:57 AM EDT

Another day, another video hit job on Planned Parenthood. Apparently the strategy here is to release new videos every three or four days and hope that mere repetition is enough to convince people that something—something—must be wrong here. Over at National Review, Ian Tuttle is disturbed:

At the 10:22 mark of the Center for Medical Progress’s latest video, released today, there is a picture of a hand. By the curve of the thumb and the articulation of the fingers, one can see that it is a right hand. It was formerly the right hand of an 11.6-week-old fetus; it is now part of the various organic odds and ends being sifted through on a plate in the pathology lab of a Planned Parenthood clinic.

....I keep calling it a hand. Maybe I shouldn’t....But I see a hand — five fingers and lines across the joints, like you learn to sketch in art class. I see a hand in form no different from my own. Or no different from Horowitz’s hands, or Edison’s, or Michelangelo’s.

The most famous image Michelangelo painted was of hands: God’s hand extended to Adam’s....The sculptor Auguste Rodin spent much of his life fashioning hands....Rodin prefigured Heidegger’s observation: “My hand . . . is not a piece of me. I myself am entirely in each gesture of the hand, every single time.”....Galen of Pergamon, the great Greek physician, in his treatise On the Use of the Various Parts of the Body, noted that to man alone had the Creator chosen to give the hand, the only instrument “applicable to every art and occasion”:

....The gods, the arts, survival, history — all that we are has required, literally, many hands. In the hand, the whole man, and in the man, the whole cosmos.

Now, in a pie dish, for sale.

That's very poetic, but like the video itself, tells us nothing. Yes, Planned Parenthood donates fetal tissue to medical research facilities. They charge enough to cover their costs, nothing more. Among the tissue they donate are hands. And this is not a sinister "black market," as the video claims: It's done in the open with the permission of the mother, and the tissue is transferred only to qualified researchers.

The idea behind the video, of course, is that it's supposed to automatically trigger disgust in us. And it does. After all, most of us felt a little disgusted when we dissected frogs in 9th grade biology. It's just part of human nature, and the Planned Parenthood haters are smart to take advantage of it.

But you know what? I'm an organ donor. I'm not sure my organs are actually safe for harvesting anymore, but if they are, then my body will be chopped up and used for its best and highest purpose when I'm dead. Some organs will be used for transplants, I hope. Some will be given to research laboratories. Some may end up as the raw materials for other stuff. If I were alive and watching, I'd probably feel pretty queasy. And yet, no one really blinks an eye at the routine job of harvesting organs and tissue from dead people who have given their permission.

This is no different. It's every bit as altruistic and admirable as harvesting useful tissue from adults. Period.

So far, the worst anyone has come up with from these videos is that some of the Planned Parenthood folks caught on tape used a "tone" that was unfortunate. Give me a break. This is the way any doctor talks among other health care professionals. They're experienced enough to talk plainly about their work in private, and they make jokes about it like any normal person. It's simply wrong to pretend that this is anything ominous.

And that hand on the pie dish? Who knows? It might save someone's life someday.

POSTSCRIPT: And I'll repeat what I said before. If you think abortion is murder, then of course you object to the use of organs and tissue from aborted fetuses. If you don't, then you think it's fine. There's nothing new going on here. It's just a slightly different twist on the same fight between pro-lifers and pro-choicers that's been going on for decades

Health Care Spending Growth Will Rise a Bit Over the Next Decade, But Only a Bit

| Wed Jul. 29, 2015 11:02 AM EDT

By coincidence, a new article in Health Affairs confirms an offhand guess I made a few days ago. I wrote, "I happen to think the slowdown in medical costs is real, and will continue for some time (though not at the extremely low rates of the past few years)." The Health Affairs researchers write: "Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase. However, in part because of the impact of continued cost-sharing increases that are anticipated among health plans, the acceleration of these growth rates is expected to be modest."

As the Wall Street Journal notes, this is is similar to what Medicare actuaries have been saying for a while:

The actuaries again Tuesday pointed to the stronger economy and aging population as the main factors in shaping Medicare’s future spending.

Prescription-drug spending, long a target of warnings from the insurance industry, drew particular attention from the actuaries, who pointed to a big rise in spending growth there as costly new specialty drugs such as Sovaldi, for hepatitis C, came on the market in 2014. Spending growth on pharmaceutical products jumped by 12.6% in 2014, up from 2.5% in 2013....In all, health care will comprise about a fifth of the U.S. economy by 2024, and the growth rate will exceed the expected average growth in gross domestic product by 1.1 percentage points.

So: good news or bad news? The bad news is that health care spending keeps increasing steadily. It's currently about 17 percent of GDP and will increase to about 20 percent of GDP over the next decade. The good news is that this is slow growth: only about 1.1 percent higher than overall economic growth. Any other time in the past 30 years we would have killed for a growth rate that low.

There's probably no way to avoid health care costs growing at least a little faster than the rest of the economy. We keep making advances, and our revealed preferences are pretty clear on at least one point: we value health care highly and are willing to pay more for it even at the expense of other items. That probably won't be true forever, but it's true for now.

Boehner Planning to Pick Up His Ball and Go Home

| Tue Jul. 28, 2015 2:55 PM EDT

Is it just me, or is this trick getting a little old?

Mr. Boehner said the three-month [highway] bill could come up for a House vote on Wednesday. If the bill passes, the House would adjourn for an August recess Wednesday, a day earlier than previously planned, a House GOP aide said. That would leave the Senate to accept one of the two House highway bills or to immediately cut off federal reimbursements to states for transportation projects. The Senate will have a hard time completing its highway bill before Thursday.

I need some scholarly help here. Has it been common in the past for one house to pass a bill and then immediately adjourn, leaving the other house with the option of either passing their bill or shutting down a chunk of government? Or is this something new that modern Republicans have discovered? Historians of Congress, please chime in.

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Unlike Dad, Rand Paul Is More Interested in Winning Than in His Principles

| Tue Jul. 28, 2015 12:26 PM EDT

Harry Enten tells us that Rand Paul isn't doing too well:

Something is awry at the Rand Paul campaign. The main super PAC supporting his presidential bid raised just $3.1 million in the first half of 2015....On Sunday, a new NBC News/Marist poll showed support for the Kentucky Republican declining to just 4 percent in New Hampshire (compared with 14 percent in February).

....The more worrying problem for Paul is his favorability numbers: They’re also dropping....Over the first five weeks of 2015, Paul’s favorable rating averaged 62 percent among Republicans. Just 14 percent had an unfavorable view of him. Over the five most recent weeks, though, Paul’s favorable rating has averaged 52 percent, with an unfavorable rating of 27 percent. His net favorability rating (favorable minus unfavorable) has dropped by nearly half, from +48 percentage points to +25 percentage points.

Enten's question: "What’s Wrong With Rand Paul’s Campaign?" I think we all know the answer.

Rand's father, Ron Paul, always attracted a fair amount of money and a fair amount of steady support. Not huge amounts, but respectable. The reason was that he was never seriously running for president. He just liked having a stage for his ideas, and since he wasn't trying to win, he could stay as true to his libertarian beliefs as he wanted. He had no need to waffle.

But son Rand has bigger plans. He is seriously running for president, and that means he has to pay attention to the aspects of his political views that just aren't going to play well with important blocs of Republican voters. From the start he was never quite as pure a libertarian as dad, but now he's discovering that he can't even be as pure a libertarian as he's been in the past. So he waffles. He changes his views. He spends time looking at polls. He worries about saying things that will piss off the white evangelicals, or the elderly, or the pragmatic business set. The result is that the folks who admired him for his principled libertarianism are dropping him, while the rest of the Republican Party has yet to warm up to him. After all, he is the guy who said the ongoing chaos in Iraq was the fault of the Republican president who started the Iraq War, not Barack Obama. He's also the guy who wanted to eliminate aid to Israel. And he's the guy who wanted to gut Medicare for everyone—even the folks currently receiving it.

He's kinda sorta changed his mind on all these things, but that makes him look like a sellout to the libertarian crowd and a opportunistic panderer to the tea party crowd. Is it any wonder his poll numbers have tanked?

Fox's Poll Cutoff for the Republican Debate Works Better Than Rachel Maddow Suggested Last Night

| Tue Jul. 28, 2015 11:14 AM EDT

Last night Rachel Maddow invited Lee Miringoff, polling director for the Marist Institute for Public Opinion, to discuss the way Fox News is using polls to cut the Republican debate field down to ten candidates. Basically, both Maddow and Miringoff agreed that the whole thing was ridiculous because so many of the candidates on the right-hand tail were so close to each other. Is it really fair for a guy who polls at 3.2 percent to be on stage while a guy with 2.7 percent is kicked to the corner? After all, the margin of error is 3 percentage points. There might not really be any difference between the two.

For some reason, Miringoff didn't push back on this. But he should have. There are two key bits of arithmetic they left out:

  • A typical poll has a 3 percent margin of error. But Fox News is averaging five polls. I don't know precisely what the margin of error is in this case, but it's probably somewhere around 1.5 percent.
  • The margin of error goes down as you go farther out on the tails. If you have two candidates polling 51-49, you can use the standard margin of error. But for candidates polling at 2 or 3 percent? It's roughly half the midpoint margin of error.

Put these two together, and the true margin of error for all the also-rans is something like 0.7 percentage points. This doesn't entirely negate Maddow's point, since the difference between 10th and 11th place might still be less than that. But it does mean the results are a lot less random than she suggested. Assuming Fox does its poll averaging correctly, there's actually a pretty good chance that the top ten really are the top ten.

That said, I wouldn't do the debate this way either. I'd rank all the candidates using the polling average, and then have one debate with all the even-numbered candidates and a second debate with all the odd-numbered candidates. Make it a 3-hour show with 90 minutes given to each group. What's so hard about that?

Congress Just Can't Help But Fall In Love With a Nuclear Physicist

| Tue Jul. 28, 2015 10:23 AM EDT

Maybe you could call this the revenge of the nerds?

He’s blinding them with science.

Or intellectually charming them anyway. That’s how Energy Secretary Ernest Moniz seems to be winning fans in the difficult fight to sell the Iran deal on Capitol Hill....Moniz, a nuclear physicist with mad-scientist hair, has already been credited as the administration’s secret weapon in the lengthy negotiations to secure an Iran deal that will prevent the rogue country from securing a nuclear weapon.

....Moniz can certainly lapse into the technical talk with aplomb — and when he gets to talking about the half-lives of isotopes and the detection technologies that will be deployed to survey Iran’s suspected nuclear activities, he can leave his audience in the dust.

But in the two years since Moniz became Energy Secretary, lawmakers have far more often noted and applauded the former professor’s natural ability to translate complex scientific concepts into digestible terms.

It's funny, in a way. Plenty of highly-qualified scientists have testified before Congress, and mostly they get treated as if they were balky university freshmen. But nuclear physics! That still has cachet. Start talking about the half-lives of isotopes and legislators swoon with admiration.

Except for dumbest among them, of course, who can't tell the difference between an MIT-trained physics PhD and Dr. Phil. That, of course, would be Wisconsin's favorite son, Ron Johnson. He just wanted to talk about the danger of electromagnetic pulses. Nice work, Senator.

Obamacare Rates In California Will Rise Only 4% in 2016

| Mon Jul. 27, 2015 8:28 PM EDT

Obamacare's moment of truth is coming. By now we've heard all the scare stories about a few health insurers in a few states requesting gigantic rate hikes for next year. But over the next few weeks, states are going to start publishing the actual average rate increases that consumers will see in 2016. California released its report today. It's still marked preliminary, but you can expect that the final numbers will be very close to these:

I've highlighted two numbers. First, the overall average rate increase is 4.0 percent. That's way lower than you've seen in the scary headlines. And this is for a state that makes up more than a tenth of the country all by itself.

Second, the price of the second-lowest-price silver plan has gone up 1.8 percent. This is the figure used to calculate subsidy levels, so it's an important one. In fact, here's an interesting consequence of that number: because subsidies will be going up roughly 1.8 percent, and the cost of the lowest-price silver plan is going up only 1.5 percent, the net cost (including subsidies) of buying the cheapest silver plan is actually going down. As you can see in the bottom row, if you shop for the lowest-priced plan, your premiums are likely to decrease about 4.5 percent.

I have a feeling this number is not going to be widely reported on Fox News.

Now, California isn't necessarily a bellwether for all the other states. Because it's the biggest state in the union, it has lots of competition that helps drive down prices. A big population also means less variability from year to year. Also: California's program is pretty well run, and the California insurance market is fairly tightly regulated. All this adds up to a good deal for consumers.

In any case, the headline number here is a very reasonable 4 percent increase in overall premiums, and a 4.5 percent decrease for consumers shopping for the cheapest plans. These are real statewide numbers, not cherry-picked bits and pieces designed to encourage hysteria. Once again, it looks like Obamacare is working pretty well.

This all comes via Andrew Sprung, who has much more detail here.