Kevin Drum

Scott Walker Finally Finds a Big-Government Subsidy He Loves

| Wed Aug. 12, 2015 12:43 PM EDT

The owner of the Milwaukee Bucks wants a new stadium. But he doesn't want to pay for it himself. So he's threatened to move the Bucks to a new city if Wisconsin doesn't pony up $250 million to help finance the shiny new sports palace he wants.

Unfortunately for him, Wisconsin's governor is Scott Walker, a small-government Republican who's famous for being a fighter. He won't give into extortion like this. If the Bucks need a new stadium, they can jolly well —

Oh wait. It turns out that Walker caved in pretty easily and the Bucks got their bucks. Paul Waldman is properly dismayed:

One might have expected more from a politician who is basing his presidential campaign on his eagerness to “fight.” This combativeness is central to Walker’s appeal — but it turns out that he’s only interested in fighting people like union members. Extortionist plutocrats, not so much.

....Even more fundamentally, one has to ask why “small government” conservatives — as Walker and every other Republican candidate considers himself — think that government should be in the business of building stadiums. Don’t they believe in the power and wisdom of the market? If the shrewd businessmen who own the Bucks would increase their profits by building themselves a new stadium, then they’ll do it. If it wouldn’t increase their profits, then they won’t, and the market will have spoken.

For some reason, professional sports franchises float serenely above the free market for both Democrats and Republicans. Neither party has been especially impressive on this score. Still, it's Republicans who are the market purists. They're the ones who insist, for example, that providing health care for 15 million people is a travesty if the government is involved in subsidizing it. But basketball? Go Bucks! That seems like a screwed up set of values to me, but I guess I just don't understand economics as well as Scott Walker.

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China's Newfound Dedication to the Market Falters When the Market Does Something They Don't Like

| Wed Aug. 12, 2015 12:03 PM EDT

Noah Smith on Twitter last night:

I see some people asserting that China is devaluing the RMB to boost the RMB's status as a global currency. I heavily doubt this.

China has two reasons to let the yuan depreciate. The first is self-serving: it makes Chinese exports cheaper and thereby helps the Chinese economy, which is in trouble. The second is their official reason: they have decided to stop setting the value of their currency by fiat. Instead they will let it follow the market, and right now the market thinks the yuan is overvalued.

Smith is telling us not to pay too much attention to the official reason. Yes, a freer exchange rate is necessary if China wants the yuan to become a major global reserve currency. But that's just plausible window dressing to mask the real reason China is letting the yuan fall: to prop up their weakening economy.

Today, the Wall Street Journal reports that Smith is most likely right. After letting the yuan fall for two days, the Bank of China decided that maybe enough was enough—and intervened at the last second on Wednesday to increase the value of the yuan:

In a statement released by the central bank, the PBOC described greater volatility in the yuan’s trading as a “normal phenomenon” and pledged to keep the exchange rate “basically stable.”

But that message largely failed to calm the market, as traders rushed to sell the yuan and businesses flocked to convert their yuan holdings into dollars. The PBOC then instructed state-owned Chinese banks to sell dollars on its behalf in the last 15 minutes of Wednesday’s trading, according to people close to the state banks.

The result: The yuan jumped about 1% in value against the dollar in the last few minutes of trading, bringing it to 6.3870 yuan against the dollar.

It's still possible that once things stabilize a bit, China will let the yuan find its natural value. But Wednesday's intervention suggests something else: when push comes to shove, China will intervene to do whatever it takes to help their economy. If that means letting the market have its way, well and good. If not, then they'll pay no attention to the market.

Obama Is Playing Hardball, and Guess Who Doesn't Like It?

| Wed Aug. 12, 2015 11:15 AM EDT

The Washington Post is unhappy with the "certitude" with which President Obama is defending the Iran nuclear deal. Normally, the Post would prefer more certitude in Obama's foreign policy, but whatever. Then there's this:

After six-plus years of a presidency in which Mr. Obama has himself been the target of relentless, often unfair, often purely partisan attacks, we can understand why he’s gotten a bit jaded about seeking bipartisan support and feels justified to respond in kind.

....Still, by not sticking to the merits of the deal, Mr. Obama implies a lack of confidence in them. The contrast is striking between the president’s tone today and his 2008 speech accepting the Democratic nomination: Looking ahead to debating his GOP opponent, Sen. John McCain (Ariz.), he pledged that “what I will not do is suggest that the senator takes his positions for political purposes, because one of the things that we have to change in our politics is the idea that people cannot disagree without challenging each other’s character and each other’s patriotism.” There’s a sad progression from that aspiration to an approach that is all about winning, even if it has to be winning ugly.

Let's recap. Obama's opposition doesn't even bother offering any plausible alternative to the deal. Every single Senate Republican opposes it. Every single one—including the supposed moderates. The vast majority opposed it before they even had a chance to read it. Jeb Bush called it "appeasement." Ted Cruz said it was a "fundamental betrayal of the security of the United States." Marco Rubio declared that Obama had offered "concession after concession to a regime that has American blood on its hands." And Rubio was just one of many who said everyone should understand that this was Obama's deal, not a real American treaty, and he would rescind it immediately upon taking office. So much for America's word on the world stage.

It's unclear to me what you can draw from this other than the fact that Republican opposition is (a) noxious and (b) largely politically motivated. Sweet reason is not going to change their minds, so Obama's best hope is to appeal at least partly to partisanship in order to keep enough Democrats in line to get the deal approved.

This is the kind of thing the Post often wishes Obama would do. Be more like LBJ! Figure out a way to get things done. Don't expect that just giving a lovely speech will turn people around.

Well, now he's doing it. Contrary to what the Post says, Obama has, in fact, defended the deal on its merits over and over. But he's also learned that this will get him nowhere with Republicans, especially while a presidential campaign is underway. So he's taking the only option open to him, whether he likes it or not. That means hitting his opponents hard. It means revving up the Democratic base to stand by him. It means using the bully pulpit to counter millions of dollars in advertising from opponents of the deal.

This is politics. This is how presidents get things done. Occasionally it gets a little nasty, and fainthearted folks will tsk tsk. But the Post knows well that there are sometimes no alternatives when the opposition party is as determined to destroy you as the modern Republican Party is. We can all wish things were different, but they aren't. Obama is playing the cards he's been dealt.

The Brownback Crash Continues in Kansas

| Tue Aug. 11, 2015 5:18 PM EDT

Menzie Chinn updates us today on how things are going in Sam Brownback's Kansas. Answer: not so good. The chart on the right compares Kansas to the rest of the country using coincident indexes, an aggregate measure of economic performance tracked monthly by the Philadelphia Fed. It consists of the following four measures:

  • Nonfarm payroll employment
  • Average hours worked in manufacturing
  • Unemployment rate
  • Wage and salary disbursements deflated by the consumer price index

The index is set to 100 at the beginning of 2011, when Gov. Brownback took office. Brownback instituted an aggressive program of tax cuts and budget reductions, promising that this supply-side intervention would supercharge the state's economy. But the reality has been rather different. Kansas has underperformed the US economy ever since Brownback was elected.

Why is that? Is the Fed using the wrong employment data? Chinn says no: "The decline shows up regardless of whether employment is measured using the establishment or household surveys." Is it the weather? "Drought does not seem to be an explanation to me." How about the poor performance of the aircraft industry? "Evidence from employment data is not supportive of this thesis."

So what is it? "I would argue much of the downturn especially post January 2013 is self-inflicted, due to the fiscal policies implemented." Surprise! I wonder if Kansans will ever figure this out?

Scott Walker's Abortion Flimflam Explained! (Maybe.)

| Tue Aug. 11, 2015 2:00 PM EDT

I had almost given up on anyone helping me understand what Scott Walker meant when he explained why he opposed abortion exceptions not just for rape and incest, but also to save the life of the mother. "There are many other alternatives that can also protect the life of that mother," Walker said during Thursday's debate. "That's been consistently proven."

But then a reader came to my rescue, and it turns out that Jonathan Allen had it right in the first place. It really does derive from the Catholic doctrine of intent in medical care. Bryan Fischer of the American Family Association provides the nickel explanation:

The reality [] is that an abortion is never necessary to save the life of the mother. This is, quite simply, a choice that a mother and her doctor never have to make, and Ms. Kelly has contributed to the already widespread ignorance on this subject.

The nearest circumstance would be what are called ectopic pregnancies, the anomaly in which the fertilized egg attaches to the Fallopian tube and never implants in the womb of the mother. Removal of the Fallopian tube is necessary to preserve the mother’s life and thus is a procedure that indirectly — not directly — causes the death of an unborn child. This technically is not even an abortion, because the procedure is done for the purpose of removing the Fallopian tube, not killing the baby.

As Lauren Enriquez writes, “The abortion procedure is not — ever — necessary to save the life of a mother...[A] true abortion — in which the direct intention is to end the life of a human being — is not a treatment for any type of maternal health risk.

Now this explanation I understand. The key step in this tap dance is to declare that some procedures that terminate a pregnancy aren't "true" abortions. Even if you know ahead of time that a procedure will abort the fetus, it's not really an abortion as long as abortion isn't your intent.

In other words, I just didn't have my cynicism meter turned up high enough. When Walker said there are always "alternatives" that can protect the life of the mother, he was only talking about true abortions. He wasn't talking about medical procedures that kill the fetus only as a side effect. Those aren't true abortions, so they're not part of the class of procedures for which there are alternatives.

Yeesh. If this is really the explanation, it takes political misdirection to a new level. All that's left now is to explain what Walker meant by "This has been consistently proven." That makes it sound very science-y, but this has nothing to do with science. It has to do with the meaning of the word "abortion." Walker has chosen a specific term-of-art definition that's quite different from how most people understand the word. This allows him to say something that seems to mean one thing but actually means another.

Donald Trump, the Tea Party, and Political Correctness Have All Collided in 2015

| Tue Aug. 11, 2015 1:02 PM EDT

Aside from conservatism (duh), Alan Abramowitz says the strongest predictor of support for the Tea Party is racial hostility. Paul Krugman says he thinks Donald Trump supporters are basically just tea partiers. Put these together and you get this:

So maybe Trump’s base is angry, fairly affluent white racists — sort of like The Donald himself, only not as rich? And maybe they’re not being hoodwinked?

Now, you might ask why angry racists are busting out of the channels the GOP constructed to direct their rage. But there, surely, we have to take account of two things: the real changes in America, which is becoming more socially and culturally diverse, plus the Fox News effect, which has created an angry white guy feedback loop.

Maybe. Here's a data point in favor of Krugman's thesis: the rapturous response Trump gets whenever he says he has no time for political correctness. It was one of the biggest applause lines he got in Thursday's debate. And while there are legitimate complaints to be had about some of the more extreme versions of language policing, for most people their real issue with it is that it forbids them from delivering casual slurs—that everyone knows are true—about blacks or women or Muslims or gays or whatever. They've been doing it all their lives, and they think it's ridiculous that they have to watch themselves in public lest someone think they're racists. Trump appeals to that sentiment.

I should add that this is entirely consistent with the notion that Trump's strength comes fundamentally from his appeal to the conservative culture of grievance and resentment. After all, what are tea partiers so resentful of? Wall Street banks? Maybe, but they sure don't seem to favor any serious action to rein them in. Corrupt politicians? Could be, but they keep electing them to Congress even if they grumble about it. Middle-class wage stagnation? Probably, but it can't be too big a deal since they consistently vote for politicians who are dedicated to doing nothing about it.

At a gut level, the answer is that they think "normal" American culture is under attack. Straight, white, Christian men used to run this country and did a pretty good job of it. But now every minority group in the country wants a piece of the pie, and they all blame "white supremacy culture" or "rape culture" or "heteronormative culture" for their problems. And what's worse, no one is even allowed to tell the truth about what this really means. Mexicans come pouring across the border but you get in trouble for just plainly saying what everyone knows: most of them are criminals and should be sent back. Muslims blow up the World Trade Center, but woe betide anyone who makes the common sense observation that we should keep a close eye on mosques because most of them are terrorist breeding grounds. Blacks commit violent crimes at higher levels than whites, but we all have to pretend this is only because whites have been keeping them down for so long. And if you make a harmless joke about some woman having a great body? It's a compliment! But the feminazis will be all over you like bees in a hive.

This is what a lot of them resent. It's even understandable: everyone is uncomfortable being told that something they're used to doing is now considered insulting. Certainly Donald Trump understands it. When he says America no longer has the luxury of worrying about political correctness, his supporters couldn't agree more.

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China Finally Adopts Market-Based Value for its Currency, But We May Not Like the Results

| Tue Aug. 11, 2015 11:03 AM EDT

For years the United States has been complaining that China artificially undervalues its currency, which makes their exports cheaper and gives them a trade advantage over American firms. In response, China has gradually let the renminbi rise. By 2015, it had roughly reached fair market value—though not all American politicians agreed about that.

But then the Chinese economy started going sour. Exports were down. The stock market crashed. Growth slowed. What to do? Answer: devalue the renminbi. But instead of doing it by fiat, pretend that you're merely responding to market forces:

Every morning, Beijing sets a target for the trading of its currency against the U.S. dollar, then allows investors to buy and sell the currency for 2 percent more or less. Tuesday's change relaxes the government's control over setting that rate. The midpoint will now be set at the market's closing rate for the previous day.

....Now, market forces could pressure the currency to depreciate rather than appreciate, making Chinese products comparatively cheaper....In China, the depreciation will be a boon for exporters and heavy industry, but bad news for companies that depend on imported goods. Shares of Chinese airlines plummeted on Tuesday, as analysts predicted that the higher cost of oil in U.S. dollars would weigh on their earnings.

It's convenient to have a market-based policy as long as that produces a devaluation of the currency. But will Chinese authorities stick to this policy even when it means the renminbi will appreciate? Good question.

So what does it all mean? Here are a few obvious thoughts:

  • This is yet another vote of no confidence in the Chinese economy. When you put together everything that Chinese authorities have done over the past six months, I'd say they're close to full-scale panic.
  • Investors are likely to push the renminbi even lower, and this is going to make life harder on anyone in China with dollar-denominated debt. This includes lots of local governments who have been financing the housing boom, which means this devaluation could hasten the housing bust everyone has been waiting for.
  • This will be a political issue in the US, but a tricky one. China is manipulating its currency to its own advantage—boo! hiss!—but has also adopted a policy that allows the renminbi's value to be dictated by market forces—which is what we've been demanding all along. It will be interesting to see how all the Republican presidential candidates decide to respond to this.

Generally speaking, I think this should be taken as bad news. The world economy remains fragile, and if the Chinese economy is falling into recession—as the Chinese themselves seem to believe—it will affect all of us. And not in a good way. Stay tuned.

I Still Don't Know What Scott Walker Was Talking About on Abortion

| Tue Aug. 11, 2015 1:05 AM EDT

During Thursday's debate, Scott Walker took the most extreme position of any candidate on abortion. Not only does he oppose exceptions for rape and incest, he even opposes an exception to save the life of the mother. "I've said many a time that that unborn child can be protected," he said, "and there are many other alternatives that can also protect the life of that mother. That's been consistently proven."

Huh? What was that supposed to mean? I was stumped then, and I'm stumped now. So I was happy to see Jonathan Allen's subhead promising to explain it:

What Scott Walker was talking about when he said there are alternatives to abortion when the woman's life is in danger

Great! So what was Walker talking about?

He essentially subscribes to the "double effect" doctrine, a well-established line of argument that governs how Catholic leaders think about the definition of abortion — and the desire to preserve the life of the mother and the viability of the fetus.

The US Conference of Catholic Bishops, in its "Ethical and Religious Directives for Catholic Health Care Services," makes a distinction between procedures designed to terminate a pregnancy to preserve the life of the woman and those for which the termination of the pregnancy is an unintended consequence of treating the woman....That is, the bishops believe intent matters.

Well, I'm still stumped. This Catholic doctrine governs what's allowed and what isn't, but it doesn't say anything about there always being a way to protect the life of both the fetus and the mother.

So I'll open this up to the floor. Does anyone know what Walker was referring to? What are the "many alternatives" that he claims are available to protect the life of an endangered mother? And who has supposedly consistently proven this? If you know, enlighten us in comments.

2016 and the Fable of the Surge

| Mon Aug. 10, 2015 5:15 PM EDT

Over at the Atlantic, Peter Beinart writes about the "fallacy of the surge"—the notion that the surge in Iraq won the war, and things have since fallen apart only because President Obama withdrew American troops and left the field wide open for the taking. Thanks to Obama's gutlessness, goes the story, "Iraq collapsed, ISIS rose, and the Middle East fell apart." Beinart continues:

For today’s GOP leaders, this story line has squelched the doubts about the Iraq invasion that a decade ago threatened to transform conservative foreign policy. The legend of the surge has become this era’s equivalent of the legend that America was winning in Vietnam until, in the words of Richard Nixon’s former defense secretary Melvin Laird, “Congress snatched defeat from the jaws of victory by cutting off funding for our ally in 1975.” In the late 1970s, the legend of the congressional cutoff—and it was a legend; Congress reduced but never cut off South Vietnam’s aid—spurred the hawkish revival that helped elect Ronald Reagan. As we approach 2016, the legend of the surge is playing a similar role. Which is why it’s so important to understand that the legend is wrong.

I've written about this before on many occasions, so here's the nutshell version. It's not that the surge itself was a failure. Gen. David Petraeus did an admirable job of taking advantage of events on the ground, and his strategy really did reduce the violence of the civil war that had broken out. The problem is that all the surge did—all it could do—was give Prime Minister Nouri al-Maliki a bit of breathing space to fashion a permanent peace in the form of a political settlement with the Sunni community. He never did that, nor did we ever really put the screws on him to do it. Without that, a relapse into violence was inevitable:

The prime minister of Iraq, Nouri al-Maliki, began persecuting the Sunnis—thus laying the groundwork for their embrace of ISIS—long before American troops departed the country. As early as 2007, writes Emma Sky, who advised both Petraeus and his successor, General Ray Odierno, “the U.S. military was frustrated by what they viewed as the schemes of Maliki and his inner circle to actively sabotage our efforts to draw Sunnis out of the insurgency.”

....The tragedy of post-surge Iraq has its roots in America’s failure to make the Iraqi government more inclusive—a failure that began under Bush and deepened under Obama. In 2010, Sunnis, who had largely boycotted Iraq’s 2005 elections, helped give a mixed Shia-Sunni bloc called Iraqiya two more seats in parliament than Maliki’s party won. But the Obama administration helped Maliki retain power. And Obama publicly praised him for “ensuring a strong, prosperous, inclusive, and democratic Iraq” even after he tried to arrest his vice president and other prominent Sunni leaders.

If Republicans want to blame Obama for this, fine. But Bush did the same, so they'd have to accept some of the blame themselves. If we did indeed "lose" Iraq, it was because we never took political reconciliation seriously enough, not because we had too few troops in the country.

But this won't do. As with the Vietnam myth, the fable of the surge is mostly a political construct. Nobody who understands the actual Iraq timeline takes it seriously, but it's a handy way of attacking Obama, and it plays well with low-information voters who figure that it's just plain common sense that war is about military force and nothing else. As an added bonus, it plays right into the Republican theme that our military has been hollowed out by Obama and needs a Reaganesque rebuilding.

And the fact that it's not true? Even moderate Republicans aren't speaking up to say so. You do know there's a presidential campaign going on, don't you?

Yes, Of Course Donald Trump Is Fueled by the Politics of Resentment

| Mon Aug. 10, 2015 2:53 PM EDT

Josh Marshall:

Far be it from me to beat up on insular, east coast elites. But the insular, cross-partisan east coast media elite hasn't grasped how the politics of resentment are fueling Donald Trump's campaign or why gang ups from Fox News just don't matter.

I don't want to beat up on Josh, but seriously: is there anyone who doesn't already get this? Maybe I'm just reading the wrong people, but among the folks I read this is the conventional wisdom by miles. Trump is basically a more experienced and media-savvy version of Sarah Palin. His appeal is anchored in simple answers, an insistence that politicians are all corrupt idiots, a disdain for political correctness, and an affirmation that ordinary folks are getting screwed.

But this doesn't mean that gang-ups from Fox News don't matter. It all depends on how personal the attacks get. If Trump starts to lose the support of the prime-time blowhards with a personal following—Bill, Greta, Sean, etc.—then it becomes a question of who the tea partiers trust more: Donald Trump or Bill O'Reilly? Donald Trump or Sean Hannity? This is a battle Trump can lose, and that's why it's in his best interest to cool it on the Fox News front. But it can also do damage to the personal following of the Fox prime-time crew, so it's in their best interest to cool it too. In other words, let's call a truce:

And there you have it. The support of Fox News really does matter, and Trump knows it. Likewise, support of Trump matters, and Roger Ailes knows it. Why? Because they're just different versions of the same thing: media impresarios that feed on the conservative culture of resentment and grievance. Of course they matter to each other.