Kevin Drum

Income Inequality Is Temporarily Down, But Hardly Out

| Tue Feb. 17, 2015 2:09 PM EST

Has income inequality increased under President Obama? David Leonhardt says no, and provides two reasons.

The first reason is fairly uninteresting: the rich suffered huge losses during the Great Collapse of 2008. So even though they've gobbled up nearly all of the earning gains since then, they still haven't gotten back to their 2007 income levels.

This is uninteresting because it's only temporarily true. Given current trends, the rich will regain all their losses within another year or two, and probably surpass them. Incomes of the rich have always been volatile, but the broad trend of the past few decades is pretty clear: they invariably make up the losses they incur during recessions and then soar to new heights. This is almost certain to happen again as the recovery strengthens.

Leonhardt's second reason, however, is more interesting: government policy under Obama has increased the earnings of the poor and the middle class. Leonhardt cites a recent study from Stephen Rose of George Washington University:

The existing safety net of jobless benefits, food stamps and the like cushioned the blow of the so-called Great Recession. So did the stimulus bill that President Obama signed in 2009 and some smaller bills passed afterward. “Not only were low-income people protected — middle-income and some higher income-households had much lower losses because of these public policies,” Mr. Rose said. “For those who think government programs never work, maybe they need to think again.”

....Pretax income for the middle class and poor dropped substantially from 2007 to 2011 — about 10 percent for most groups. Yet including taxes and transfers, incomes fared better: Average income for the bottom fifth of earners rose 2.6 percent, to $24,100, and the average for the middle fifth fell only 2 percent, to $59,000. Such stagnation is hardly good news, but it’s a lot better than a large decline.

We can add Obamacare to that list too. It effectively increased the earnings of millions of low-income workers. And retaining the pre-Bush top marginal tax rates in the fiscal cliff deal of 2012 decreased the post-tax earnings of the rich slightly.

None of this is massive. The rich will make up their losses, safety net programs are already receding as the economy recovers, and middle-class wages continue to be pretty stagnant. The growth of income inequality may have taken a brief hiatus when the economy crashed, but it's almost certain to return, bigger and badder than ever. As Leonhardt concludes:

Mr. Rose himself, who’s more optimistic about the state of the middle class than I am, says, the United States has “a real income-inequality problem.”

But the fact that inequality hasn’t continued rising in the last several years matters — first, because facts matter, and, second, because it helps show what Washington has the potential to do. For much of the last few decades, rather than attacking inequality, government policy has exacerbated it. Tax rates on the very rich, the same group receiving the largest pretax raises, have fallen the most.

In the last several years, however, the federal government has tried to combat inequality, through a combination of tax and spending policies. These efforts weren’t aggressive enough to bring major raises to most families. The financial crisis was too big, and Washington’s response was too restrained. Yet the efforts were aggressive enough to make a difference.

They are a reminder that rising inequality is not inevitable, and that the country has the power to shape its economy.

This is true. Unfortunately, Obama's efforts to modestly address income inequality were nearly all completed during his first year in office, when he had big Democratic majorities in Congress. Since then, almost nothing has happened, and that's the way things are likely to stay as long as Republicans remain resolutely opposed to anything that concretely helps either the poor or the middle class.

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Forget Bribery and Blackmail, Job Offers Are the Real Corruption in Politics

| Tue Feb. 17, 2015 12:29 PM EST

This will obviously not come as a shock to anyone, but Suzanne Dovi, a public policy professor at the University of Arizona, puts together a few interesting factlets about government corruption in an op-ed today:

Political scientist Adolfo Santos has found that public officials who have plans to become lobbyists act differently while in office from their colleagues who don't. Interestingly, they are more successful at passing the bills they introduce than officials who don't go on to be lobbyists. Does this behavior reflect their desire to please their potential future employer or something else? We can't tell. What we do know is that public officials who are no longer thinking about reelection are freed from the sanctioning power of constituents.

....One report found that congressional members, on average, get a 1,452% raise when they become lobbyists....Interestingly, according to one study, former staff members can generate more revenue (and earn higher salaries) than former members of Congress.

Dovi recommends that we increase the mandatory waiting period before government officials and staffers can become lobbyists. Instead of being required to wait two years after they leave their jobs, she suggests six. "A six-year wait would significantly weaken their connections and diminish their earning power as lobbyists. And that would reduce the temptation to treat public service as a trial job period, acting on behalf of a future boss rather than the constituents."

This, of course, is why it will never happen. But it's probably not a bad idea.

A Judge Just Blocked Obama's Immigration Plans. Here's Why You Shouldn't Take His Ruling Seriously.

| Tue Feb. 17, 2015 12:02 PM EST

A federal judge in Brownsville, Texas, has issued an injunction against President Obama's recent immigration actions. I don't take this even slightly seriously. To see why, all you have to do is read to the end of the New York Times account:

Judge Hanen, who was appointed in 2002 by President George W. Bush, has excoriated the Obama administration’s immigration policies in several unusually outspoken rulings....At a hearing on Jan. 15, Judge Hanen said Brownsville, which sits on the border with Mexico, was an appropriate venue for the suit because its residents see the impact of immigration every day. “Talking to anyone in Brownsville about immigration is like talking to Noah about the flood,” Judge Hanen said.

In a long and colorful opinion last August, Judge Hanen departed from the issue at hand to accuse the Obama administration of adopting a deportation policy that “endangers America” and was “an open invitation to the most dangerous criminals in society.”

The case involved a Salvadoran immigrant with a long criminal record whom Judge Hanen had earlier sent to prison for five years. Instead of deporting the man after he served his sentence, an immigration judge in Los Angeles ordered him released, a decision Judge Hanen found “incredible.” Citing no specific evidence, he surmised that the administration had adopted a broader policy of releasing such criminals.

While acknowledging that he had no jurisdiction to alter policy, Judge Hanen said he relied on his “firsthand, in-the-trenches knowledge of the border situation” and “at least a measurable level of common sense” to reach his conclusions about the case.

Judge Andrew Hanen so obviously hates both Obama and his immigration actions that no one is going to take his decision seriously. It's a polemic, not a proper court ruling. The case will continue its dreary way through Hanen's docket, but I imagine an appeals court will stay the injunction pretty quickly, and then overrule his inevitable final ruling in short order. The right-wing plaintiffs in this case may have thought they were being clever in venue shopping to get the case before Hanen, but it won't do them any good. It might even backfire, given just how transparently political Hanen's ruling is.

This story makes for a good headline, but it probably means little in real life. At most we'll have a delay of a few weeks in implementing Obama's immigration orders.

Anti-Semitic Violence Has Very Different Roots in the U.S. and Europe

| Mon Feb. 16, 2015 7:12 PM EST

In a recently updated post over at Vox, Zack Beauchamp has a longish write-up about the disturbing recent rise of anti-Semitic violence. But there's an interesting thing about it.

First off, here's the rate of anti-Semitic incidents in the U.S., as tallied by the Anti-Defamation League. What you see is a peak in the early 90s and a decline ever since. This is exactly the same thing that you see in rates of violent crime in general. In other words, as violent crime fell, violent crime directed at Jews also fell. This makes sense.

But the global picture is quite different. Partly this is probably due to the fact that the worldwide numbers come from a different source (the Kantor Center in Tel Aviv) and are tallied up using a different methodology. But I doubt that accounts for the stark contrast: worldwide, anti-Semitic attacks have been on a straight upward path ever since the late 90s. This is despite the fact that violent crime in Europe, which accounts for most of the incidents, has followed a trajectory pretty similar to the U.S. The exact dates when violent crime peaked and then started to fall are a little different in different countries, but not by a lot.

The Kantor data also shows that anti-Semitic violence in Canada tripled in the past decade. This is especially unusual. Canada is culturally more similar to the U.S. than Europe is, and the rise and fall of violent crime in Canada has been nearly identical to that in the U.S.

The conventional conclusion from this is, first of all, that anti-Semitic violence in Europe is triggered by events: Israeli incursions into Gaza, the various intifadas, copycat attacks, etc. So you see peaks that correspond to these events, which drives up the trend numbers as triggering events increase. Beyond that, there's a broad increase in attacks that's most likely related to the influence of far-right parties in European countries. The U.S. is different because it has no equivalent far-right parties of any strength, and because, apparently, American anti-Semites aren't especially motivated by specific events. We just have a subset of violent criminals who decide to take out their anger on Jews, and do so fairly randomly.

As for Canada, I don't even have a guess. I would expect their trend rate to be similar to the U.S., but it's clearly not.

I don't have a sharp point to make about this. I just thought the stark difference between the U.S. and Europe was interesting, as was the fact that the U.S. numbers appear to be driven by overall levels of violent crime, while European numbers are driven by something quite different. Comments welcome.

Eurozone Fiddling While Greece Burns

| Mon Feb. 16, 2015 3:42 PM EST

Hmmm. Things are not looking good in Greece:

A meeting of eurozone finance ministers on Greece's debt crisis broke up in acrimony on Monday evening, further dimming hopes of a speedy resolution to problems that could result in the new Greek government soon running out of money.

Just before the meeting ended, a Greek official dismissed the latest proposal by its European creditors as “unreasonable and unacceptable.” The proposal had called for Greece to abide by the current terms of its bailout program.

In other words: "Our offer is this: nothing." Greece needs to toe the line and will be given no quarter. Paul Krugman considers the possibility that the eurozone ministers are just idiots, and finds it unlikely. They know exactly what they're doing:

Alternatively, and I guess more likely, they’ve decided to push Greece over the edge. Rather than give any ground, they prefer to see Greece forced into default and probably out of the euro, with the presumed economic wreckage as an object lesson to anyone else thinking of asking for relief. That is, they’re setting out to impose the economic equivalent of the “Carthaginian peace” France sought to impose on Germany after World War I.

Either way, the lack of wisdom is astonishing and appalling.

This is a helluva game of chicken everyone is playing. But Krugman might be right. There's so much genuine acrimony on both sides—Germans think the Greeks are chronic liars and spendthrifts1, Greeks think the Germans are self-righteous bullies—and there's so much political incentive not to give ground, that in the end, maybe no one will give ground. And then Greece will default and will get kicked out of the euro.

If this happens, it would certainly be catastrophic in the short term, but it's possible that it would be better for Greece in the long term. Still, keep in mind that we might not find out. In the past, the standard pattern for eurozone crises was pretty simple: lots of threats back and forth, and no resolution until literally the last hour of the last day. We still have a couple of weeks to go, and it might work out the same way this time. Stay tuned.

1An opinion that may have calcified even further over the past couple of months as Greece's finances deteriorated fairly badly. Short version here, details here.

A Simple Chart That Shows We've Locked Up Too Many People

| Mon Feb. 16, 2015 12:55 PM EST

Correlation is not causation. This has recently become something of an all-purpose comeback from people who want to sound smart without really understanding anything about a particular research result. Still, whether it's overused or not, it's a true statement. When two things move up and down together, it's a hint that one of them might be causing the other, but it's just a hint. Sometimes correlation implies causation and sometimes it doesn't.

The inverse statement, however, is different: If there's no correlation, then there's no causation. With the rarest of exceptions, this is almost always true. Dara Lind provides an example of this as it relates to crime and mass incarceration.

The chart on the right shows the trend in various states at reducing incarceration. If reducing incarceration produced more crime, you'd expect at least some level of correlation. The dots would line up to look something like the red arrow, with lots of dots in the upper left quadrant.

Obviously we see nothing like that. In fact, we don't appear to see any significant correlation at all. As Lind says, the scatterplot is just a scatter.

It's possible that a more sophisticated analysis would tease out a correlation of some kind. You can show almost anything if you really put your mind to it. But if a simple, crude scatterplot doesn't show even a hint of a correlation, it's almost a certainty that there's nothing there. And in this case it demonstrates that we've locked up too many people. Mass incarceration hit the limit of its effectiveness in the late-80s and since then has been running dangerously on autopilot. It ruins lives, costs a lot of money, and has gone way beyond the point where it affects the crime rate. It's well past time to reverse this trend and get to work seriously cutting the prison population.

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Friday Cat Blogging - 13 February 2015

| Fri Feb. 13, 2015 2:20 PM EST

Chemotherapy may be over, but I still have to go in to the infusion center once a month for a bone-strengthening treatment. Unlike chemo, which was a pretty quick procedure, this actually takes a while, and this month it happens to be scheduled for mid-morning today. So that means I'm checking out early. Sorry about that. On the bright side you get early catblogging out of the deal. Here are the sibs posing for their dual royal portrait, Hopper on the left and Hilbert on the right. Have a good weekend, everyone.

Republicans Are Cutting Taxes on the Rich and Raising Them on the Poor

| Fri Feb. 13, 2015 1:52 PM EST

Shaila Dewan surveys the tax policies of actual Republicans who are governing actual states:

A number of Republican-led states are considering tax changes that, in many cases, would have the effect of cutting taxes on the rich and raising them on the poor.

Conservatives are known for hating taxes but particularly hate income taxes, which they say have a greater dampening effect on growth. Of the 10 or so Republican governors who have proposed tax increases, virtually all have called for increases in consumption taxes, which hit the poor and middle class harder than the rich.

Favorite targets for the new taxes include gasoline, e-cigarettes, and goods and services in general (Governor Paul LePage of Maine would like to start taxing movie tickets and haircuts). At the same time, some of those governors — most notably Mr. LePage, Nikki Haley of South Carolina and John Kasich of Ohio — have proposed significant cuts to their state income tax. In an effort to relieve some of the added pressure, Mr. LePage’s plan includes a tax break for the lowest-income families.

This gets back to what I was talking about a couple of days ago. Contrary to what Republican reformicons are proposing, Republicans on the ground continue to focus most of their attention on cutting taxes on the rich. Or, in a pinch, if they have to raise revenue, they're raising it from the poor and middle class. This is despite the well-known fact that virtually all of the income gains in recent years have gone to the well-off.

There are ways to make consumption taxes progressive. It's not impossible. The problem is that Republicans simply don't want to. Their goal is, and always has been, to reduce taxes on the wealthy. Any other tax agenda just isn't on the table.

Republicans Are Shooting Themselves in the Foot Over Net Neutrality

| Fri Feb. 13, 2015 12:35 PM EST

I've written before about the GOP's peculiarly uncompromising stance on net neutrality. At its core, net neutrality has always been a battle between two huge industry groups and therefore never really presented an obvious reason for Republicans to feel strongly about one side or the other. But they've taken sides anyway, energetically supporting the anti-neutrality broadband industry against the pro-neutrality tech industry. Today an LA Times article dives more deeply into the problems this is causing:

As tech firms and cable companies prepare for a fight that each says will shape the future of the Internet, Silicon Valley executives and activists are growing increasingly irritated by the feeling that the GOP is not on their side. Republican leaders have struggled to explain to their nascent allies in the Bay Area why they are working so hard to undermine a plan endorsed by the Obama administration to keep a level playing field in Internet innovation.

....The fight comes at a time when Republicans had been making gains in Silicon Valley, a constituency of well-heeled donors and coveted millennial-generation voters who have generally been loyal to Democrats....Republicans have hoped to seize on recent Democratic policy moves that riled tech companies, including a push for strict anti-piracy rules and the Obama administration's continued backing of National Security Agency surveillance of Internet users.

But the hot issue in Silicon Valley now is net neutrality. And on that issue, the GOP and the tech industry are mostly out of step...."It is close to a litmus test," said Paul Sieminski, a Republican who is the general counsel to Automattic, the company that operates Web-making tool WordPress.com. "It's such a fundamental issue for the Internet," said Sieminski, who has been active in fighting for net neutrality. "I guess it is a proxy on where a candidate may stand on a lot of issues related to the Internet."

The obvious and cynical explanation for the Republican view is that President Obama is for net neutrality, so they're against it. The more principled view is that they hate regulation so much that they don't care what it costs them to oppose net neutrality. It's regulation, so they're against it.

Neither one truly makes sense to me, and I suppose their real motivation is a combination of both. Most Republicans probably started out moderately skeptical of net neutrality because it represented a new layer of regulation, and then gradually adopted an ever more inflexible opposition as it became clear that Obama and the Democratic Party were staking out the pro-neutrality space. Eventually it became a hot button issue, and now the die is cast.

But it's sure hard to see what it buys them. It's already eroding any chance they had of appealing to the growing tech industry, which is going to be even more firmly in the Democratic camp after this. And while the support of the broadband industry is nice, it's not big enough to tip the fundraising scales more than a few milligrams in either direction.

All in all, it's an odd fight. It remains unclear to me why Republicans have chosen this particular hill to die on.

Republicans and Democrats Are Both in Favor of Approval to Fight ISIS

| Fri Feb. 13, 2015 11:44 AM EST

So what does the public think of President Obama's request for an authorization to use military force against ISIS? According to a new NBC/Marist poll, they're basically in favor:

Greg Sargent has a partisan breakdown, and approval of the AUMF is surprisingly bipartisan: 60 percent of Democrats approve and 52 percent of Republicans approve. So I imagine this is going to pass before long, probably without too many major changes.

The poll has some other responses that are a bit odd. Only 45 percent of the respondents have much confidence in President Obama's strategy, but 66 percent think we're going to be able to defeat ISIS anyway. Is this a triumph of partisanship over actual belief, or the other way around? Or just the usual incoherence you get in practically every poll about everything?

In any case, it will be interesting to see what line Fox News and the rest of the right-wing punditocracy take on this, and whether this affects future poll results. I wouldn't be surprised if there's a much bigger partisan split on this question a couple of weeks from now.