Kevin Drum

What's a Liberal to Think About the Great Import-Export Bank Foofaraw?

| Tue Jun. 24, 2014 7:51 PM EDT

Suddenly, as if out of nowhere, everybody's talking about the Export-Import Bank today. Isn't that exciting? I have some thoughts about this myself, if you'll hold on for just a minute.

Tick, tick, tick.....

Hmmm. The Wikipedia entry was too long to read so I just skimmed it. Still, that should get me up to speed about as much as everyone else who's become an instant expert today. In a nutshell, the Ex-Im Bank provides subsidies for American exporters. If, say, Malaysian Airlines wants to buy a few Boeing 777s, Ex-Im will provide them with a low-interest loan for that purpose. This is basically just a way of making the purchase price lower, and the benefit of this subsidy is divided between Boeing and Malaysian Airlines. As with all subsidies, the precise division of the split between the buyer and the seller presumably depends on the elasticity of something or other, yada yada yada. Ask an economist for details.

But what should you, as a good liberal, think about all this? Killing Ex-Im is basically a conservative hobbyhorse, but plenty of lefties have weighed in too. Dean Baker points out that an interest rate subsidy is basically the same as a tariff, so if you're in favor of free trade you should be opposed to Ex-Im. Paul Krugman admits that Ex-Im is mercantilist and therefore a bad idea—except when the economy is weak and monetary policy is up against the zero lower bound. Which it is, so Ex-Im acts as an economic stimulus, more or less, and we should probably keep it around for now. On a political note, Greg Sargent points out that deep-sixing Ex-Im may become the scalp tea partiers claim for their defeat of Eric Cantor, who was a big supporter.

Elsewhere, Matt Yglesias tells us that opposition to Ex-Im was largely driven by Delta Airlines, which was tired of seeing its foreign competitors get subsidies to buy their airplanes. The Wall Street Journal reports that four Ex-Im officials have been suspended or removed recently "amid investigations into allegations of gifts and kickbacks," and Danny Vinik says these charges should be a warning for liberals. "If they prove true, then officials are choosing winners and losers based on kickbacks. And that should make the decision easy for liberals: Join with conservatives and oppose the reauthorization of the Export-Import bank."

Meanwhile, a friend emails "Feel the schadenfreude!" after reading a Politico piece about how the Texas business community is feeling glum because Rep. Jeb Hensarling, normally one of their darlings, is dead set on killing Ex-Im. "The bank supported exports worth around $3.68 billion in fiscal year 2013," says the story, "ranking the Lone Star State third among states in amount financed." I guess them's the breaks when you get into bed with a true believer.

This is probably already a lot more than you ever wanted to know about the Export-Import Bank, so I'll stop. As for whether we keep it or kill it, it's hard to make much of a case for keeping it except (a) as Krugman points out, it doesn't cost us anything at the moment, and (b) every other country does it too. You may decide for yourself whether you find those reasons persuasive.

Oh, and the tea party hates it, for the usual obscure reasons that the tea party hates things you've never heard of. Perhaps that will sway you too.

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Yes, You Can Now Call Your Crock Pot on Your iPhone

| Tue Jun. 24, 2014 3:10 PM EDT

From the annals of stories I'm afraid to read:

The age of cooking by smartphone is here. We test a Robo-Crock in the connected kitchen.

But I'm a professional, so I clicked the link:

For my first test, I made chili....But instead of reaching for any knobs or buttons on the front of the device, I launched an app on my phone to set temperature and time.

The machine fired up, eventually reaching a simmer. The app kept track of time and alerted me with a pop-up message when my three-hour stew was ready for mass consumption. If I had wanted to bump the temperature from High to Low or adjust the cook time, I could easily do that whether I was down the street or half a world away.

I am happy to report that the $130 Smart Crock-Pot works as billed....The chili came out great. It was at that point that the greater existential questions surrounding a Smart Crock-Pot began surfacing: When would I really need this? Is it worth the extra $50? And is it smart enough?

Indeed. Is it smart enough? I'd say no, because it still forces me to cut up all the meat and vegetables and then manually toss them in the crock pot. That doesn't sound nearly smart enough to me. Call me back when a robot version of Wolfgang Puck is available for $130.

Is ISIS a Monster of Our Allies' Creation?

| Tue Jun. 24, 2014 1:36 PM EDT

On her show last night, Rachel Maddow highlighted a piece by Steve Clemons claiming that the rise of ISIS in Syria—and, more recently, in Iraq—has been largely due to financial and arms assistance from Saudi Arabia:

The Free Syrian Army (FSA), the “moderate” armed opposition in the country, receives a lot of attention. But two of the most successful factions fighting Assad’s forces are Islamist extremist groups: Jabhat al-Nusra and the Islamic State of Iraq and Syria (ISIS)....Qatar’s military and economic largesse has made its way to Jabhat al-Nusra....But ISIS is another matter. As one senior Qatari official stated, “ISIS has been a Saudi project.”

....The United States, France, and Turkey have long sought to support the weak and disorganized FSA, and to secure commitments from Qatar and Saudi Arabia to do the same....In February, the Saudi government appeared to finally be endorsing this strategy.

....The worry at the time, punctuated by a February meeting between U.S. National Security Adviser Susan Rice and the intelligence chiefs of Turkey, Qatar, Jordan, and others in the region, was that ISIS and al-Qaeda-affiliated Jabhat al-Nusra had emerged as the preeminent rebel forces in Syria. The governments who took part reportedly committed to cut off ISIS and Jabhat al-Nusra, and support the FSA instead. But while official support from Qatar and Saudi Arabia appears to have dried up, non-governmental military and financial support may still be flowing from these countries to Islamist groups.

Clemons' piece is vaguely sourced, and Saudi Arabia has strongly denied accusations that it has supported ISIS. Nonetheless, it's a fairly commonly held view, and it certainly demonstrates the dangers of trying to pick sides in Middle East conflicts. The US may have been doing its best to support the FSA, but that doesn't mean our allies are doing the same. Unfortunately, there are inherent limits to just how precisely you can pinpoint aid in conflicts like this, and that means the possibility of blowback is never far away. That sure seems to have been the case here.

America Unhappy Over Obama's Lack of Magic Iraq Wand

| Tue Jun. 24, 2014 11:52 AM EDT

President Obama's conduct of foreign policy continues to get bad reviews:

Dissatisfaction with President Obama’s conduct of foreign policy has shot up among both Republicans and Democrats in the past month, even though a slim majority supports his recent decision to send military advisers to Iraq to confront the growing threat from militants there, according to the latest New York Times/CBS News poll.

The survey suggests that most Americans back some of Mr. Obama’s approaches to the crisis in Iraq, including majority support for the possibility of drone strikes. But the poll documents an increasing lack of faith in the president and his leadership, and shows deep concern that further intervention by the United States in Iraq could lead to another long and costly involvement there.

....“I voted for him because he said, ‘Give me four more years and I will fix everything,’ but nothing is being fixed,” Michelle Roberts, 34, a Democrat from Salem, Mass., said in a follow-up interview. “I understand he wants to fight terrorism, but send in robots, drones. Don’t send in our troops. Our men and women are dying for what?”

This poll really demonstrates the schizophrenia of the American public. If you read through the individual questions, you'll see that substantial majorities approve of nearly everything Obama has done related to Iraq. Majorities believe the US shouldn't take the lead in world conflicts; they don't believe we should have left troops behind in Iraq; they don't think the US has a continuing responsibility to Iraq; they specifically don't think the US has a responsibility to fight ISIS; they approve of sending 300 advisors; they very much disapprove of "sending ground troops" into Iraq; and overall, a plurality thinks Obama is doing the "right amount" to address the violence in Iraq.

And yet, the public disapproves of Obama's handling of Iraq by 52-37 percent.

In other words, Iraq is like the economy: it doesn't really matter what the president is doing. If the economy is good, the public approves of his performance. It it's bad, they disapprove. Likewise, if the world is peaceful, they think the president is doing a great job. If it's not, they don't—even if he's pretty much doing everything they think he should be doing. Basically, we all want the president to wave a magic wand and make everything better. No wand, no approval.

Is it Obnoxious to Support Health Care For the Poor?

| Tue Jun. 24, 2014 10:35 AM EDT

Here is Gary Silverman in the Financial Times:

What I like about Obamacare is that it shows some respect for “those people” — as Hudson called them in Giant — who are good enough to work the fields and mow the lawns, and build the roads and sew the clothes, and diaper the babies and wash the dishes, but somehow aren’t good enough to see a doctor from time to time to make sure there is nothing wrong inside.

Along with a passage from another author about Palestinians, this makes Tyler Cowen unaccountably angry:

I am not in this post seeking to adjudicate ACA or U.S. policy in the Middle East.  The easy target is to go after these two authors, but I am interested in different game.  The deeper point is that virtually all of us argue this way, albeit with more subtlety.  A lot of the more innocuous-sounding arguments we use all the time come perilously close to committing the same fallacies as do these quite transparent and I would say quite obnoxious mistaken excerpts.  One of the best paths for becoming a good reader of economics and politics blog posts (and other material) is to learn when you are encountering these kinds of arguments in disguised form.

I'm stumped. What's obnoxious about this? There are certainly technocratic arguments to be made for and against universal health care, as well as the particular implementation details of Obamacare. But the core reason most of us have for supporting Obamacare is exactly the one Silverman makes here: we think everyone, even the poor, should have access to decent health care. A great many conservatives prefer to simply turn their heads away from this human suffering, often because they prefer to keep their taxes low. A great many liberals prefer the opposite.

This isn't a secret, or a hidden agenda, or anything like that. It's always been the primary motivation for universal health care. More generally, our values are the motivation for a large share of human activity, especially including political activity. What's wrong with that?

The Supreme Court Is a Remarkably Agreeable Place

| Mon Jun. 23, 2014 11:22 PM EDT

The diagram below comes from The Upshot, and it shows how much various Supreme Court justices agree with each other:

In general, there are no surprises. You can rank the justices on a scale from most liberal to most conservative, and there's more agreement the closer they are ideologically. But here's one thing that might surprise you: The lowest level of agreement, between Ruth Bader Ginsburg and Clarence Thomas, is 65 percent. That is, the two justices who are the most extreme polar opposites still agree with each other two-thirds of the time.

This tells you a lot about what the Supreme Court actually does most of the time: it rules on obscure tax cases and agency regulation cases that don't always break down on the usual left-right spectrum. When it comes to high-profile cases, you get a lot of 5-4 decisions. But on the majority of less celebrated cases, when the political spotlight is turned off, there's a surprising amount of consensus on what the law means.

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Better Anti-Boycott Arguments, Please

| Mon Jun. 23, 2014 7:35 PM EDT

Kelsey McKinney writes today about the controversy over the Beverly Hills Hotel. The hotel is owned by the Dorchester Collection, which in turn is owned by the Brunei Investment Agency, which in turn is owned by the Sultan of Brunei. The sultan has recently proposed a new legal code based on a strict interpretation of shariah law:

Under the first phase of [the sultan's] proposed implementation of sharia, fines and jail time can be given for failing to attend Friday prayers, indecent behaviors, and being pregnant outside of marriage. The second phase will allow flogging and limb severing for property crimes, and the third will allow stoning for crimes of adultery and gay sex.

Unsurprisingly, a bunch of Hollywood celebrities object to this and have tried to organize a boycott of the hotel (though, oddly enough, nobody seems to care much about any of the other hotels in the Dorchester Collection, including the Hotel Bel-Air, which is all of two miles away). I'm not going to pretend that I have any settled views on this whole thing, but I'm struck by the arguments of some of the folks who oppose the boycott. Here's Russell Crowe:

Sending me abuse will not stop my support of Gay , Lesbian, Bi and Trans Gender rights. The laws that Brunei are adopting are hideous.....However, throwing the staff of Dorchester Collection Hotels under the bus to make a political point is not acceptable to me.

This is the standard anti-boycott argument from the hotel's management, and I wonder if Crowe and others understand what it means? It's basically a case against ever boycotting any business for any reason. After all, pretty much every business employs lots of people who are merely innocent bystanders in these kinds of affairs.

This is a plausible argument against boycotts in general, but that's the only thing it's a plausible argument against. If you've ever supported a boycott of any business anywhere, it won't work.

Awlaki Assassination Memo Finally Released

| Mon Jun. 23, 2014 3:52 PM EDT

A federal court has finally released the Obama administration's memo justifying the targeted killing of Anwar al-Awlaki, an American citizen living in Yemen who was apparently a top Al Qaeda operative. I think we mostly knew this already, but the memo confirms that the decision to kill Awlaki was based primarily on the Authorization to Use Military Force passed a few weeks after 9/11:

"We believe that the AUMF's authority to use lethal force abroad also may apply in appropriate circumstances to a United States citizen who is part of the forces of an enemy authorization within the scope of the force authorization," reads the Justice Department memorandum, written for attorney general Eric Holder on 16 July 2010 and ostensibly intended strictly for Awlaki's case.

Among those circumstances: "Where high-level government officials have determined that a capture operation is infeasible and that the targeted person is part of a dangerous enemy force and is engaged in activities that pose a continued and imminent threat to US persons or interests."

I've never taken a firm stand on the decision to kill Awlaki. Everything I've read persuades me that he was, indeed, a high-ranking Al Qaeda operative, and a dangerous one. If we were engaged in a normal war, there would be no question about our right to treat him like any other enemy combatant.

But we aren't engaged in a normal war, are we? There's no specific enemy, no specific battlefield, and no way of knowing if and when the war is over. The AUMF is open-ended, both in time and geography, and is famously vague about just who it authorizes the president to make war against. It specifies "those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001," and that takes in a helluva lot of ground.

Thus, the problem I've always had isn't specifically with the targeting of Awlaki, but with the fact that the targeting was based on such a flimsy legal pretext. However, despite the fact that I'm disappointed in Obama's decision to interpret the AUMF broadly, most of the blame on that score should be directed not at Obama, but at Congress. The AUMF is now more than a dozen years old, and it's long past time for Congress to emerge from its fetal crouch and write a new law specifically designed for our present circumstances. Among other things, it should address the president's ability to target American citizens for killing. If Congress wants to give the president that power, it should debate and pass a law and the courts should rule on its constitutionality. That's the rule of law. And regardless of whether I liked the law, I'd accept it if Congress passed it, the president signed it, and the Supreme Court declared it constitutional.

Instead, as usual, Congress prefers to do nothing. This leaves them free to kibitz if they don't like what the president is doing, or to simply avoid having to take a stand at all. It's shameful.

Read the full Justice Department memo here.

Nothing Hillary Clinton Says This Week Matters

| Mon Jun. 23, 2014 2:40 PM EDT

For the love of God, can everyone please stop chattering about whether Hillary Clinton's latest minuscule miscue is going to be a huge problem for her if she runs for president? Is there truly nothing else to write about?

The correct answer is: no, it will not be a problem. You know why? Because it's June 2014. The election is scheduled for November 2016. That's it.

Now can we all move on? I think I've only read about 20 explainers today on the path forward for the US at the World Cup. That's probably not enough, so how about writing a couple dozen more?

At the Moment, Inflation Is Our Friend, Not Our Enemy

| Mon Jun. 23, 2014 1:01 PM EDT

Atrios makes a point today that's been on my mind as well. So instead of writing it myself, I'll just let him say it:

I think more people need to make the point regularly (even Krgthulu!) that the lack of inflation risks isn't simply because we don't have any actual inflation, it's because if there's one thing the major central banks know how to do — and are biased in favor of doing — is killing inflation. If we do wake up and discover that we've had sustained inflation at, say, the unimaginable level of 3% for several months, ushering in the Zombie Apocalypse, our great and glorious central banks will actually step on the brakes. Genuine inflation risk isn't about a few months of too high inflation (which we should have but that's another discussion), it's about "irresponsible" central banks that will keep stepping on the gas even as hyperinflation is destroying the world. But that isn't going to happen and no one with half a brain really believes it's going to happen. Are those who fret about inflation evil or stupid? I have no idea, but...

In addition, I'd expand a bit on his aside that a few months of high inflation would be a good thing. That's true, and it's the primary reason we shouldn't let inflation fears overwhelm us. If the CPI rises by 4 or 5 percent for a few months, that's not a problem. It's happened before, and then reverted back to the mean. Even a year wouldn't be a problem. In fact, it would probably be helpful since it would implicitly reduce real interest rates and act as a spur to the economy. And if inflation stays at an elevated level for more than a year? Then Atrios is right: if there's one thing the Fed knows how to do, it's kill inflation. There's a ton of controversy over whether and how the Fed can influence other things (growth, employment, strength of the dollar, etc.), but there's no question about its ability to curb inflation if it wants to. This is something that left and right both agree about.

So yes: we should tolerate higher inflation for a while. With the economy still as weak as it is, there's a lot of potential upside and very little potential downside.