Kevin Drum

Dems v. Dems

| Fri Jun. 5, 2009 2:43 AM EDT

Chris Hayes:

It seems strange, almost surreal, to say this, but the Republican Party, and arguably the whole conservative movement, is not the left's biggest enemy at the moment. On keeping a public plan in healthcare reform; streamlining student lending; and passing the Employee Free Choice Act (EFCA), cap and trade, financial regulation and a host of other structural economic reforms progressives hope to enact, the GOP is more akin to the garbage men than the alderman. [Click the link for an explanation of what this analogy means. –ed.]

"Most Republicans aren't waking up every day thinking, How do we kill banking regulation?" says Goehl. "Most people who listen to Rush Limbaugh aren't waking up thinking about how do we kill banking regulation. But the people with the deep pockets who have power in DC are thinking that.

"I sometimes get frustrated because it seems like the left isn't focused on corporate power. We like to talk about the Sarah Palins and Rush Limbaughs, and meanwhile the American Bankers Association is one of the main entities running the country."

....While the Republican Party shrinks, corporate interests are deftly molting their old K Street Project skin and crawling en masse inside the big tent being pitched by the Democratic Party. These same corporate interests have always had a purchase on Democrats, of course. But for much of the last decade, business interests had the luxury of spending most of their resources aiding their allies in the GOP.

Chris is right: the biggest threat to the Democratic agenda these days isn't the Republican Party.  It's the Democratic Party.

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Healthcare and Bankruptcy

| Fri Jun. 5, 2009 2:07 AM EDT

Last night I linked to story about a new study showing that medical bills contributed to 62% of all personal bankruptcies in 2007.  According to the authors, that's up 50% from 2001, once you adjust the numbers to compare apples to apples.

Megan McArdle is skeptical.  Objection 1: could slowly but steadily rising healthcare costs really cause such a huge increase in the bankruptcy stats in just six years?  It's hard to say without more data, but it sounds plausible to me given the fact that bankruptcies are outliers to begin with.  Objection 2: other studies have come to different conclusions.  That's addressed here.  Objection 3: why do the subjects of the study themselves self-report at different levels?  That's also addressed here.

But this is all just throat clearing.  Megan's real objection is this:

[Elizabeth] Warren and her co-authors have obscured important and obvious facts that call the integrity of the work into serious question.

....What Warren et. al. neglect to mention is that bankruptcies fell between 2001 and 2007.  In fact, they were cut in half.  Going by the numbers Warren et. al. provide, medical bankruptcies actually fell by almost 220,000 between 2001 and 2007, a fact that they not only fail to mention, but deliberately obscure.

Are Warren, et. al. unaware that bankruptcies fell by half?  No bankruptcy analyst could possibly be unaware of this fact; it has been the most talked-about phenomenon in the bankruptcy area since the 2005 law was passed.

....What's left out here?  That in 2001, 1.45 million households filed for bankruptcy.  In 2007, that number was 727,167.   Had their paper done the basic arithmetic, readers would easily have seen that their own numbers imply a decrease in medical bankruptcies, from about 750,000 to slightly over 500,000.  Yet their paper does not merely ignore this fact; it uses language that seems deliberately designed to conceal it.  I invite any of my readers to scan the paper for any hint that medical bankruptcies had fallen significantly over 6 years.

For my money, this is an important point that should have been addressed directly in the study.  At the same time, it's not clear that it's nearly as sinister as Megan suggests.  If I move out the fences in every baseball stadium in the country, the fact that fewer home runs are hit at Dodger Stadium isn't very interesting.  What is interesting is whether the proportion of home runs per at-bat goes up or down at Dodger Stadium more than it does elsewhere.

Likewise, the authors of the bankruptcy study faced a change in the law that affected all bankruptcies and made it impossible to compare raw numbers. The fences had been moved out, and a large number of people who once would have declared bankruptcy because of, say, a $20,000 medical bill, couldn't do so anymore.  Naturally the absolute number of medical bankruptcies went down, but that doesn't really tell us much.

It's impossible to say anything with certainty since the change in the law was so sweeping, but other data in the study suggests that bankruptcies with a medical component are similar to the overall population of bankruptcies, both demographically and otherwise.  They aren't systematically either better or worse off than average.  This in turn suggests that if you compare the better-off half and the worst-off half of all pre-2005 bankruptcy filers, their medical components probably matched pretty closely.

Why do we care?  Because bankruptcy filings after 2005, when the law made it harder to file, were probably similar to the worst-off half of the pre-2005 bankruptcy filings.  This means the group in the 2007 study is probably similar to the worst-off half of the group in the 2001 study — which makes a direct comparison impossible.  However, since the proportion of medical bankruptcies in that group likely mirrors the proportion in the entire pre-2005 population, it means that if the law hadn't changed and the total population of bankruptcies had stayed large, the proportion of medical bankruptcies probably still would have increased.  This is all very rough and tentative, and better data would be helpful.  Still, even though I agree that this is something the authors should have addressed head on, they probably did about as well as they could with the hand they were dealt.

What Will People Do For Free?

| Thu Jun. 4, 2009 8:54 PM EDT

Barron YoungSmith remarks on the fact that Craigslist actively avoids making a profit:

As Paul Starr has explained, newspapers only flourished during the past few centuries because they functioned as intermediaries between readers and advertisers — fundamentally, they survived because they were institutions that stood between people.

Now, along comes Craigslist, which sees cutting these sorts of intermediaries out of the equation as a form of public service. It considers that mission so important that it is willing to forego huge potential profits and compete against classified pages everywhere while charging virtually nothing for what it offers. In that kind of environment, it's pretty ludicrous to think that newspapers could survive.

Probably so.  Especially since Craigslist works better than newspaper classified advertising.  I've got some old darkroom equipment that's been sitting in my garage for ages, and if I had to go through the hassle of taking out a newspaper classified ad to sell it, it would still be there.  But last night at about 6 pm I suddenly decided to advertise it on Craigslist.  Two hours later I got a response from a guy in Long Beach.  This morning he came by, took a look at the whole setup, and hauled everything off.  I'm a few dollars richer, he's excited at the prospect of setting up a darkroom, and the whole transaction took less than 24 hours.  Amazing.

(Also amazing: using a darkroom must be like riding a bicycle.  You remember how to do it forever.  It's been 20 years since I used this stuff, but as I was showing him how to operate everything and what all the various parts were for, I realized I hadn't forgotten a thing.  I could have set up the entire kit, mixed up the chemicals, and been back in business in an hour.  I can't really think of anything else from so far in my past that I can say that about.)

Anyway: Ten years ago, I remember ruminating over the open source movement and wondering what its limits were.  What kind of stuff would people do for free, and what kind of stuff wouldn't they?  Since open source software is mostly produced by obsessive nerds, the obvious answer is that they'll work for free on the kind of things that obsessive nerds themselves like to use: operating systems, editors, compilers, etc.  Then, at the other end of the spectrum, you have, say, the firmware for controlling GM's assembly line robots.  Nobody in their right mind would do that for free.

But where's the line?  The interesting answer is: if it's the kind of thing that one person (or a small set of people) can do, then it's wherever one competent person draws it.  I'd guess that very few people feel that classified advertising (!) is so important to a vibrant society that they want to dedicate their lives to making it available for free, but it turned out that it didn't take very many people.  Just one guy named Craig.

So now I think about this stuff a little differently.  Sure, some things are just more fun than others, and thus more likely to attract people to do them for free.  But just as important is: how many people does it take?  Once something gets to the point where it only takes a person or three to do it, then there's a pretty good chance that someone, somewhere will start offering it for free.  Even if it's something that most sane people think is boring as hell, there's almost bound to be at least one person who's obsessed by it.  Like classified advertising.

More Smoke and Mirrors from the GOP

| Thu Jun. 4, 2009 3:40 PM EDT

Today House Republican leaders proposed a bold new plan to save $375 billion over the next five years.  So what did they come up with?

Well, according to this document, $317 billion comes from every budget coward's favorite gimmick: an across-the-board spending cap that (a) they know perfectly well will never happen and (b) allows them to avoid mentioning any actual specific cuts.  Another $45 billion comes from devoting returned TARP funds to deficit reduction — something that's going to happen over the next five years anyway.  That leaves $13 billion in actual targeted cuts.  For the arithmetic challenged among you, that's $2.6 billion per year out of a budget of about $3.5 trillion.

That's a reduction of 0.07%.

Every little bit helps, I guess, but for a bunch of fiscal watchdogs they seem curiously unable to find very much in the way of actual wasteful programs that they're willing to stand up and take some lumps for opposing.  Instead it's just the usual smoke and mirrors.  How tedious.

UPDATE: Actually, looking at this more carefully, something doesn't add up.  The GOP brain trust claims to save $317 billion from the cap, $45 billion from TARP, and about $25 billion in targeted cuts.  But that comes to $387 billion, not $375 billion.  So I guess they can't add either.

Still, if the targeted numbers are correct, they're proposing cuts of 0.14%, not 0.07%. I'll leave it up to you to decide if you're impressed by their budget slashing bona fides.

Geithner Plan is Dead

| Thu Jun. 4, 2009 2:32 PM EDT

The New York Times reports that Tim Geithner's plan to buy up toxic assets from the banking system is dead.  Basically, even at the subsidized prices the program would have offered them, banks weren't willing to sell because it would have forced them to recognize big losses, and recognizing big losses would have been bad.  Ezra Klein comments:

There are two ways of understanding what happened here. The first is that banks couldn't sell their assets at current prices because doing so would have rendered them effectively insolvent. In this scenario, PPIP fails to fulfill its intended function: Saving the banks. The toxic assets survive and the banking system remains hollow and unhealthy.

The second is that banks no longer need to rush their troubled assets off their books because they're increasingly able to raise private capital, operate in a restored financial market, and wait out the last vestiges of the storm. They can, in this world, let the value of the assets rise naturally, and sell them off later. In this scenario, PPIP is no longer necessary.

I'll take door #1.  It's at least arguable that the banks were justified in not wanting to sell toxic securities at the fire sale prices on offer from vulture funds and others.  But Geithner's plan would have offered them considerably more than that — and they're still unwilling to sell.  That means they're completely dedicated to the proposition that all their mortgage-backed junk is worth exactly what they say it's worth.

Maybe this will work out in the end.  But history suggests that we'd all be better off if banks were forced to honestly account for their losses, take their lumps, and then move on.  Instead, Geithner's stress tests have persuaded everyone that things are fine and losses on these securities aren't as bad as everyone thinks.  Maybe so.  But if Geithner and the banks are wrong, doing it this way is likely to drag the pain out over years, producing a long period of sluggish semi-recovery and slow, fragile growth.

That's basically my fear at this point.  I sure hope Geithner knows what he's doing.

Lowry on Obama

| Thu Jun. 4, 2009 2:00 PM EDT

Most of the conservative reaction to Obama's speech seems to be the usual robotic stuff — moral equivalence! shameful! naive! — but props to Rich Lowry for his reasonably measured response:

I have to go back and read it carefully, so I reserve the right to extend and revise my remarks. But on the whole I thought it was pretty good and I basically agree with Max Boot's take here. Yes, there were many things about which to cavil, there were missed opportunities, and he betrayed the disturbing weakness of his policy in certain key areas, Iran foremost among them. But the speech was an act of diplomacy and as such, it inevitably was going to skate over some inconvenient truths and tilt its presentation in a way to try to make it more persuasive to its target audience. Fundamentally, Obama's goal was to tell the Muslim world, "We respect and value you, your religion and your civilization, and only ask that you don't hate us and murder us in return." Bush tried to deliver the same message over and over again. The difference with Obama is that people might actually be willing to listen.

I guess the question is whether he sticks to his guns here, or whether the wingosphere reeducation squads eventually force him to "extend and revise" his remarks and admit that the speech was, in fact, a betrayal of everything good and decent.  Stay tuned!

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Coleman Ready to Bow Out?

| Thu Jun. 4, 2009 12:36 PM EDT

Roll Call reports that Norm Coleman might throw in the towel if the Minnesota Supreme Court rules that Al Franken won last year's senate race:

Senate Republican leaders appear willing to go to the mat for former Sen. Norm Coleman (R-Minn.), but it’s unclear whether Coleman wants to go to the mat for himself.

....Sources close to Coleman say the former Senator would likely give up his legal battle and accept defeat if the Minnesota Supreme Court decides in Franken’s favor. That’s because Coleman anticipates that Gov. Tim Pawlenty (R) would ultimately sign Franken’s certification papers.

OK, this is pretty iffy.  The only backup is "sources close to Coleman," and those sources only say it's "likely" that he'd give up the fight, and even then it's only if Pawlenty signs the certification papers.  So who knows?

Coleman's appeal is based on the contention that different counties used different standards for counting ballots, and as it happens, I'm tolerably sympathetic to this argument.  I'd like to see states do a better job of ensuring equal treatment for ballots in a variety of respects.  But my opinions don't matter.  What matters is past precedent and accepted practice, and on that score Minnesota actually seems to have handled the recount quite admirably.  Legally, Coleman really doesn't have a leg to stand on, so maybe he and Pawlenty will do the right thing after all. We'll know in a few weeks.

Obama in Cairo

| Thu Jun. 4, 2009 11:50 AM EDT

I didn't watch Obama's big speech in Cairo, but I've read the transcript.  It's first rate: long, detailed, honest, evenhanded, and temperate.  If I have a complaint, it's that it struck me, both literally and figuratively, as maybe a little bit too by-the-numbers.  But I think part of that is a reaction to the high bar Obama has set for himself: his oratory is so good that it's easy to get a little jaded by yet another great performance.

I imagine that this part will end up getting a lot of attention:

Palestinians must abandon violence. Resistance through violence and killing is wrong and does not succeed. For centuries, black people in America suffered the lash of the whip as slaves and the humiliation of segregation. But it was not violence that won full and equal rights. It was a peaceful and determined insistence upon the ideals at the center of America's founding. This same story can be told by people from South Africa to South Asia; from Eastern Europe to Indonesia. It's a story with a simple truth: that violence is a dead end. It is a sign of neither courage nor power to shoot rockets at sleeping children, or to blow up old women on a bus. That is not how moral authority is claimed; that is how it is surrendered.

Now is the time for Palestinians to focus on what they can build. The Palestinian Authority must develop its capacity to govern, with institutions that serve the needs of its people. Hamas does have support among some Palestinians, but they also have responsibilities. To play a role in fulfilling Palestinian aspirations, and to unify the Palestinian people, Hamas must put an end to violence, recognize past agreements, and recognize Israel's right to exist.

At the same time, Israelis must acknowledge that just as Israel's right to exist cannot be denied, neither can Palestine's. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop.

In some sense, there's nothing new here: most of it is longstanding American policy, and Obama's stand on West Bank settlements was made clear last week.  Still: it might light a fire under both sides.

Nick Baumann calls Obama's speech "Nine Hard Truths," and there's something to that.  It offered something to everyone, but it also offered challenges to everyone.  Marc Lynch has a few initial thoughts here, but warns us to hold off a bit on trying to gauge Arab reaction: "A cautionary note, though — English-language Egyptian blogs are likely to be a particularly poor initial 'focus group' for  judging the response.  But listening to the response and engaging in the debate which emerges will be key, for American officials and for the American public.  Because Obama's address sought to reframe the conversation, we won't know whether it succeeds until we see how the subsequent political debate unfolds."

The full text of the speech is below the fold.

Healthcare and Bankruptcy

| Thu Jun. 4, 2009 2:03 AM EDT

On the campaign trail, Barack Obama frequently cited research showing that medical expenses were a contributing factor in 55% of all personal bankruptcies.  A new study says he was wrong. It was actually more than that:

The study found that medical bills, plus related problems such as lost wages for the ill and their caregivers, contributed to 62% of all bankruptcies filed in 2007....Medical insurance isn't much help, either. About 78% of bankruptcy filers burdened by healthcare expenses were insured, according to the survey, to be published in the August issue of the American Journal of Medicine.

....Most people who filed medical-related bankruptcies "were solidly middle class before financial disaster hit," the study says. Two-thirds were homeowners, and most had gone to college.

The study does not suggest that medical expenses were the sole cause for these bankruptcies, but it does identify them as a contributing factor. The increase in such filings occurred despite a 2005 law aimed at making it more difficult for individuals to seek court protection from creditors.

Among bankruptcy filers, those without insurance reported average medical expenses of $26,971.  Those with private insurance reported average medical bills of $17,749.

Will the Uighurs Be Released?

| Wed Jun. 3, 2009 5:42 PM EDT

Here's a peculiar story from Bloomberg:

Some of the 17 Chinese Uighur Muslims being held at Guantanamo Bay, Cuba, will likely be released in the U.S. in an effort to convince other countries to accept prisoners from the detention facility, according to current and former American officials.

Why peculiar?  Because there's not even a smidgen of backup for this claim in the rest of the story, which runs to over a thousand words.  There's one speculative quote from a Bush-era legal advisor and that's it.  Nothing from current American officials at all.  All in all, the story gives no reason to believe that the Obama administration is any closer to releasing any of the Uighurs into the U.S. than it was a month ago.

Still, I'd like it to be true.  So here's hoping there's more to this piece than meets the eye.