Kevin Drum

Stimulus Details

| Sat Jan. 10, 2009 3:43 PM EST

STIMULUS DETAILS....In case you're curious, Barack Obama's economic boffins now estimate that his stimulus plan will create 3.6 million additional jobs over the next two years. And if you're further curious about how likely this is to affect you, the estimated breakdown by industry is on the right:

To get more detailed information on the breakdown of the jobs created, we use a simulation from a prominent private forecaster on a plan that is similar — though not identical — to the type of plan the President-Elect is considering....The estimates suggest that 30% of the jobs created will be in construction and manufacturing, even though these industries employ only 15% of all workers. Both sectors have been particularly hard hit recently. The other two significant sectors that are disproportionately represented in job creation are retail trade and leisure and hospitality.

Later in the report the authors helpfully estimate that 42% of the new jobs will go to women. Bruce Bartlett emails a very brief critique of the report: "Some of these numbers look rather dubious to me, especially those for 'indirect' job creation." Perhaps so, though the broad methodology seems within the ballpark of reasonableness: they assume a net multiplier (spending + tax cuts) of around 1.3 producing nominal GDP growth in 2010 of $500 billion, combined with a "conservative rule of thumb that a 1 percent increase in GDP corresponds to an increase in employment of approximately 1 million jobs." Paul Krugman thinks these numbers sound roughly right and show that the stimulus package is too small. I'll pass along other economic comment as I see it.

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Job Losses

| Sat Jan. 10, 2009 1:29 PM EST

JOB LOSSES....A headline at CNN blares:

Worst year for jobs since '45

The LA Times follows suit. But come on, folks. This is completely bogus. I'm all for dramatizing just how grim our economic situation is, but you can't use raw numbers like this in an era of rising population. The civilian labor force today is 40% larger than it was in 1982 and more than twice as large as it was in 1945. Job losses last year amounted to about 1.7% of the labor force, but in 1945 the equivalent number was nearly 5% and in 1982 it was nearly 2%.

Job losses last year were brutal, and if you count broader measures than the headline unemployment rate they were even grimmer. But there's no need to use moron math to make it seem even worse than it is. "Worst since 1982" would have been fine.

Don't Ask, Don't Tell

| Fri Jan. 9, 2009 10:37 PM EST

DON'T ASK, DON'T TELL....Obama press secretary Robert Gibbs posted a video Q&A today on the change.gov site and took the following question:

Thaddeus: Is the new administration going to get rid of the "don't ask don't tell" policy?

Gibbs: Thaddeus, you don't hear a politician give a one-word answer much, but it's yes.

That's very good news, though I sure wish Gibbs had given a multi-word answer instead. Mainly, what I want to know is: "What do you plan to replace it with?" We'll just have to wait and see, I guess.

Friday Cat Blogging - 9 January 2009

| Fri Jan. 9, 2009 3:48 PM EST

FRIDAY CATBLOGGING....Yesterday was a nice sunny winter day, so Inkblot got a bee in his bonnet and suddenly decided to scamper up our jacaranda tree. Perhaps he knew that we're about to have it removed and wanted one last look? Hard to say. As usual, though, he didn't really know what to do once he got up, and came scampering down about as fast as he scampered up. Domino, who knows her limits, enjoyed the winter sun from ground level.

In other cat news, the Bush family cat, India, died on Sunday. R.I.P.

Debra Bowen, California's Secretary of State, sends along news of her critters: "I'm up to three cats now — Mapplethorpe, Oz and Sushi. Sushi, my latest pound cat, hangs out on the 6th floor of the SOS office fairly often — and knows everyone who works there, and who has the best sleeping spots at what time of day." She promises pictures someday.

Finally, last week Blue Girl started up Friday Public Art Blogging over at her Missouri blog. "Does Missouri have any public art of cats?" I asked. Probably so, but this week a dog will have to do. And Zoe!

Quote of the Day - 01.09.09

| Fri Jan. 9, 2009 3:25 PM EST

QUOTE OF THE DAY....From Ben Shapiro, describing the Benjamin "Henry Gale" Linus character on Lost:

Benry is evil to be sure — but he's pure, solid, wonderful evil in the mold of Dick Cheney.

Yes, this is meant as a compliment.

High-Speed Rail

| Fri Jan. 9, 2009 2:04 PM EST

HIGH-SPEED RAIL....John Judis makes the case for a big piece of the stimulus package to be spent on high-speed rail:

One area that is ripe for such investment — and that is not, from what I have seen, a declared priority of the Obama administration — is high-speed rail. Amtrak's Acela trains — the closest thing we have to one — average less than 100 mph between Washington D.C. and Boston, whereas trains in Western Europe and Japan go more than twice as fast. Many of them also run on electricity. They would be the most energy-efficient and quickest means of getting between places like Boston and New York, or Los Angeles and San Francisco. But they would require a massive investment. For instance, installing high-speed rail in the Northeast corridor could cost about $32 billion, while California's high-speed rail system would require up to $40 billion. A system that would address the other areas of the country could easily raise the cost to the hundreds of billions. The House transportation and infrastructure committee has currently proposed $5 billion in stimulus funds for intercity rail--not even a down payment on what it would cost to convert the U.S. to high-speed rail.

Investing in high-speed rails would be very expensive, but unlike tax cuts — the benefits of which can be siphoned off in the purchase of imported goods — the money spent would go directly to reviving American industry and improving the country's trade balance. That doesn't just mean jobs creating dedicated tracks or new rail stations: Though the U.S. abandoned train manufacturing decades ago to the French, Germans, Canadians, and Japanese, this kind of production could be undertaken by our ailing auto companies or aircraft companies — if the federal and state governments were to place orders. And building trains that would run on electricity would be a paradigmatic example of the "green jobs" that Obama often touts.

I agree with some of this. The train manufacturing part seems like small potatoes, and I have my doubts that there's anything to be gained from trying to revive that particular part of the American manufacturing scene. On the broader picture — and I say this even though I live in California — I'd be happiest with a large and highly targeted investment in high-speed rail in the northeast. Most medium and long-haul rail projects in the U.S. are both iffy in conception (LA-San Francisco is really at the bleeding edge of what's likely to be workable for high-speed rail) and so far from being started that they'd have no immediate stimulative impact at all. The northeast, by contrast, fairly cries out for a modern, fast, European style rail system. It's geographically compact and densely populated; its residents are fairly train-centric already; and most of the terminal cities have good public transit. That's not really true of any other region in the country.

Unfortunately, this is a political minefield. There's no way Congress will allocate tens of billions of dollars to the northeast unless lots of other congressional districts get their pet rail projects too. Amtrak has always been a porkfest, and it's not clear that anyone has the political will to put a stop to it.

But maybe! Common sense suggests that high-speed rail in the northeast corridor would be a pretty good national project to get started on, and other regions of the country should probably focus either on urban subway/light rail projects or on non-transit spending. For now, the northeast ought to be both a showcase and a pilot project for serious high-speed rail. If the French can do it, so can we.

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Cap-And-Trade vs. Carbon Taxes

| Fri Jan. 9, 2009 1:32 PM EST

CAP-AND-TRADE vs. CARBON TAXES....Exxon's CEO call for a carbon tax:

The chief executive of Exxon Mobil Corp. for the first time called on Congress to enact a tax on greenhouse-gas emissions in order to fight global warming.

In a speech in Washington, Rex Tillerson said that a tax was a "more direct, a more transparent and a more effective approach" to curtailing greenhouse gases than other plans popular in Congress and with the incoming Obama administration.

Is this good news? Hard to say. It's certainly good news that Tillerson is in favor of something, and favoring a carbon tax puts him on the side of Al Gore and lots of academics, who think that a tax is the quickest, cleanest, and technically most efficient way of pricing carbon, thus reducing GHG emissions and slowing the progress of global warming.

But it's bad news if his goal is mainly to roil the waters. Barack Obama has called for a cap-and-trade system, not a carbon tax, and most green groups have backed cap-and-trade as well because they feel that a tax is a political nonstarter. But if Exxon can help gin up a big fight between tax advocates and cap-and-trade advocates, who knows? Maybe nothing will get passed at all. If that's Tillerson's calculus, then his newfound support for carbon taxes is just a cynical ploy.

Technical and political issues aren't the only big difference between taxes and cap-and-trade, either. Both raise money (the tax directly, cap-and-trade by selling emission permits), but with a tax you don't know for sure what effect it will have. You have to guess. So you set a carbon tax of, say, $50/ton, with the goal of reducing carbon emissions 5%, and then cross your fingers and wait a few years. Maybe it works, maybe it doesn't. Conversely, cap-and-trade works on the theory of a hard cap. If you want to reduce carbon emissions by 5%, then you auction off credits equal to 95% of current emissions and you're done. You're taking a chance on what the price of credits will be (something that businesses hate since they like price stability), but you know for sure that you'll meet your cap as long as your have adequate enforcement mechanisms in place.

This alone is enough to make me a cap-and-trade advocate. Not only is it more politically feasible than a tax, but it's more attractive to the public since it focuses on the thing they really care about: a hard cap on carbon emissions. Price instability is a legitimate issue, but I don't think it's a big one: energy intensive companies already have to deal with considerable instability in gas and oil prices, and Wall Street will eagerly help them hedge against future instability in carbon permit pricing if it's really important to them.

The "trade" part of cap-and-trade is attractive because it makes the whole system more efficient. But it's the "cap" part that's really important. In my mind, that makes it a better solution than a tax for the carbon pricing piece of a broad climate change plan.

Lighting a Fire

| Fri Jan. 9, 2009 12:15 PM EST

LIGHTING A FIRE....Felix Salmon finds a silver lining to today's very, very grim employment report:

Maybe the only real upside to this report is that it should light a fire under Congress to pass a stimulus package sooner rather than later — including the release of the second tranche of TARP funds. Let's start getting money out the door now: that's more important than haggling over what goes where.

Well, it worked for FDR. Maybe it will work for BHO too.

Pay No Attention to the Party Behind the Curtain

| Fri Jan. 9, 2009 1:56 AM EST

PAY NO ATTENTION TO THE PARTY BEHIND THE CURTAIN....Citigroup has agreed to drop its opposition to "cramdown" legislation:

Key congressional Democrats on Thursday reached an agreement with financial giant Citigroup Inc. on a proposal to make it easier for bankruptcy judges to adjust the terms of home loans and possibly forestall many foreclosures.

....The breakthrough agreement boosts the chances that Democrats can push new laws through Congress that direct bankruptcy judges to rework mortgage terms by writing down the principal on the millions of homes that now are worth less than the mortgages they carry.

Most of the reaction to this announcement has been dismay that Congress had to "negotiate" with Citigroup in order to pass this legislation, but it's important to get clear what's actually going on here. The negotiation wasn't really with Citigroup, it was with Senate Republicans, who have almost unanimously opposed this legislation in the past. With Citigroup on board, Durbin and Dodd and Schumer hope that other banks will hop on board too, and once the banks are on board then maybe a few of those legendary "moderate" Republicans will also see the light and do the right thing.

Maybe it will work, maybe it won't. But it's Republicans that are the problem. Banks are just fronting for them.

Conyers vs. Gupta

| Thu Jan. 8, 2009 3:01 PM EST

CONYERS vs. GUPTA....Sam Stein reports that Rep. John Conyers has decided to publicly oppose the nomination of Sanjay Gupta as Surgeon General. That's.....weird. I don't really care much one way or the other about Gupta (though having a telegenic personality lead our public health service seems like a pretty inspired idea, frankly), and it's hard to believe that Gupta's smackdown with Michael Moore three years ago is anything more than a minor blip in the grand scheme of things. I wonder why Conyers is bothering to expend political capital on this?