Kevin Drum

Waxman Wins

| Thu Nov. 20, 2008 9:19 AM PST

WAXMAN WINS....The news keeps getting better and better. The House Democratic caucus just voted 137-122 to replace John Dingell (D–General Motors) as chair of the Energy and Commerce Committee. The new chair will be Henry Waxman, who cares deeply about global warming and will be a huge ally in the fight to get serious carbon legislation passed next year. This is change we can believe in.

Advertise on MotherJones.com

Gutting the Trout

| Thu Nov. 20, 2008 9:12 AM PST

GUTTING THE TROUT....Ezra informs us today that the healthcare insurance industry has blinked. But it's sort of a Sarah Palin blink:

The big news of the day is that the insurance industry has offered a deal: In return for a mandate in which every American must purchase health care coverage, they will stop refusing to sell insurance to those with preexisting conditions. Some deal. They're basically saying that if we legislate that every American must purchase insurance coverage, they will sell insurance coverage, at some price, to every American.

Needless to say, this is a deal that every industry in America would love. Take GM, for example. Why bother bailing them out with taxpayer cash? Just pass a law instead mandating that every American has to buy a Chevy, let GM set the price, and they'd be back in business!

Of course, it's actually worse than that. At least if you mandated car purchases, the car companies would still compete for business by lowering prices. Healthcare companies, conversely, don't want your business if you have a preexisting condition. Why would they? So they'd actually do just the opposite, jacking up prices steadily to ensure that someone else will end up getting your business if you happen to be a diabetic or have a family history of coronary trouble.

Ezra explains all this in more detail, but for now I'll just observe that a blink is a blink, even if the deal on the table is patently ridiculous. It means the health insurance industry is scared that we might actually do something in 2009 and they want to be seen as something other than completely obstructionist. That means only one thing: they've shown fear, and now it's time to bore in for the kill and gut them like trouts. Let's get to it.

Newt Explains It All For You

| Thu Nov. 20, 2008 8:45 AM PST

NEWT EXPLAINS IT ALL FOR YOU....In the Wall Street Journal today, Newt Gingrich and Peter Ferrara tell us why median wages have sucked so badly during the Bush era:

Marginal tax rates for middle-income families in the 25% tax bracket are too high. Add in effective payroll tax rates of 15% and state income taxes, and these workers are laboring under marginal tax rates of close to 50%. No wonder middle-income wage growth has slowed sharply.

Yep, that explains it: George Bush has kept taxes too damn high and no one wants to work anymore. It's analysis like this that has made Newt the conservative visionary he is.

Oogedy-Boogedy

| Wed Nov. 19, 2008 3:17 PM PST

OOGEDY-BOOGEDY....Kathleen Parker blames the demise of the Republican Party on its "evangelical, right-wing, oogedy-boogedy branch," and Jonah Goldberg is annoyed:

What aspects of the Christian Right amount to oogedy-boogedyism? I take oogedy-boogedy to be a perjorative reference to absurd superstition and irrational nonsense. So where has the GOP embraced to its detriment oogedy-boogedyism? With the possible exception of some variants of creationism (which is hardly a major issue at the national level in the GOP, as much as some on the left and a few on the right try to make it one), I'm at a loss as to what Kathleen is referring to. Opposition to abortion? Opposition to gay marriage? Euthanasia? Support for prayer in school?

OK, maybe "oogedy-boogedy" wasn't the most felicitous phrase to use. Sway to the music all you want and no one will mind. But I think conservatives do themselves a disservice if they pretend not to know what Parker is talking about.

There will always be plenty of votes for a culturally conservative party. That's not the problem. The problem is the venomous, spittle-flecked, hardcore cultural conservatism that's become the public face of the evangelical wing of the GOP. It's the wing that doesn't just support more stringent immigration laws, but that turns the issue into a hate fest against La Raza, losing 3 million Latino votes in the process. It's the wing that isn't just a little skittish about gay marriage, but that turns homophobia into a virtual litmus test, losing 6 million young voters in the process. It's the wing that isn't just religious, but that treats belief as a precondition to righteousness, losing 2 million secular voters in the process. It's the wing that isn't just nostalgic for old traditions, but that fetishizes the heartland as the only real America, losing 7 million urban voters in the process. It's the wing that goes into a legislative frenzy over Terri Schiavo but six months later can barely rouse itself into more than a yawn over the destruction of New Orleans.

Now, the GOP didn't lose all those votes solely because of their embrace of cultural victimhood. It was a Democratic year, after all, and the economy worked against them too. Still, exit polls suggest they had already lost most of this ground by 2006, and the economy had nothing to do with it back then. Conservative gains after 9/11 may have masked the problem for a while, but fundamentally these are voters who saw the Republican Party turn into a party of rabid identity politics and turned away in disgust. It's probably cost them (so far) about 10 million votes, and in an era where 53-47 is considered a big victory, that's a helluva deficit to make up elsewhere.

A party that merely wants to move more slowly and more deliberately than liberals in the cultural sphere wouldn't have lost all those votes. But the real-life GOP, a party whose primary association in much of the public mind is with revulsion toward gays, immigrants, urban elites, and the non-churchgoing, did. That's oogedy-boogedy.

Putting the Noise Machine in its Place

| Wed Nov. 19, 2008 2:41 PM PST

PUTTING THE NOISE MACHINE IN ITS PLACE....Ezra Klein isn't sure that Barack Obama made the right choice by tapping Eric Holder as his nominee for attorney general:

It's hard for me to believe that Obama couldn't find anyone for the post who wasn't the workhorse behind Bill Clinton's pardon of fugitive financier Marc Rich. Holder, obviously, was just doing his job, but appearances matter in this town. Republicans will have no problem attacking the choice, and your average voter will be rather confused as to why Obama made it. Whatever Holder's merits — and I grant that they are many — it's a nomination that recalls the worst of the Clinton era, and it's not clear why that needed to be done.

Leaving Holder's broader merits (or lack thereof) to one side, I'd offer a different take on this: do we really want to hamstring ourselves by worrying too much about what kind of temper tantrum the Republican Party is likely to throw over Obama's nominees? I don't doubt they'll do their best to smear Holder, but the Rich pardon happened eight years ago and Holder's role in it was fairly modest. Obviously it's not a good idea to give Republicans too many free shots early in his term, but if Obama truly thinks Holder is the best man for the job, then I think he's done the right thing. Let the talk show clowns wail and the congressional leadership send out their streams of faux outraged press releases. This is a pretty good chance to show that this stuff just doesn't work anymore, and I'll bet Obama realizes it.

Team of Rivals?

| Wed Nov. 19, 2008 11:58 AM PST

TEAM OF RIVALS?....Is Barack Obama really assembling a "team of rivals," as Abraham Lincoln did in Doris Kearns Goodwin's account of Lincoln's presidency? Goodwin's book was a little too hagiographic for my taste (even Lincoln's obvious mistakes routinely get spun into accidental acts of genius), but there's no question that Lincoln really did surround himself with a contentious bunch of personalities. Obama, conversely, doesn't really seem to be doing that. Hillary Clinton and the other SecState candidates are the only real "rivals" he's considering for his cabinet, and one cabinet spot hardly counts as a team, does it?

Still, Dan Drezner thinks the Goodwin analogy is serving Obama well:

That said, it's pretty smart for Obama and his staff to spread this meme around. First, it flatters all of his cabinet officers to think that they're like Seward, Salmon Chase et al. Second, by invoking the metaphor, Obama gets to frame his administration as evoking both the great challenges of the Civil War period and the greatness of Lincoln.

So maybe Obama isn't assembling a team of rivals after all, but he's still a pretty smart cookie for faking us into thinking he is. Nice move from the former gym rat.

Advertise on MotherJones.com

Czar Thomas

| Wed Nov. 19, 2008 11:43 AM PST

CZAR THOMAS....Steve Benen passes along the news that Tom Daschle is Obama's pick both for Secretary of Health and Human Services — a cabinet position — and White House health "czar" — a more traditionally West Wing-ish kind of thing. Steve is pleased:

The Daschle announcement reinforces the notion that an Obama administration is going to take the push for healthcare reform very seriously. A senior Democratic official told Mike Allen, "Of all the proposals that Obama wants to enact, health care requires the most input and tough negotiations and shepherding. No one knows the House and Senate like Tom Daschle."

Indeed, the Daschle news makes me even more encouraged about the prospect of a healthcare package actually passing. Emanuel is insisting that an incremental approach won't do; Baucus and Kennedy are laying the groundwork on the Hill; and Daschle has been preparing for this fight for quite a while.

I'm not really a fan of the whole "czar" thing, but if we're gong to have a healthcare czar it makes sense to give the position to the HHS secretary. What's more, if Hillary Clinton decides to stay in the Senate, this would set up a pretty interesting contrast with 1993: Hillary would be shepherding healthcare reform from the legislative side this time and Daschle would be doing it from the executive branch. It's so crazy it might work!

Anyway: I agree with Steve. This is good news. Daschle is plainly dedicated to healthcare reform, he understands the legislative realities as well as anyone, and Obama is sending a pretty clear message that he plans to push full steam ahead on this. Keep your fingers crossed.

Examining the SOFA

| Wed Nov. 19, 2008 11:14 AM PST

EXAMINING THE SOFA....McClatchy has posted an unofficial translation of the Status of Forces Agreement that the Iraqi cabinet recently approved. Here are the key paragraphs:

"U.S. Forces" refers to the entity that includes all the personnel of the American Armed Forces, the civilian personnel connected to them and all their possessions, installations and equipment present on Iraqi territory.

....All U.S. forces are to withdraw from all Iraqi territory, water and airspace no later than the 31st of December of 2011.

That's as clear and simple as it could be, and as near as I can tell there are no weasel words elsewhere that weaken this commitment. Leila Feidel apparently agrees:

If Iraq's parliament endorses the agreement, in six weeks American forces would have to change the way they operate in Iraq, and all U.S. combat troops, police trainers and military advisers would have to leave the country by Dec. 31, 2011. President-elect Barack Obama's campaign plan to leave a residual force of some 30,000 American troops in Iraq would be impossible under the pact.

Now, obviously Iraq and the U.S. can mutually agree to amend the SOFA later if they decide to. But the fact that the wording of the current document is so clear — not "aspirational," not "conditions based" — will make it hard to do that. This language will very shortly get baked into the DNA of every Iraqi in the country regardless of confessional or ethnic loyalty, and the document provides no mechanism for modification aside from changing the SOFA itself, which would require approval from the Iraqi parliament. And what are the odds of that?

The translated agreement is here. I encourage everyone to read through it and look for loopholes. If you find any, leave 'em in comments.

Regulation

| Wed Nov. 19, 2008 10:39 AM PST

REGULATION....Apparently there was a panel discussion on the financial crisis last night, and both Matt and Ezra report that the main takeaway was not to worry too much about trying to cure the precise causes of our current catastrophe. See, we've learned our lessons and the next catastrophe will almost certainly be caused by something different. Better instead to focus on broader regulations aimed at things like limiting leverage and taming asset bubbles slightly.

(That "slightly" is an important qualifier. There's plenty of legitimate controversy over whether the Fed can identify asset bubbles at all, and even if they can, whether the cure is worse than the disease. My own take is that I'll bet we can identify the worst asset bubbles if we make it a priority, and can probably do it early enough to provide mild corrections. That might not sound like much, but if the housing bubble had peaked out even 20% lower than it did in real life, I'll bet that would have made a noticeable difference in the severity of the ensuing financial meltdown. We still would have had a bubble, and its bursting still would have caused huge problems, but huge problems are still easier to deal with than catastrophic problems.)

In any case, I think Ezra is properly skeptical of this advice, since bankers will in fact make the exact same mistakes they made this time around if we allow them to. It'll take 20 years, but they'll do it. Here in Southern California, just to provide an example close to home, the fact that we had a disastrous housing bubble in the late 80s didn't put any brakes on the housing bubble in the early 2000s. In fact, the housing bubble was worse here than just about any other place in the country. It took us a grand total of 15 years to go from the peak of one housing bubble to the next.

Still, broad regulation is probably better. Leverage is obviously a common factor in lots of financial meltdowns and pretty clearly needs to be addressed seriously this time around — and that includes hedge funds, which have collectively grown big enough that they really can't be left to their own devices any longer. The CDS market allows risk to be laid off and spread around, which is good, but we probably ought to give a little more thought to whether it's really such a good thing when it happens on a gigantic scale. Perhaps forcing loan originators and bond underwriters, who (supposedly) understand their customers better than anyone, to retain more of their own risk acts as a natural brake on irrational exuberance. Transparency in financial transactions is another obvious target for regulators: more is almost always better. Finally, the obvious conflict of interest in rating agency behavior might or might not have been a major contributor to our current problems, but it was certainly part of the problem, and some modest regulations on that score couldn't hurt. David Zetland suggests that setting standard fees for rating financial instruments and then adjusting those fees over time based on their accuracy would be a good place to start.

What else? I wonder if anyone is seriously suggesting any macro solutions to what happened? If, for example, the global savings glut (or investment drought, depending on your view of the matter) really did produce such a tidal wave of idle cash that it was going to find stupid places to go no matter what regulations we had in place, then what's the answer to that? Is there one? Or should that simply be considered a specialized example of an asset bubble itself?

Too many questions, not enough answers. I'd sure like to hear more about this stuff from the econosphere, though. It would be nice for us laymen to start hearing about the issues and taking part in the debate before the conventional wisdom gets set too far in stone and there's nothing much we can do about it.

Deflation

| Wed Nov. 19, 2008 9:17 AM PST

DEFLATION....Economists have been warning about the possibility of deflation for the past several months, and it looks like we might finally be getting it:

The Consumer Price Index, a key measure of how much Americans spend on groceries, clothing, entertainment and other goods and services, fell by 1 percent in October....Energy prices led the decline, falling 8.6 percent in October as the price of gasoline continued its steady slide from highs of more than $4 a gallon.

....In Wednesday's report, even excluding volatile food and energy prices, prices dropped 0.1 percent in October. It was the first such decline in more than two decades and raises the specter of deflation as the economy contracts and demand for goods and services across the board plunges.

"This month it's more than slowing, it's outright contraction," [James] O'Sullivan said. "And yes, if you extrapolate that, it's deflation."

It's only 0.1% and it's only for one month — so far. But that's the biggest drop since 1982, and the drop in the primary CPI number is the biggest since 1947, yet another indication that our current recession is on track to be the worst we've suffered since World War II. More stimulus, please.