Kevin Drum

Obama and FDR

| Mon Nov. 10, 2008 9:26 AM PST

OBAMA AND FDR....Paul Krugman writes today about the New Deal and the American economy:

Now, there's a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it's important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.

That said, F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the '30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful "not because it does not work, but because it was not tried."

....F.D.R. wasn't just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy....What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs.

I'm curious about something. I've read a number of conservatives recently taking liberals to task for thinking that the New Deal fixed the Great Depression. Some of them are the folks Krugman talks about, who like to pretend that the New Deal made things worse, but others are more moderate, insisting only that liberals stubbornly overestimate the macroeconomic impact of FDR's policies.

But here's the thing. I'm a liberal and I grew up (academically speaking) in the 70s and 80s. I wasn't an economics major or a history major, so everything I learned about FDR and the Great Depression came from a bog standard layman's viewpoint. And the conventional wisdom I learned (apparently based on Cary Brown's 1956 work, though I didn't know that at the time) was that although the New Deal was a fine thing that helped a lot of people etc. etc., it didn't get us out of the Great Depression because, in the end, FDR wasn't a Keynesian and the New Deal just didn't provide enough economic stimulus. What got us out of the Great Depression was World War II.

In other words, exactly what Krugman says. But if that's how I learned this stuff 30 years ago, it's not exactly a big secret, is it? Surely most liberals do, in fact, know this?

I'm also curious about why conservatives are so enamored with this argument in the first place. After all, the conclusion one draws from it is that the New Deal wasn't big enough. Hoover shouldn't have raised taxes, Roosevelt should have spent even more, and deficits should have been even bigger. I can see how they'd like the tax part, but do they really want to convince everyone that the New Deal was too timid? Doesn't that make the argument for an enormous stimulus to address our current mini-depression all the more forceful?

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Section 382

| Sun Nov. 9, 2008 11:24 PM PST

SECTION 382....Today, Amit Paley of the Washington Post tells us the riveting story of Section 382 of the tax code, which the Treasury Department suddenly gutted (via a five-sentence notice) a few weeks ago while the rest of us were wrapped up in the drama of the bailout bill:

The change to Section 382 of the tax code — a provision that limited a kind of tax shelter arising in corporate mergers — came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.

The reason it looks like a corporate giveaway, apparently, is that it is a corporate giveaway — and it's going to cost the taxpayers something north of $100 billion. Plus, the notice was probably illegal. But no one wants to complain about it because it might put some big bank mergers in jeopardy:

"It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops," said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. "I've been in tax law for 20 years, and I've never seen anything like this."

More than a dozen tax lawyers interviewed for this story — including several representing banks that stand to reap billions from the change — said the Treasury had no authority to issue the notice.

....Several [congressional] aides said they were still torn between their belief that the change is illegal and fear of further destabilizing the economy.

"None of us wants to be blamed for ruining these mergers and creating a new Great Depression," one said.

Some legal experts said these under-the-radar objections mirror the objections to the congressional resolution authorizing the war in Iraq.

"It's just like after September 11. Back then no one wanted to be seen as not patriotic, and now no one wants to be seen as not doing all they can to save the financial system," said Lee A. Sheppard, a tax attorney who is a contributing editor at the trade publication Tax Analysts. "We're left now with congressional Democrats that have spines like overcooked spaghetti. So who is going to stop the Treasury secretary from doing whatever he wants?"

I guess some things never change. On either side.

Ed Secretary Lotto

| Sun Nov. 9, 2008 10:52 PM PST

ED SECRETARY LOTTO....When most of us think about the Department of Education, we think of No Child Left Behind and its effect on K-12 schools. But Steven Teles says that much of DoE's responsibility is actually in higher education, and that means Barack Obama ought to pick a Secretary of Education who knows higher education issues intimately. He's got just the guy:

If the US is to maintain its status as a great power in this century, there is simply no question that we need to get more of our students into math, science and engineering. Despite programs throughout the federal government, fewer students today receive undergraduate degrees in math, science and engineering than they did forty years ago. The Secretary of Education needs to be familiar with the problem and have a high degree of sophistication about strategies for remedying it.

....There may be a number of people who fit these criteria, but at least one person I can think of is Freeman Hrabowski, the president of the University of Maryland-Baltimore County. Hrabowski has been president of the university for fifteen years, in which he dramatically increased the quality and reputation of the school — and turned down offers to be the president of much more prestigious institutions. He's been especially successful in producing African-American students who go on to receive advanced degrees in the sciences, and he has published two books on the subject (separating out the issues by gender). He is a really effective communicator, and he has a great story to tell — he's a black man from Alabama who marched for civil rights as a small child, and got a PhD at the age of 24. His life embodies the slogan of educational reformers, which is that education is the civil rights issue of our time.

Sounds like a name the transition team ought to be thinking about. He wouldn't even have to move very far.

Infrastructure and Carbon

| Sun Nov. 9, 2008 10:26 PM PST

INFRASTRUCTURE AND CARBON....Robert Reich says the best way to stimulate the economy is through massive spending on infrastructure:

So the crucial questions become (1) how much will the government have to spend to get the economy back on track? and (2) what sort of spending will have the biggest impact on jobs and incomes?

The answer to the first question is "a lot."....The answer to the second question is mostly "infrastructure" — repairing roads and bridges, levees and ports; investing in light rail, electrical grids, new sources of energy, more energy conservation. Even conservative economists like Harvard's Martin Feldstein are calling for government to stimulate the economy through infrastructure spending. Infrastructure projects like these pack a double-whammy: they create lots of jobs, and they make the economy work better in the future.

This is actually something that conservatives should be relatively happy with. Entitlement programs never go away once they're enacted, but infrastructure projects do. Spending a trillion dollars on bridges and electrical grids may be a lot of money, but it's a well-defined lot of money that isn't likely to continue indefinitely. What's more, conservatives aren't actually opposed to bridges and electrical grids on principle, so from their perspective the money is also being pretty well spent. (Or at least, not too badly spent.) All in all, it should get a fair amount of support.

Here's another way to make it even better. One of the problems with running a big deficit is that we want it to be temporary. Infrastructure helps with the spending side of that, since it's not likely to go on forever. But how about on the revenue side?

A pretty good answer might be found in Barack Obama's energy plan, which includes a cap-and-trade proposal to reduce carbon emissions. One of the details of his plan is that it includes full auction of carbon permits, with the revenue from the auction going to the federal government. But that money won't start rolling in immediately. If a cap-and-trade plan were passed in 2009, it would probably take effect in 2012 or so, and the revenue stream would start small the next year and then grow every year after that. That's perfect timing. We don't want to raise taxes right now, but a program that guaranteed a growing revenue stream starting a few years from now would help convince investors that the current budget deficit won't last forever.

That's not the main reason to pass a cap-and-trade bill, of course. The main reason is to start reducing carbon emissions. But an infrastructure program that makes the country more productive in the future but automatically winds down, combined with a revenue program that automatically winds up in the out years, is a pretty fiscally conservative plan. That doesn't mean conservatives will support it, of course, but they should.

The Maldives Swap

| Sun Nov. 9, 2008 9:59 PM PST

THE MALDIVES SWAP....The Maldives — average elevation: 150 cm above sea level — wants to buy some land in another country as an insurance policy against global warming:

[Newly elected president Mohamed Nasheed] said Sri Lanka and India were targets because they had similar cultures, cuisines and climates. Australia was also being considered because of the amount of unoccupied land available.

"We do not want to leave the Maldives, but we also do not want to be climate refugees living in tents for decades," he said.

Instead of setting up a sovereign wealth fund to purchase the land, perhaps Nasheed should just buy a credit default swap that pays off if the Maldives are inundated. Since Republicans don't believe that global warming exists, they should be eager buyers for the other end of the swap.

The Gender Gap

| Sun Nov. 9, 2008 3:38 PM PST

THE GENDER GAP....Ruth Rosen writes today that women "sealed the deal" for Obama:

For the last two years, I've been writing and telling anyone who would listen that American women could elect the next president, if only they voted.

Well, this time they did, and there is no doubt that women were a decisive factor in the election of Barack Obama.

....Just take a serious look at the numbers. As the data in the Week in Review in the New York Times reveals, women constituted 53% of the electorate, while only 47% of men voted. Among those who voted for Obama, 56% were women and 43% were men. Among unmarried women, a whopping 70% voted for Obama.

Is this true? Remember, Obama's overall national swing was 9 percentage points compared to John Kerry in 2004. So women only made an outsize difference if they swung by substantially more than 9 points.

But they didn't. The swing among women was 10 points. That's actually smaller than the swing among men, who switched to Obama by 12 points. There's some slop in these numbers thanks to sampling error and so forth, but it's unlikely that women played an unusually large role in this election. The gender gap this year was pretty much the same as it was four years ago.

On the other hand, it is true that unmarried women swung hard for Obama. Kerry carried this group by 25 points in 2004, while Obama carried them by 41 points this year. That's a swing of 16 points, nearly double the national trend. I don't know exactly what it was about his character or his policies that did it, but there's certainly a story of some kind there.

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The Problem with Sarah

| Sun Nov. 9, 2008 12:17 PM PST

THE PROBLEM WITH SARAH....James Joyner explains why he soured on Sarah Palin even if she probably does know that Africa is a continent:

Bill's right that it's inconceivable that she got elected and re-elected to so many offices over the years, culminating with a state governorship, by being an airhead....I saw little evidence, though, that she's very interested in foreign policy or most issues of American domestic policy. That doesn't make her a bad person — she's in the same boat as most Americans on that score — but it made her a bad choice for the vice presidency.

This is what Palinophiles — and, to be fair, some Palinophobes too — don't seem to get. Palin's problem isn't that she's a social conservative, or that she's an airhead, or that she's inexperienced. Her big problem is that prior to August 29, 2008, she quite plainly didn't have the slightest interest in national or international policy issues of any sort. And no matter how much prepping she gets over the next four years, no matter how much better she gets at dealing with the press, no matter how much she does or doesn't smooth off the rough edges of her social views, conservatives have to ask themselves this question: do we really want our standard bearer to be someone who didn't become seriously interested in either domestic policy or foreign affairs until the age of 44? What does that say about how seriously we ourselves take this stuff?

In the end, I don't imagine many of them will ask that question. But they should.

UPDATE: Well, Mark Lilla is asking, at least. In the Wall Street Journal this weekend he wonders how conservative intellectuals could "promote a candidate like Sarah Palin, whose ignorance, provinciality and populist demagoguery represent everything older conservative thinkers once stood against?" It all began in the 80s, he says, when the same conservative intellectuals who had powered the movement for three decades decided to throw in their lot with know-nothingism:

Over the next 25 years there grew up a new generation of conservative writers who cultivated none of their elders' intellectual virtues — indeed, who saw themselves as counter-intellectuals. Most are well-educated and many have attended Ivy League universities; in fact, one of the masterminds of the Palin nomination was once a Harvard professor. But their function within the conservative movement is no longer to educate and ennoble a populist political tendency, it is to defend that tendency against the supposedly monolithic and uniformly hostile educated classes. They mock the advice of Nobel Prize-winning economists and praise the financial acumen of plumbers and builders. They ridicule ambassadors and diplomats while promoting jingoistic journalists who have never lived abroad and speak no foreign languages. And with the rise of shock radio and television, they have found a large, popular audience that eagerly absorbs their contempt for intellectual elites. They hoped to shape that audience, but the truth is that their audience has now shaped them.

For a movement that decided long ago that slogans and shibboleths mattered while serious policy discourse was merely a distraction, a candidate who showed no interest in domestic policy before the age of 44 is the perfect public face. But is that really the face they want to adopt permanently?

Full Speed Ahead

| Sun Nov. 9, 2008 11:48 AM PST

FULL SPEED AHEAD....As regular readers know, I consider Fareed Zakaria an extremely reliable indicator of trends in mainstream Beltway thinking. So if he says Barack Obama should damn the fiscal torpedoes and move full speed ahead with his legislative agenda, that probably means most of Washington is starting to come around to that idea too.

Well, guess what? That's what Zakaria says. It's yet another piece of evidence that the battleship of state is turning before our eyes.

Big Spender

| Sun Nov. 9, 2008 11:21 AM PST

BIG SPENDER....National Review editor Rich Lowry addresses the party faithful today about the reason Republicans got trounced so badly this year:

One temptation will be to say that if only Republicans had stayed truer to the faith, especially on fiscal discipline, none of this would have happened. Earmarks unquestionably contributed to the culture of corruption that has so bedeviled Republicans in recent years. But fighting them became an overriding obsession of some conservatives and of McCain, as if opposing earmarks alone — 1 percent of federal spending — would constitute a winning economic agenda.

As for Bush, he didn't run as a strict fiscal conservative when he was elected in 2000, and he wasn't any more profligate in his second term, when he was roundly rejected by the public, than in his first term, when he was on his way to reelection.

Lowry is right, but it's actually even worse than that. Bush's big spending ways have been overdramatized by the right, but it's true that domestic spending went up during his first three years in office. So did earmarks. And his big Medicare bill was passed in 2003. Did conservatives revolt over this? It sure doesn't look like it. The next year Bush rode a triumphant conservative coalition to reelection and Republicans picked up four seats in the Senate.

But then, starting in 2004, Bush got fairly stingy with his domestic budgets. Result: Republicans took a shellacking in 2006, and two years later took yet another shellacking. This is not exactly great evidence for a nationwide rebellion over profligate spending. In fact, you might even conclude that Americans like profligate spending. Conservatives don't seem to mind it that much either: their rebellion against Bush mostly started after 2005, three years after the 2003 budget was put in place and lower spending had become the order of the day in the Bush White House.

As for earmarks, can we get real here? Lowry is right that they represent a tiny portion of federal spending, but even at that he doesn't tell the whole story. Earmarks merely redirect spending, they don't add spending to the budget. If we got rid of earmarks completely, we'd still spend the same amount of money. It would just get allocated a little differently.

Bottom line (so to speak): Reining in spending and cutting back earmarks might be good things to do from a conservative perspective. But was it spending and earmarks that turned the American public against the Republican Party? Not a chance. My guess is that the answer is pretty much the obvious one: a combination of policy incompetence, an unpopular war, economic dogma that didn't even pretend to take middle class wage stagnation seriously, and an increasingly hard-edged social conservatism that turned off Latinos, seculars, and the young. But big spending? Not so much.

Religion Watch

| Sun Nov. 9, 2008 10:21 AM PST

RELIGION WATCH....In the LA Times today, Cathleen Decker repeats the claim that Barack Obama kicked ass among religious voters this year. Let's deconstruct her argument. The first problem is that she has her facts wrong:

Exit polls showed the dramatic effect: Obama won 43% of voters who said they attend church weekly, eight percentage points higher than 2004 Democratic nominee John F. Kerry.

That's not true. Kerry won 39% of weekly churchgoers in 2004. Obama did four percentage points better than Kerry, not eight.

The second problem is that it's irrelevant. Check this out:

"Obama did better than Kerry among pretty much every religious group," said Greg Smith, a research fellow at the Pew Forum on Religion & Public Life who analyzed the poll results.

Even among voters who describe themselves as born-again Christians or evangelicals, a group that tends to vote Republican, Obama improved on Kerry's standing....Yet there is no doubt that secular voters were more supportive of Obama than religious ones, according to the exit poll.

So Obama did better among every religious group and he did better among seculars. Hmmm. It's almost as if Obama did better among everyone!

Which he did. He beat Kerry's overall 2004 total by 4.3 percentage points, which means that doing four points better among weekly churchgoers doesn't mean a thing. What's more, the reason he did even that much better is pretty obvious: blacks and Latinos, who are heavy churchgoers, voted strongly for Obama this year — and needless to say, that had nothing to do with Obama's outreach to the religious community. (In fact, Obama underperformed with white evangelicals.) Decker mentions this, but then plows right through to provide nearly a thousand additional words of anecdotal explanation for Obama's nonexistent surge of support among churchgoers.

Please. Can we stop this? I know we all need stories, and liberals are hungry for evidence that we're making inroads among religious voters. But we aren't. In fact, Obama made up more ground among the nonreligious than he did among the religious. For some reason, though, no one seems interested in writing a story about that.