Kevin Drum

No, Obamacare Didn't Tank the Economy Last Quarter

| Fri Jun. 27, 2014 12:50 AM EDT

For some reason, there's been a fair amount of attention paid to the impact of Q1's decline in health care growth on the latest GDP numbers, which were pretty dismal. The Wall Street Journal even figured out a way to blame it all on Obamacare. This is nonsensical, and in any case, the question of what happened is almost certainly pretty simple. Here's Dean Baker:

The NYT noted that a sharp drop in health care spending reduced the first quarter growth rate by 0.16 percentage points. It is important to recognize that this drop followed a surge in health care spending reported for the fourth quarter of 2013 that added 0.62 percentage points to growth in quarter....It is likely that the data overstated the actual increase in spending in the fourth quarter and therefore also overstated the drop in the first quarter. The average impact of health care spending on growth for the two quarters taken together is almost the same as over the prior four quarters.

Yep. I've illustrated this with a gigantic diagram showing raw health care expenditure figures below. In short, the Q1 decline is almost certainly just statistical noise. Pay no attention to the hyperventilating.

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Maybe Congress Will Now Move to Protect Email From Warrantless Searches

| Thu Jun. 26, 2014 6:42 PM EDT

Brian Fung reports that yesterday's Supreme Court ruling protecting smartphones from warrantless searches may be having a ripple effect:

Members of Congress who back stronger protections for e-mail and other electronic communications have begun citing the Court's landmark privacy endorsement, in an attempt to add momentum to their own privacy legislation.

The push to reform the Electronic Communications Privacy Act, a decades-old law that allows cops to read your e-mails if they've lain dormant for more than 180 days, has the support of the Justice Department and 220 cosponsors of a House bill known as the Email Privacy Act. The proposal would force police to get a warrant if they want to look at a suspect's e-mail. Today, that type of inspection requires little more than a subpoena.

Remarkably enough, 138 of these cosponsors are Republicans and 82 are Democrats. This means it not only has majority support within the House as a whole, but it also has the support of considerably more than half the Republican caucus. That doesn't mean it can get by House Judiciary Committee chairman Bob Goodlatte, but maybe if another hundred Democrats sign on, even Goodlatte will crumble in the face of a bill supported by three-quarters of the House.

Another Geopolitical Triumph For Vladimir Putin!

| Thu Jun. 26, 2014 4:44 PM EDT

From the Guardian:

It was the document that started a revolution and ended up bringing Europe to the brink of war. Ukraine's association agreement with the European Union, a mainly economic document setting up a free trade area that nevertheless has political and strategic ramifications, will finally be signed on Friday.

Along with Georgia and Moldova, two other post-Soviet countries keen to move out of Moscow's orbit, Kiev will sign the deal with Brussels to establish a free-trade area and introduce a raft of measures designed to synchronise economies with EU nations, as well as improve rule of law and human rights.

Yep, that Putin is a geopolitical strategic mastermind, isn't he? Every country on Russia's border is now hellbent on better economic and military ties with the West. Nice work.

No, the Aereo Case Doesn't Endanger Cloud Computing Services

| Thu Jun. 26, 2014 2:11 PM EDT

I'm puzzled by much of the commentary on the Aereo case. Much of it echoes a point in Scalia's dissent, namely that ruling against Aereo puts all sorts of cloud computing services at risk. After all, if it's a copyright infringement for Aereo to rent you an antenna and some hard disk space, then why shouldn't it be an infringement for, say, Google to rent you cloud storage that allows you to copy—and potentially share—copyrighted music?

I think David Post has the answer right:

The majority is at pains, in several places, to say that the case is just about broadcast television and the re-transmission of broadcast signals. Not about cloud storage, or streaming services, or gaming platforms, or anything else. Just broadcast TV, and what you may or may not do with over-the-air broadcast signals. Congress has made a choice about those signals; anyone who re-transmits them (like the cable companies do) has to pay royalties to the broadcasters. If that’s what it means ... the decision has nothing to say about any other content-delivery or content-storage platforms that deal with the vast array of non-broadcast-TV content.

The Aereo case turns almost entirely on the fact that Aereo was retransmitting TV signals, which are covered by a very specific statute. Despite Scalia's huffing and puffing, I simply don't see how this applies to cloud storage platforms.

Beyond that, there's another crucial distinction: Aereo was explicitly in the business of retransmitting content that was almost 100 percent copyrighted. That's fundamentally different from a third-party service—email, cloud storage, etc.—that can be used for infringing purposes but has a generally legitimate intent. The Supreme Court has ruled in cases like this before, and it's why VCRs and Gmail are still around even though people sometimes use them to copy and share copyrighted material with each other, while Napster is dead.

It's hard not to conclude that much of the opposition to the Aereo decision is based on a simple libertarian dislike of enforcing copyright law at all. But like it or not, commercial TV is almost entirely copyrighted content, and the stations that produce it have every right to control how it's distributed. The fact that current copyright law is overly expansive doesn't really affect that.

POSTSCRIPT: It's interesting that we've seen back-to-back decisions that, to my mind, were confirmed in diametrically opposite ways. In the Aereo case, Aereo thought it had discovered a clever loophole in copyright law, but the court ruled against them. The general intent of the law was more important. In the recess appointment case, Senate Republicans found a clever loophole to stay technically in session, and the court ruled that this was perfectly fine. The fact that it was a hypertechnical sham didn't move them.

Digital Privacy Is Fundamentally Different From Physical Privacy

| Thu Jun. 26, 2014 11:34 AM EDT

Tim Lee argues—or perhaps merely hopes—that yesterday's decision protecting cell phones from warrantless searches might signal a turning point for the Supreme Court's attitude toward digital information in general:

The government has typically pursued a simple legal strategy when faced with digital technologies. First, find a precedent that gave the government access to information in the physical world. Second, argue that the same principle should apply in the digital world, ignoring the fact that this will vastly expand the government's snooping power while eroding Americans' privacy.

....The government hoped the Supreme Court would take this same narrow, formalistic approach in this week's cell phone privacy case. It wanted the justices to pretend that rifling through the vast quantity of personal information on a suspect's cell phone is no different from inspecting other objects that happen to be in suspects' pockets. But the Supreme Court didn't buy it.

....The Supreme Court clearly recognizes that in the transition from information stored on paper to information stored in computer chips, differences of degree can become differences of kind. If the police get access to one letter or photograph you happen to have in your pocket, that might not be a great privacy invasion. If the police get access to every email you've received and every photograph you've taken in the last two years, that's a huge invasion of privacy.

This is a problem that's been getting more acute for years. The basic question is whether courts should recognize the fact that digital access to information removes practical barriers that are important for privacy. For example, the state of California keeps lots of records about me that are legally public: DMV records, property records, birth and marriage records, etc. In the past, practically speaking, the mere fact that they were physical records provided me with a degree of privacy. It took a lot of time and money to dig through them all, and this meant that neither the government nor a private citizen would do it except in rare and urgent cases.

In the digital world, that all changes. If a police officer has even a hint of curiosity about me, it takes only seconds to compile all this information and more. In a technical sense, they don't have access to anything they didn't before, but in a practical sense I've lost a vast amount of privacy.

In the past, the Supreme Court has rarely (never?) acknowledged this. In yesterday's cell phone case, they not only acknowledged it, they acknowledged it unanimously. Is it possible that this means they'll be applying a more skeptical view to similar cases in the future? Or even revisiting some of their past decisions in light of the continuing march of technology? We don't know yet, but it's certainly possible. Maybe the Supreme Court has finally entered the 21st century.

Supreme Court Rules That Even a Sham Recess is Still a Recess

| Thu Jun. 26, 2014 10:47 AM EDT

See? If you take President Obama to court over an issue of executive overreach, you might win:

The Supreme Court on Wednesday limited the president’s power to fill high-level vacancies with temporary appointments, ruling in favor of Senate Republicans in their partisan clash with President Barack Obama.

The court’s first-ever case involving the Constitution’s recess appointments clause ended in a unanimous decision holding that Obama’s appointments to the National Labor Relations Board in 2012 without Senate confirmation were illegal.

Republicans had argued that the Senate wasn't really in recess when Obama made those appointments. Obama argued that, in practice, the Senate was indeed in recess, and simply gaveling open a few pro forma "sessions" during the break didn't change that. In this case, the justices decided to go with the letter of the law, and Obama lost.

This result doesn't bother me much. I actually agree with Obama that these pro forma sessions are shams, but sometimes the law allows you to get away with technicalities like this. In any case, it's good that we have a definitive ruling here.

On the other hand, the related ruling on a tea party hobbyhorse—that virtually all recess appointments are illegal anyway because the only real recess is the annual end-of-year break—is more problematic. This one struck me as completely ridiculous and contrary to 200 years of precedent, but the court rejected it only by a 5-4 margin. That's four votes for an entirely invented bit of nonsense, and that's not a good sign.

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Boehner Plans Lawsuit to Rein in King Barack I

| Wed Jun. 25, 2014 4:59 PM EDT

House Speaker John Boehner, apparently responding to tea party anger over President Obama's continued "lawlessness," plans to take Obama to court:

On one matter after another during his presidency, President Obama has circumvented the Congress through executive action, creating his own laws and excusing himself from executing statutes he is sworn to enforce — at times even boasting about his willingness to do it, as if daring the America people to stop him. On matters ranging from health care and energy to foreign policy and education, President Obama has repeatedly run an end-around on the American people and their elected legislators, straining the boundaries of the solemn oath he took on Inauguration Day.

....Everywhere I go in America outside of Washington, D.C., I’m asked: when will the House stand up on behalf of the people to stop the encroachment of executive power under President Obama? We elected a president, Americans note; we didn’t elect a monarch or king.

....Under our system of government, the Judicial Branch has the power to resolve disputes between the Executive and Legislative Branches. When there is a failure on the part of the president to faithfully execute the law, the House has the authority to challenge this failure in the Judicial Branch by filing suit in Federal Court....

Good for Boehner. If he truly believes that Obama has overstepped his authority, this is exactly what he should do: stop whining, and instead step up to the plate and take his cases to court. My guess is that he might even be able to win a few of them. A couple of the Obamacare delays, in particular, seem legally pretty dodgy.

None of this will be easy for Boehner. The tea partyish nature of Boehner's language is pretty obvious, so this should go over well with the base—but only if he plays his cards wisely. He'll need to choose his cases carefully, and he's between a rock and a hard place there. Pick too many fights and he'll end up embarrassing himself with a string of losses. Pick too few and the tea party will think he's a wuss. Plus he needs money for all this stuff, and there are almost certain to be some fairly serious standing issues related to many of them.

Still, I hope he goes through with this. Let's find out what he's really serious about, and then see what the Supreme Court thinks about it. That's how this stuff should be resolved.

POSTSCRIPT: This might not mean anything, but I'm a little surprised that Boehner's bill of particulars didn't include immigration. This is one of the tea party's biggest hot buttons when it comes to Obama allegedly refusing to enforce the law. Was it just an oversight? Or a sign that it's not on his list of presidential transgressions? Wait and see.

Supreme Court: Aereo Looks Just Like Cable TV, So It Has to Follow the Same Laws as Cable TV

| Wed Jun. 25, 2014 2:17 PM EDT

I've been reading the Supreme Court's opinion in the Aereo case, and it's kind of fascinating. As you may know, Aereo is a company that installs thousands of tiny antennnas in a warehouse and then lets users "rent" one of the antennas, as well as some storage space. Users connect to their antenna via the internet, and can either watch broadcast TV in real time or set up times for shows to be recorded.

Broadcast networks claim that Aereo is retransmitting their content to the public, which is a violation of copyright law. Aereo, naturally, disagrees. The court's decision appears to hinge on a single key question: can Aereo be said to be an active infringer when it's merely a passive conduit for users, who are the ones who choose what to watch and record?

The majority said yes, because Aereo is essentially just like a cable TV operator, and the Copyright Act of 1976 specifically says that cable TV operators are retransmitting content. Antonin Scalia, writing in dissent, calls this specious:

The Court’s reasoning fails on its own terms because there are material differences between the cable systems at issue in [Teleprompter and other decisions] on the one hand and Aereo on the other. The former (which were then known as community-antenna television systems) captured the full range of broadcast signals and forwarded them to all subscribers at all times, whereas Aereo transmits only specific programs selected by the user, at specific times selected by the user. The Court acknowledges this distinction but blithely concludes that it “does not make a critical difference.”

....Even if that were true, the Court fails to account for other salient differences between the two technologies....At the time of our Teleprompter decision, cable companies “perform[ed] the same functions as ‘broadcasters’ by deliberately selecting and importing distant signals, originating programs, [and] selling commercials,”, thus making them curators of content—more akin to video-on-demand services than copy shops. So far as the record reveals, Aereo does none of those things.

The key distinction here is that Aereo doesn't actively "curate" its content or retransmit everything at all times. It just makes everything available and users then choose what to watch. "Some of those broadcasts are copyrighted; others are in the public domain. The key point is that subscribers call all the shots."

I can't say that I find this very persuasive. For one thing, cable operators don't forward everything to all subscribers at all times. You have to turn on your cable box and then set your tuner to pick up a particular station. More substantively, I suppose it's true that there are bits and pieces of broadcast television that are in the public domain, but come on. Virtually everything Aereo makes available is copyrighted material and they know it. Scalia says Aereo is a lot like a copy shop, which isn't held liable for the occasional customer who infringes copyright because, in practice, most of their customers aren't infringing. But if a shop ran a service where they copied entire books from their library, they'd be held liable—even if a few of their books were in the public domain and even if their users had to physically press a button to start up the copying process.

In any case, as near as I can tell this case is based almost entirely on extremely fine points like this. Is Aereo essentially the same as a cable TV operator, and thus something that Congress intended to regulate in the Copyright Act of 1976? Can Aereo be held liable for infringement even though it's users who make the decisions about what to watch and what to record? Are Aereo's transmissions "public" even though each individual antenna is rented out to only a single individual person?

I could have seen this case going either way, but in the end the majority decided the case based on their conclusions about (a) the intent of Congress and (b) whether Aereo is so similar to a cable TV operator that it falls under the same laws. In the end, they decided that if it looks like a duck and quacks like a duck, it's a duck. And Aereo lost.

Race and Republicans in Mississippi's Senate Primary

| Wed Jun. 25, 2014 12:37 PM EDT

In yesterday's primary election in Mississippi, incumbent Thad Cochran appealed to black voters in his race against Chris McDaniel. This is from a New York Times companion piece to their main reporting on the election:

The former mayor [of Belzoni, an early focal point of the civil rights movement] was not surprised by African-Americans’ enthusiasm for Mr. Cochran. The returns showed that Humphreys County, a predominantly African-American area, went for the senator, 811 to 214. “Cochran has been very responsive to the community, to the constituency and the state regardless of race,” he said.

....Race relations have improved over the last 45 years, and African-Americans made a coordinated effort to keep Mr. Cochran in office out of concern that his challenger, Chris McDaniel, a Tea Party favorite, would be less inclusive.

McDaniel is crying foul because he thinks Cochran won with the help of liberal Democratic voters—as he's allowed to do in Mississippi's open primary system. Ed Kilgore is unimpressed:

The kvetching from the Right last night sounded an awful lot like southern seggies during the civil rights era complaning about "The Bloc Vote"....For all the talk last night of "liberal Democrats" being allowed to determine a Republican primary, there's actually no way to know the partisan or ideological identity of voters in a state with no party registration (as David Nir pointedly asked this morning, why hasn't Chris McDaniel sponsored a bill to change that in his years in the state legislature?). So what these birds are really complaining about is black participation in a "white primary." This is certainly not an argument consistent with broadening the appeal of the GOP or the conservative movement.

I don't doubt for a second that race played a role here, but I think this is a mite unfair. In 2012, Mississippi blacks voted for Barack Obama over Mitt Romney by 96-4 percent. In 2008, they voted for Democrat Ronnie Musgrove over Republican Roger Wicker 92-8 percent and for Democrat Erik Fleming over Thad Cochran 94-6 percent. (Mississippi had two senate races that year.)

Cochran did nothing wrong in yesterday's election, and if blacks showed up to support him because they disliked McDaniel's racially-charged past, that's democracy for you. Still, I think it's pretty clear that most of these voters really were Democrats. Race may be an underlying motivation for the complaints from McDaniel's supporters, but conservative dislike of Democrats voting in a Republican primary is also a motivation. (And, in my view, a legitimate one. I'm not a fan of open primaries.)

That said, if tea party types want to avoid accusations of racism, they should steer clear of things like loudly announcing an Election Day program to send teams of "poll watchers" to majority black precincts. Especially in a state with a history like Mississippi's, it's pretty hard to interpret that as anything other than a deliberate racial provocation.

The US Economy Imploded Last Quarter

| Wed Jun. 25, 2014 11:55 AM EDT

Yikes. In the first quarter GDP didn't grow by an anemic 0.1 percent. Nor did it shrink by 1 percent. According to the Commerce Department's final tally, it shrunk by 2.9 percent.

Everyone is brushing this off because other economic signals suggest it was a one-off event. And maybe so. But even if it is, it probably knocks about 1 percent off the full-year figure compared to a more normal growth rate of, say, at least 2 percent. The only way it turns out to be a nothingburger is if this number really is an anomaly and the economy makes up for it with supercharged growth for the rest of the year.

I have my doubts about that. I just don't buy the tired excuse that the Q1 number was weather related. Something happened.