Kevin Drum

Kansas Disproves Supply-Side Magic Yet Again

| Mon Jun. 30, 2014 12:41 PM EDT

Paul Krugman writes today about what's the matter with Kansas:

Two years ago Kansas embarked on a remarkable fiscal experiment: It sharply slashed income taxes without any clear idea of what would replace the lost revenue. Sam Brownback, the governor, proposed the legislation — in percentage terms, the largest tax cut in one year any state has ever enacted — in close consultation with the economist Arthur Laffer. And Mr. Brownback predicted that the cuts would jump-start an economic boom — “Look out, Texas,” he proclaimed.

But Kansas isn’t booming — in fact, its economy is lagging both neighboring states and America as a whole. Meanwhile, the state’s budget has plunged deep into deficit, provoking a Moody’s downgrade of its debt.

There’s an important lesson here — but it’s not what you think.

As Krugman goes on to say, the lesson is not that supply-side tax cuts don't supercharge the economy. We already knew that. The lesson is that this was never really about supply-side theories in the first place: "Faith in tax-cut magic isn’t about evidence; it’s about finding reasons to give powerful interests what they want."

This is true. Corporations and rich people want low taxes, but even in post-Reagan America they're a bit reluctant to just come out and say that the reason they want lower taxes is because they want to keep more of their money. As near as I can tell, they aren't reticent about this because it embarrasses them, they're reticent because they understand that it's wildly unpersuasive to anyone who's not rich. So they need some plausibly altruistic excuse for supporting tax cuts on themselves. Enter supply-side economics.

Still, we're all capable of astonishing feats of convincing ourselves of things that we want to believe. So here's what I wonder: do today's rich really believe this stuff anymore? The fact is that it really was a plausible theory in the early 80s, when it was being applied to income tax rates of 70 percent. Today, when it's being applied to federal rates of under 40 percent and state rates of well under 10 percent, there's not even the slightest hint of plausibility. It's as close to a completely bankrupt theory as it's possible to have in a field like economics.

And yet, most of them must still believe it, right? The alternative is that we have a large class of people who are consciously lying about all this and don't feel a twinge of remorse. It's nice to think about your ideological opponents that way, but aside from the occasional sociopath here and there, that's really not the way most people operate. That want lower taxes, and they also want to believe that they themselves are good people. So they continue to believe in a theory that's been about as conclusively disproven as phlogiston.

But how? It's easy: you just cherry pick your evidence. Look at Texas! Low taxes and great growth. Look at California! High taxes and lousy growth. (And pay no attention when those trends reverse course.) As for Kansas, eventually they'll slash spending on the poor enough to balance their budget, and eventually their economy will recover. Economies always do. And then, it will be: See? We told you that tax cuts would supercharge the economy!

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The Good Guys Are 0-2 in Supreme Court Today

| Mon Jun. 30, 2014 10:57 AM EDT

The Supreme Court could have obliterated public sector unions today by ruling that workers can't be required to pay representation fees if they disagree with the union's political stands. It's been longstanding practice that such workers don't have to pay full union dues—which include money used for political activity—but do have to pay fees that are used to support collective bargaining activities that benefit everyone.

But the court stepped back from the brink today, ruling in favor of workers who objected to the fees, but then saying their ruling was limited solely to home health care workers:

The ruling was limited to this particular segment of workers — not private sector unions — and it stopped short of overturning decades of practice that has generally allowed public sector unions to pass through their representation costs to nonmembers.

Writing for the court, Justice Samuel Alito said home care workers are different from other types of government employees because they work primarily for their disabled or elderly customers and do not have most of the rights and benefits of state employees.

....The workers had urged the justices to overturn a 1977 Supreme Court decision which held that public employees who choose not to join a union can still be required to pay representation fees, as long as those fees don’t go toward political purposes. They say the union is not merely seeking higher wages, but making a political push for expansion of Medicaid payments.

Alito said the court was not overturning that case, Abood v. Detroit Board of Education. That case, he said, is confined “to full-fledged state employees.”

So public sector unions live to fight another day. At this point, the question is whether a majority on the court is truly unwilling to overturn Abood, or whether they want to do it slowly and today's case is just an opening volley.

In other news, the good guys lost in the Hobby Lobby case:

The U.S. Supreme Court dealt a setback to President Obama's healthcare law Monday and ruled that Christian business owners with religious objections to certain forms of birth control may refuse to provide their employees with insurance coverage for contraceptives.

In a major 5-4 ruling on religious freedom, the justices decided the religious rights of these company owners trump the rights of female employees to receive the full contraceptive coverage promised by the law.

Alito wrote the Hobby Lobby opinion too, and he was careful to say that this case doesn't apply to much of anything else that a religious employer might object to. Only things related to abortion, apparently. Because....um, that's plainly more important than any other religious objection on the planet. Or something.

In the end, I suppose that's good news. A narrow ruling is better than a broad one. Today's holding applies only to closely-held corporations (those in which a small number of people have majority control of the company), and Kennedy's concurrence apparently says the government can pay directly for contraception coverage if it want to. It could have been worse.

Seriously, What Accounts for the Right-Wing Obsession With Military Tribunals?

| Sun Jun. 29, 2014 1:16 PM EDT

From the Guardian today:

Mike Rogers, the chair of the House of Representatives intelligence committee, told CNN Khattala had been “compliant but not cooperative” through 10 days of interrogation on a navy ship before being transferred to Washington for a civilian trial. Rogers said Khattala should be classified as an enemy combatant and held at Guantánamo Bay.

....“We have a military tribunal process and I do believe in it. We've used it in the past, in World War II and subsequent to that. We have a process where they get a trial and their guilt or innocence is established.

This has become such a knee-jerk reaction from right-wing politicos that I almost don't even notice it anymore. But seriously, what is it that accounts for the conservative obsession with military tribunals? Abu Khattala would get a taxpayer-paid defense attorney either way. He'll be held securely either way. He's got about the same chance of being convicted either way. And if he is convicted, he'll be shipped off to an appropriately grim prison cell either way.

So what's the deal? Is this really just code for we should ship him to Gitmo and interrogate him in, um, an enhanced way? Is it code for Obama is doing this so we're against it? Or is there something more to it? There's a mountain of evidence suggesting that civilian courts are more effective at prosecuting terrorism than military tribunals, so that's not it. Unless torture and abusive treatment are their goals, it's a mystery why folks like Rogers keep banging away endlessly on their infatuation with military tribunals.

Did the White House Create a Bunch of Fake Lois Lerner Emails?

| Sat Jun. 28, 2014 11:53 AM EDT

Howard Kurtz thinks Jon Stewart is going too damn easy on our current president:

When it comes to Obama, the humor is gentle. I do recall Stewart pummeling the president over the botched ObamaCare rollout. But on the IRS scandal this week, he mocked the tax agency for almost criminal stupidity in losing all those emails—but never questioned whether the Obama administration is engaged in a coverup.

Yes, Kurtz actually wrote that. He thinks Jon Stewart should have entertained the possibility that someone in the White House invented a time machine and wrote a bunch of emails in 2011 asking the IT department at the IRS to fix Lois Lerner's crashed hard drive. Maybe it was the same time machine that inserted Obama's birth record in the Honolulu Advertiser in 1961. Or, perhaps, Mission Impossible-like, a crack team of forgers ginned up a bunch of fake emails that just looked like they were from 2011.

Look, I'm not saying that's what's happened. I'm just asking the question. It's what any responsible journalist would do.

Friday Cat Blogging - 27 June 2014

| Fri Jun. 27, 2014 3:15 PM EDT

Here is Domino peeking out from under one of Marian's sweatshirts. I guess cats just like caves. It's not like it's been chilly around here these days.

And now, I'm off to the dentist to see if we can finally install a crown. The first two didn't fit properly, so we're hoping third time's the charm. It will be nice to be able to chew on both sides of my mouth again.

Are Tea Partiers Really Less Willing to Compromise Than Extreme Lefties?

| Fri Jun. 27, 2014 1:58 PM EDT

Ezra Klein writes today:

Hardcore conservatives agree with liberals on a lot. They just don’t want to compromise.

This is based on the Pew typology survey, which finds that "steadfast conservatives" oppose compromise by a 2:1 margin, while every other group favors compromise by at least a little bit. At the far left end of the spectrum, "solid liberals" favor compromise by 84-11 percent.

This is the same result that we've seen in lots of other surveys, and I sure wish someone would dig deeper into this. I can think of several questions:

  • Are folks on the far left really in favor of compromise? Or by "compromise" do they actually mean "the other side should back down in exchange for a few bones"?
  • Do extreme conservatives have good reason to be suspicious of compromise? A feeling of being sold out is a common trope on the right, but is it justified?
  • Are liberals in favor of compromise because they believe—correctly—that change is always incremental, which makes it sensible to accept an increment now in the sound belief that it will encourage a slippery slope toward further increments? (And likewise, are conservatives perfectly rational to oppose compromise for the same reason?)
  • In practice, when various real-world compromise positions are polled, are extreme liberals truly more willing to accept them than extreme conservatives?

You can probably guess that I'm a little skeptical of the entire notion that liberals are all sweetly willing to compromise. They certainly talk in a more conciliatory manner than tea partiers, and maybe in the end they really are more willing to swallow half a loaf. But I have my doubts. More research, please.

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Most Americans Think Racial Discrimination Doesn't Matter Much Anymore

| Fri Jun. 27, 2014 12:40 PM EDT

On Thursday Pew released its latest "typology report," which breaks down Americans into seven different groups. I'm a little skeptical of these kinds of clustering exercises, but I suppose they have their place. And one result in particular has gotten a lot of play: the finding that more than 80 percent of conservatives believe that blacks who can't get ahead are responsible for their own condition.

But I think that misstates the real finding of Pew's survey: everyone thinks blacks who can't get ahead are mostly responsible for their own condition. With the single exception of solid liberals, majorities in every other group believe this by a 2:1 margin or more. That's the takeaway here.

The other takeaway is that the news was a little different on the other questions Pew asked about race. The country is split about evenly on whether further racial progress is necessary, and large majorities in nearly every group continue to support affirmative action on college campuses. A sizeable majority of Americans may not believe that discrimination is the main reason blacks can't get ahead, but apparently they still believe it's enough of a problem to justify continuing efforts to help out.

Overall, though, this is not good news. It's obvious that most Americans don't really think discrimination is a continuing problem, and even their support for affirmative action is only on college campuses, where it doesn't really affect them. If that question were about affirmative action in their own workplaces, I suspect support would plummet.

I don't have any keen insights to offer about this. But like it or not, it's the base on which we all have to work. Further racial progress is going to be very slow and very hard unless and until these attitudes soften up.

President Obama Has Finally Learned the Limits of American Military Power

| Fri Jun. 27, 2014 11:59 AM EDT

I've been meaning to make note of something about Iraq for a while, and a story today in the LA Times provides the perfect hook:

A group of U.S. diplomats arrived in Libya three years ago to a memorable reception: a throng of cheering men and women who pressed in on the startled group "just to touch us and thank us," recalled Susan Rice, President Obama's national security advisor....But in three years Libya has turned into the kind of place U.S. officials most fear: a lawless land that attracts terrorists, pumps out illegal arms and drugs and destabilizes its neighbors.

....Now, as Obama considers a limited military intervention in Iraq, the Libya experience is seen by many as a cautionary tale of the unintended damage big powers can inflict when they aim for a limited involvement in an unpredictable conflict....Though they succeeded in their military effort, the United States and its North Atlantic Treaty Organization allies fell short in the broader goal of putting Libya on a path toward democracy and stability. Exhausted after a decade of war and mindful of the failures in Iraq, U.S. officials didn't want to embark on another nation-building effort in an oil-rich country that seemed to pose no threat to Western security.

But by limiting efforts to help the new Libyan government gain control over the country, critics say, the U.S. and its allies have inadvertently helped turn Libya into a higher security threat than it was before the military intervention.

The view of the critics in this piece is pretty predictable: no matter what happens in the world, their answer is "more." And whenever military intervention fails, it's always because we didn't do enough.

But I don't think Obama believes this anymore. He mounted a surge in Afghanistan, and it's pretty plain that it's accomplished very little in the way of prompting reconciliation with the Taliban or setting the stage for genuine peace. Even lasting stability seems unlikely at this point. That experience made him reluctant to intervene in Libya, but he eventually got talked into it and within a couple of years that turned to shit too. Next up was Syria, and this time his reluctance was much more acute. There would be some minor steps to arm the anti-Assad rebels, but that was it. There was a brief moment when he considered upping our involvement over Syria's use of chemical weapons, but then he backed off via the expedient of asking for congressional approval. Congress, as Obama probably suspected from the start, was unwilling to do more than whine. When it came time to actually voting for the kind of action they kept demanding, they refused.

By now, I suspect that Obama's reluctance to support military intervention overseas is bone deep. The saber rattlers and jingoists will never change, but he never really cared about them. More recently, though, I think he's had the same epiphany that JFK had at one time: the mainstream national security establishment—in the Pentagon, in Congress, in the CIA, and in the think tanks—simply can't be trusted. Their words are more measured, but in the end they aren't much different from the perma-hawks. They always want more, and deep in their hearts the only thing they really respect is military force. In the end, they'll always push for it, and they'll always insist that this time it will work.

But I don't think Obama believes that anymore, and I think he's far more willing to stand up to establishment pressure these days. This is why I'm not too worried about the 300 advisors he's sent to Iraq. A few years ago, this might very well have been the start of a Vietnam-like slippery slope into a serious recommitment of forces. Today, I doubt it. Obama will provide some limited support, but he simply won't be badgered into doing more. Deep in his heart, he now understands that Iraq's problem is fundamentally political. Until there's some chance of forging a genuine political consensus, American troops just can't accomplish much.

Immigration Reform: It's Finally Officially Dead

| Fri Jun. 27, 2014 11:10 AM EDT

I've had a friendly argument with Greg Sargent for some months about whether immigration reform was dead, or was merely on life support and still stood a chance of resuscitation. But in a way, it may turn out we disagreed a little less than we thought. He points me today to this Politico story:

Last summer, House Speaker John Boehner (R-Ohio) privately told the National Hispanic Christian Leadership Conference that if reformers won the August recess, then Republicans would move a bill in the fall. But the Syria crisis, the government shutdown and the botched rollout of HealthCare.gov consumed attention through the end of 2013.

....As recently as this month, however, there was more movement in the House than previously known....But then Majority Leader Eric Cantor (R-Va.) lost his Republican primary election. And young children from Central America crossed illegally over the southwestern border in record numbers. Those two unforeseen events killed any remaining chance for action this year.

....For their part, reformers underestimated how impervious most House Republicans would be to persuasion from evangelicals, law enforcement and big business, and how the GOP’s animus toward Obama over health care and executive actions would bleed into immigration reform.

Before last summer I didn't think immigration reform was irretrievably dead. I thought it was damn close, but it wasn't until fall that I was pretty sure it was, indeed, completely dead. And that's pretty much my read of what Politico says. (Though, as it happens, I wouldn't actually put much stock in John Boehner's promise to the NHCLC, since it sounds mostly like something he said merely to avoid gratuitously pissing off a constituency, even though he knew perfectly well the reformers weren't going to win the August recess.)

I'd say the last paragraph of the excerpt is key. The reformers may have kept up their hopes, but for some reason they simply didn't understand just how hellbent the tea partiers were against any kind of serious immigration reform. I, on the other hand, being a cynical liberal, understood this perfectly. They were never going to bend—not no how, not no way—and Boehner was never going to move a bill without them.

The canary in the coal mine was always Marco Rubio. He genuinely wanted reform; he genuinely worked hard to persuade his fellow conservatives; and he genuinely had credibility with the tea party wing of the GOP. But by the end of summer, he understood the truth: it wasn't gonna happen. At that point, he backed away from his own bill, and that was the death knell. No base, no bill. And by the end of summer, it was finally and definitively clear that the base just wasn't persuadable.

In any case, Republicans have now abandoned even the pretense of working on immigration reform, and Sargent says they'll come to regret this:

The current crisis is actually an argument for comprehensive immigration reform. But [Rep. Bob] Goodlatte — who once cried about the breakup of families — is now reduced to arguing that the crisis is the fault of Obama’s failure to enforce the law. Goodlatte’s demand (which is being echoed by other, dumber Republicans) that Obama stop de-prioritizing the deportation of the DREAMers really means: Deport more children. When journalist Jorge Ramos confronted Goodlatte directly on whether this is really what he wants, the Republican refused to answer directly.

....This is the course Republicans have chosen — they’ve opted to be the party of maximum deportations. Now Democrats and advocates will increase the pressure on Obama to do something ambitious to ease deportations in any way he can. Whatever he does end up doing will almost certainly fall well short of what they want. But determining the true limits on what can be done to mitigate this crisis is now on him.

I don't know what Obama is going to do. For years, he followed a strategy of beefing up enforcement in hopes of gaining goodwill among conservatives. In the end, all that accomplished was to anger his own Hispanic supporters without producing anything of substance. At this point, there's no downside to taking maximal executive action, so he might very well do that. But will he do it before or after the midterms? Or just give up and move on to other things? Hard to say.

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.