Kevin Drum

Obama's Agenda

| Wed Oct. 29, 2008 11:06 AM EDT

OBAMA'S AGENDA....Matt Ygelsias thinks Barack Obama is more activist than some people give him credit for:

Every time I read Ezra Klein pooh-pooing Barack Obama's domestic agenda, I feel a bit baffled. He's running on a platform that promises universal preschool, dramatic cuts in carbon emissions and investments in clean energy infrastructure, health insurance that would be affordable for all, comprehensive immigration reform, substantial labor law reform, large new spending on K-12 initiatives, and tax reform to make the federal code much more progressive overall.

I think that's a fair point. I'd say that his positions on tax reform (where the public face is primarily an endlessly repeated promise to cut taxes for almost everyone) and immigration reform (which hasn't gotten much public play at all) have been decidedly understated, but Obama has pretty clearly put himself on the side of big, important reforms in the areas of energy, healthcare and union organizing. (I'm a little less sure about education, where I feel like I sometimes get mixed signals about how big a priority this is with him. But that might just be the luck of the draw in which ads and speeches I happen to have seen.) He's also committed to withdrawal from Iraq, and so far at least, he hasn't backed away from that.

No question then: if Obama manages to get out of Iraq and pass significant legislation in the areas of healthcare and energy, and nothing more, that would make his first term wildly successful. If he also adds some serious labor law reform and financial market regulation to the mix, progressives ought to be pretty delirious by 2012.

The only question is, will he do it? The foundations all seem to be there (majorities in Congress, a viable electoral coalition, and a public seemingly open to change), but Obama's past history, both in the Illinois Senate and the U.S. Senate, is clearly one of caution and tactical compromise. In my case, then, my doubts lie not in whether he has the right policy instincts, but in whether he's got the temperament to seize the moment, stick to his guns, force recalcitrant committee heads to follow his lead, and get a big agenda passed. I sure hope so, but I think that's the big question mark, not whether he's campaigning on the right set of priorities.

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The Cost of the Crisis

| Wed Oct. 29, 2008 1:51 AM EDT

THE COST OF THE CRISIS....The latest international bailout news:

Hungary has been granted a multi-billion dollar rescue package by the IMF, the EU and the World Bank. The deal, worth $25bn (£15.6bn;19.6 euro), is intended to help Hungary cope with the ongoing effects of the world financial crisis.

Given the numbers that we've all gotten used to lately, I know this doesn't like all that much. But it's over 10% of Hungary's GDP. Meanwhile, BBC Business Editor Robert Peston estimates that taxpayers around the globe have spent (so far!) about $8 trillion to shore up the world's banks. That's more than 10% of total global GDP.

Given that, it seems likely that when it's all said and done, the U.S. is also going to spend 10% of GDP or more to bail out the financial industry here. That would be somewhere in the neighborhood of $1.5-2 trillion — double or triple what we've allocated so far. That fits the data I presented a couple of weeks ago, and it's also about what Paul Krugman thinks is possible. Buckle up.

Chart of the Day - 10.28.2008

| Tue Oct. 28, 2008 9:50 PM EDT

CHART OF THE DAY....Newspaper accounts of housing prices usually provide year-to-year comparisons, which are useful for some purposes but not for others. In particular, if house prices start to stabilize, you won't see it in the year-to-year charts because prices will still be way below their level from a year ago even if they aren't dropping any further. "21% below their peak" doesn't really tell you much about what's happening now.

For that, you want to see how prices compare to the previous month. Back in August I posted a Case-Shiller chart showing monthly comparisons (through June) that suggested prices might be stabilizing, but with a caveat that this stuff is seasonal and the good news might not hold up. Sure enough, it hasn't. Here is this month's chart (with prices through August), and it shows that month-to-month prices are not only still declining, but declining faster than they were earlier in the summer.

The rate of decline is still nowhere near its nadir in February, but this is yet more evidence that we still have a ways to go before housing prices bottom out. And people know it: this month the consumer confidence index fell to 38.0, lower than during the 1974 recession, lower than during the 1980 recession, lower than ever recorded before. And credit card companies are "sharply curtailing" credit lines. And to top it all off, we're running up an "ecological debt" of $4 trillion per year.

But the stock market is up! Why? Apparently because investors are looking forward to the Fed cutting interest rates tomorrow. Sure, the Fed is only contemplating this because the signs of recession are so bleak, and it's unlikely that interest rate cuts will have much of an effect anyway, but who ever said Wall Street investors were smart?

John McCain, Holy Man

| Tue Oct. 28, 2008 6:15 PM EDT

JOHN McCAIN, HOLY MAN....David Gelernter says that John McCain's big problem is that he's just too damn modest about his own saintliness:

Of course no candidate can advertise his own moral stature; he can use weak words like "maverick" and "I have been tested," but can't quite say "I stand before you as a hero of proven nobility."

No, I guess he can't, can he? Luckily, Gelernter does it for him: "In Hebrew he would be called a tsaddik — a man of such nobility and moral substance that he approaches holiness." Here's an example of McCain's alleged holiness:

McCain is only a part-time conservative and has never inspired enthusiasm on the right; but no one doubts that each of his leftward excursions has been a matter of principle and not convenience. His outspoken, unwavering support for Israel in the face of American Jewish indifference is a perfect example of principled versus self-interested politics.

I admit that I hadn't realized before that unwavering support for Israel was such a gutsy stand for an American politician to take. Live and learn.

Obama the Cautious

| Tue Oct. 28, 2008 4:49 PM EDT

OBAMA THE CAUTIOUS....More Ezra, this time on the likely impact of a Barack Obama presidency:

If the fact of Obama's candidacy has been remarkable, however, it's hard to escape the signs that his presidency will be rather less transformative. Obama's domestic policy proposals were the weakest of the three major Democrats. His legislative instincts, as he's frequently admitted and as his career suggests, are fairly cautious. His staff is primarily comprised of competent representatives of the center-left. His campaign picked no major fights with Democratic Party orthodoxy.

This is what makes the eleventh-hour conservative meltdown over Obama (he's a socialist, a street thug, a terrorist lover, a radical leftist, etc. etc.) so strange. It's true that Obama is something of a Rorschach test, with all of us seemingly projecting on him what we'd like to see (or, in some cases, fear to see), but the reality of the man sure doesn't seem to support anything very apocalyptic. Yes, he's young, black, and charismatic, but let's get real: the real reason most people are thrilled with him is that he's not George Bush. After eight years of Republican misrule, the Democrats could have nominated Austin Powers and the world would have breathed a sigh of relief.

As for Obama himself, Ezra is responding to a Jack Shafer column that complains about reporters being completely smitten by "the notion that Obama's candidacy is momentous, without parallel, and earth-shattering." But the links he provides — presumably the best he could Google up — are pretty thin fare, mostly just a few pundits claiming that Obama might help restore respect for America abroad. In fact, what's struck me most about pro-Obama campaign punditry both in the blogosphere and the MSM is how little of it has been motivated by an active defense of Obama. Andrew Sullivan aside, the vast bulk has been anti-McCain and anti-Bush. The blogosphere, the country, and the world are just tired of Republicans. Obama has run a good campaign, but if Hillary Clinton had won the nomination (or Al Gore or John Kerry or Socks the cat) they'd all be ahead by seven points too.

Language Watch

| Tue Oct. 28, 2008 2:28 PM EDT

LANGUAGE WATCH....Yesterday a regular reader emailed me about that famous quote from a McCain advisor calling Sarah Palin a "diva":

It's sad how the Republicans struggle with sexism and it shows (brutally) in the slamming she is starting to take. Sadly, though, if the internal warfare goes unchecked, Palin will be a stereotype — the single-mindedly, narcissistic, aggressive woman who is striving for self-aggrandizement at all costs, who lacks any intellectual depth and is ultimately shallow — a true Diva. And while part of me would be very happy if Palin's capitol exposure is forever limited to tours, another part of me sees the risks of more roadblocks for women.

I've been watching the growing grumblings and have been wondering how long it would be before we saw the reference to Diva, a great put-down of powerful women. Why can't she just be another self-interested but charismatic politician who is woefully out of her element and not appropriate for this position. And leave it at that. No, I bet you'll see more sexist-based disparagement from the right before this is done.

As a father of two strong-willed girls, the whole spectacle is frustrating.

Today, Mike Allen reports the latest:

In convo with Playbook, a top McCain adviser one-ups the priceless "diva" description, calling her "a whack job."

"Whack job" isn't sexist, is it? How about that instead?

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A Tiny Violin

| Tue Oct. 28, 2008 1:42 PM EDT

A TINY VIOLIN....Yesterday I read that Porsche had increased its ownership stake in VW to 74% and was seeking a "dominance" agreement that would give it control over the company. Today, via Tyler Cowen, the Financial Times reports that hedge funds are pretty unhappy about this:

VW shares rose 147 per cent after Porsche unexpectedly disclosed that through the use of derivatives it had increased its stake in VW from 35 to 74.1 per cent, sparking outcry among investors, analysts and corporate governance experts.

....The sudden disclosure meant there was a free float of only 5.8 per cent — the state of Lower Saxony owns 20.1 per cent — sparking panic among hedge funds. Many had bet on VW's share price falling and the rise on Monday led to estimated losses among them of €10bn-€15bn ($12.5bn-$18.8bn).

"This was supposed to be a very low-risk trade and it's a nuclear bomb which has gone off in people's faces," said one hedge fund manager.

Technically, the complaint is that Porsche has been less than transparent about its maneuverings, and it might well be that current German regulation is too lax in this regard. That aside, though, can I just say that my heart is not exactly breaking for the hedge funds who got burned here? The whole point of most hedge funds is to invest vast sums of money with the least possible transparency possible, and now they're complaining because somebody else has executed a slick maneuver that made what was "supposed" to be a very low-risk trade into a money loser.

Well, guess what? There's are no tablets from Mt. Sinai that guarantee hedge funds access to low-risk-high-return investments. Their bet turned out to be a bad one, and now they're unhappy about it. Boo hoo.

For more, check out the first commenter to Tyler's post. He explains pretty well what happened here and how the hedge funds got burned.

Plan vs. "Plan"

| Tue Oct. 28, 2008 12:58 PM EDT

PLAN vs. "PLAN"....Ezra Klein catches McCain advisor Douglas Holtz-Eakin accidentally telling the truth about McCain's healthcare plan:

John McCain's health care plan aims to do something very simple: Raise taxes on the employer health insurance market so individuals move to the individual health insurance market. What Doug Holtz-Eakin just said is that even McCain's top advisers realize that this will mean much worse health care coverage for everyone involved. As he put it, "what they are getting from their employer is way better than what they could get with the [tax] credit."

Poor Douglas Holtz-Eakin. He's stuck having to defend a healthcare plan that's really a healthcare "plan." It doesn't work in theory, it doesn't work in practice, and it's not something that would appeal to most Americans in any case. But McCain needed a plan to compete with Obama's plan, and Republicans like tax credits, so that became the basis of his plan. The fact that it doesn't make sense isn't something that McCain really cares much about.

UPDATE: More here from Time's Karen Tumulty: "If Doug Holtz-Eakin doesn't believe that young, healthy people would leave the system, he might want to talk to Mitt Romney, who actually studied the situation in the real world when he was reforming the health care system in Massachusetts. It's not — as Holtz-Eakin suggests — that these healthier citizens would choose between staying with their employer-provided benefits or buying them on the open market. It's that they would decide to go uninsured entirely — leaving older and sicker people in the employer-provided system. That would make it even more expensive for employers to continue to provide coverage for their workers, accelerating a trend that we are already seeing, in which fewer and fewer companies are providing coverage."

Stimulate Me!

| Tue Oct. 28, 2008 12:22 PM EDT

STIMULATE ME!....We have a long, hard recession ahead of us, and monetary policy has already done about as much for us as it can. That means we need fiscal stimulus and plenty of it. But what kind? Mark Zandi from Moody's Economy.com provides the answer and EPI makes it into a chart for your consideration. Basically, they suggest that the money is best spent (a) on low and middle income workers who will actually buy things with it, (b) infrastructure, because the recession is likely to be long and infrastructure projects take a while to get up and running, and (c) aid to states, who would otherwise have to cut back spending and thus blunt the effect of the stimulus package. Works for me.


Civil War Watch

| Tue Oct. 28, 2008 11:48 AM EDT

CIVIL WAR WATCH....From the LA Times:

The social conservatives and moderates who together boosted the Republican Party to dominance have begun a tense battle over the future of the GOP, with social conservatives already moving to seize control of the party's machinery and some vowing to limit John McCain's influence, even if he wins the presidency.

In skirmishes around the country in recent months, evangelicals and others who believe Republicans have been too timid in fighting abortion, gay marriage and illegal immigration have won election to the party's national committee, in preparation for a fight over the direction and leadership of the party.

Obviously this sounds crazy to liberal ears, but I guess I can't blame them. After all, the job of a true believer is to believe. And turning elections into culture war battlefields certainly seems to have worked in the past for them.

But times change. Among vast swathes of the young, the culture war has lost its salience. Worse, it's become an albatross, a sign of intolerance and hatred that young voters despise. The results are crystal clear in party ID polling: twenty-somethings have fled the Republican Party in numbers not seen since the Great Depression, and if social conservatives manage to wrest control of the GOP and start shrieking 24/7 about banning abortion and hating gay people, they'll be guaranteeing Democratic dominance among an entire cohort of voters for decades to come.

Which is fine with me, of course. But the adults in the Republican Party better plan on knocking heads very hard and very fast if they don't share my attitude. Sarah Palin isn't the future of their party, she's the future of mine.