Kevin Drum

The Great Wage Slowdown Finally Takes Center Stage

| Tue Nov. 11, 2014 2:01 PM EST

I'm feeling better today, but still not really in good blogging condition. So just a quick note: it appears that the great wage slowdown is finally getting lots of mainstream attention. Why? Because apparently the midterm results have persuaded a lot of people that this isn't just an economic problem, but a political problem as well. In fact, here's the headline on David Leonhardt's piece today:

The Great Wage Slowdown, Looming Over Politics

Josh Marshall makes much the same point with this headline:

Forget the Chatter, This is the Democrats' Real Problem

Both are saying similar things. First, growing income inequality per se isn't our big problem. Stagnant wages for the middle class are. Obviously these things are tightly related in an economic sense, but in a political sense they aren't. Voters care far less about rich people buying gold-plated fixtures for their yachts than they do about not getting a raise for the past five years. The latter is the problem they want solved.

Needless to say, I agree, but here are the two key takeaways from Marshall and Leonhardt and pretty much everyone else who tackles this subject: (1) nobody has any real answers, and (2) this hurts Democrats more than Republicans since Democrats are supposed to be the party of the middle class.

I'd say #1 is obviously true, and it's a huge problem. But #2 is a little shakier. Sure, Republicans are the party of business interests and the rich, but voters blame their problems on whoever's in power. Right now, Democrats have gotten the lion's share of the blame for the slow economy, but Republicans rather plainly have no serious ideas about how to grow middle-class wages either. They won't escape voter wrath on this front forever.

I'm not going to try to say more about this right now. I just wanted to point out that this is finally starting to get some real attention. And that's good: it's one of the great economic trends of our time, and therefore one of the great political trends as well. For a short rundown of the other great trends of our time, I recommend this piece. I wrote it a couple of years ago, and I continue to think these are the basic battlegrounds our politics are going to be fought on over the next decade or two.

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Housekeeping Note

| Mon Nov. 10, 2014 3:10 PM EST

Sorry folks. Not a good day today. Hopefully I'll be back tomorrow.

Republican Agenda Starts to Take Shape

| Mon Nov. 10, 2014 12:48 AM EST

Reading between the lines, I gather that Republicans are starting to coalesce around a legislative agenda to celebrate their recent midterm victory:

  • Ban abortions after 20 weeks.
  • Wipe out all of Obama's new and pending EPA regulations.
  • Repeal Obamacare bit by bit.
  • Figure out a way to obstruct Loretta Lynch's nomination as Attorney General.

Oh, there's still some desultory happy talk about tax reform and fast-track trade authority and other "areas of agreement," but that seems to be fading out. Poking a stick in President Obama's eye is very quickly becoming the order of the day.

And no reason not to, I suppose. Republicans won, after all. But they shouldn't be surprised if Obama continues to plan to poke back.

Friday Cat Blogging - 7 November 2014

| Fri Nov. 7, 2014 2:52 PM EST

Remember I told you that 56-year-old human reflexes were no match for 11-month-old kitten reflexes? Well, if you throw in a bad back, it's game over. Unless these guys are snoozing, I'd guess that only about one picture in ten is even close to catblogging material these days.

Still, one in ten is one in ten, so here are today's pictures. On the left, Hopper is sitting on the window sill, waiting for a bird to fly by and entertain her. On the right, Hilbert has taken up shop on Marian's chair in our newly rearranged living room (rearranged to make room for a more back-friendly chair for Kevin). He actually spent most of the night on Wednesday sleeping in our bed with us. Progress!

In other news, my sister recommends that all of you with cats try this. She's coming over to visit tomorrow morning, so we'll try it then. Let us know in comments how it goes.

Supreme Court Takes Up Yet Another Challenge to Obamacare

| Fri Nov. 7, 2014 1:27 PM EST

It looks like the Halbig challenge to Obamacare is a go:

The justices on Friday say they will decide whether the law authorizes subsidies that help millions of low- and middle-income people afford their health insurance premiums. A federal appeals court upheld Internal Revenue Service regulations that allow health-insurance tax credits under the Affordable Care Act for consumers in all 50 states. Opponents argue that most of the subsidies are illegal.

In case it's slipped your mind, this is the case that hinges on whether a typo in one sentence of the Affordable Care Act should wipe out health care subsidies in every state that uses the federal exchange. If the challengers win, subsidies will be available only in states that run their own exchanges.

Given the facts of the case, I'd normally say the whole thing is laughable. The intent of the law is, and always has been, crystal clear. But the current Supreme Court really doesn't seem to care much about laughable. If they want to cripple Obamacare, they'll do it. The shoddiness of the argument doesn't much matter to them.

So this is going to be a nail-biter. If it goes the wrong way, 6 million people or more will lose access to affordable health care—and half the country will cheer giddily about it. Because there's just nothing more satisfying than denying decent health care to millions of your fellow citizens.

UPDATE: Although this challenge is the same as the one in Halbig, the actual case the Supreme Court agreed to hear is King v. Burwell. Sorry for the mistake.

Negotiating With Republicans ≠ Negotiating With Tea Partiers

| Fri Nov. 7, 2014 12:56 PM EST

Megan McArdle was pretty unimpressed with President Obama's press conference following the Democrats' midterm defeat. "No one reasonable expected the president to grovel," she says, but surely he could have adopted a more conciliatory tone?

Most notably, of course, he said he would take executive action on immigration by year's end unless Republicans passed a bill. It's certainly a bold negotiating tactic: You can do what I want, or I'll go ahead and do what I want anyway. This is how you “negotiate” with a seven-year old, not a Senate Majority Leader.

I'm not sure that isn't what Obama thinks he's doing…But Mitch McConnell is not a seven year old…McConnell is not the proverbial Tea Party extremist who won't negotiate; he's an establishment guy, known as a strategist and a tactician, not an ideologue (which is why the Tea Party isn't that fond of him). In short, he's someone who can make deals. Responding to McConnell's rather gracious remarks about finding common goals by announcing that you know what the American public wants, and you're going to give it to them no matter what their elected representatives say, seems curiously brash. It might chill the atmosphere today when he sits down with congressional leaders.

 I wonder if Obama even knows how to negotiate with Republicans…

I'm not here to defend Obama's negotiating record. I'd rate it higher than McArdle, probably, but it's obviously not one of Obama's strong suits. Still, she's rather pointedly ignoring the elephant in the room here.

As near as I can tell, Obama has regularly demonstrated the ability to negotiate with Mitch McConnell. Not perfectly, and not without plenty of hiccups, but they can do business when the incentives are strong enough. In fact, they did do business on immigration reform. A year ago the Senate passed a comprehensive bill 68-32. Here's what Obama said about McConnell on Wednesday:

My interactions with Mitch McConnell, he has always been very straightforward with me. To his credit, he has never made a promise that he couldn't deliver. And he knows the legislative process well. He obviously knows his caucus well—he has always given me, I think, realistic assessments of what he can get through his caucus and what he can't. And so I think we can have a productive relationship.

The unnamed elephant in the room, obviously, is John Boehner and the tea party caucus in the House. Boehner has repeatedly shown that he can't control his own caucus and can't deliver a deal of any sort. That's not because either Obama or Boehner are incompetent negotiators, it's because the tea partiers are flatly unwilling to compromise in any remotely constructive way. So when Obama adopts a combative tone on immigration, it's aimed at Boehner, who really does have the miserable job of trying to ride herd on a bunch of erratic and willful seven-year-olds—as he himself has admitted from time to time.

Does Obama know how to negotiate with Republicans? Sure. Does he know how to negotiate with tea party extremists? Hard to say. But then again, even John Boehner hasn't figured out how to do that. Perhaps Obama's playground style hit-them-over-the-head approach is about as good as it gets.

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Chart of the Day #2: Wage Growth Is Still Lousy

| Fri Nov. 7, 2014 11:52 AM EST

In my post earlier this morning about jobs growth, I mentioned that wage growth continues to be stuck at about zero after accounting for inflation. This probably deserves a chart of its own to make it clear what things look like, so here it is: wage growth after inflation since the recovery began in 2010. As you can see, real wages have been bouncing along slightly above and slightly below zero for four years now. If you use alternate measures of inflation, the trend is even worse.

This is the basic lay of the land. Yes, the economy is improving and jobs are becoming more plentiful. But most of us have seen our pay stagnate for four years and counting. That's one of the reasons the public mood remains so sour.

Chart of the Day: Net New Jobs in October

| Fri Nov. 7, 2014 10:50 AM EST

The American economy added 214,000 new jobs in October, but about 90,000 of those jobs were needed just to keep up with population growth, so net job growth clocked in at 124,000. That's about the same as last month—in fact, about the same as the past nine months—and it's a fairly solid number. In addition, the headline unemployment rate ticked down to 5.8 percent, and this was a real gain, not a chimera due to more people giving up and leaving the workforce. In fact, both the labor force participation rate and the employment-population ratio were up.

This is all good news. It's not evidence of a roaring economy, but it's solid good news. As usual, the main blemish comes in wage growth, which continues to be stuck at about zero after accounting for inflation. In other words, the economy is growing, but it's still not growing fast enough to truly tighten up the labor market. When we start seeing healthy wage gains, that will be the first sign that we've truly put the Great Recession behind us. We're not there yet.

President Obama Can Safely Keep His Veto Pen in Mothballs

| Fri Nov. 7, 2014 12:22 AM EST

Ramesh Ponnuru is completely correct about this:

A strange amnesia has settled over much of the political world. I can't count the number of articles I've read saying that the new Republican Congress is going to pass all sorts of legislation that President Barack Obama will veto. The latest example: George Will's syndicated column urging the Republicans to pass several bills even if it results in "a blizzard of presidential vetoes."

There's no blizzard in the forecast. Senate Democrats will have the power to subject almost all legislation to filibuster (a word that does not appear in Will's column). Overcoming a filibuster takes 60 votes. So Republicans, who will probably end up with 54 seats, would have to win over Democrats to get legislation through the Senate to the president's desk. If they can do that, the legislation is unlikely to draw a veto.

I've noticed the same thing Ponnuru did, and it's weird. Is there some kind of unspoken assumption among pundits that Democrats aren't going to routinely insist on a 60-vote threshold for Republican legislation? If so, I don't know why. It seems pretty obvious to me that they will. At the very least, it allows them to keep most legislative negotiating leverage safely within the Senate, which is just where they want it.

Basically, the next two years are going to be just like the last two. The only thing that will change is the order of the signatures on the consent agreements.

Mitch McConnell Puts His Finger on the Pulse of the American People

| Thu Nov. 6, 2014 7:01 PM EST

Mitch McConnell says that repealing Obamacare outright is probably unrealistic, but Republicans will nonetheless try to chip away at it:

But with Mr. Obama sure to block any repeal bill passed in the Senate and Republican-controlled House, Mr. McConnell indicated that Senate Republicans will turn their attention to peeling back “pieces of it that are deeply, deeply unpopular with the American people.” He cited the law’s tax on medical devices, its requirement that big employers provide insurance to all workers clocking 30 hours a week or more or pay a fee, and its mandate that most Americans carry insurance or pay a fee.

Let me get this straight. McConnell thinks a 2.3 percent tax on manufacturers and importers of medical devices is deeply, deeply unpopular? He thinks a requirement that employers provide insurance for anyone who works more than 30 hours a week is deeply, deeply unpopular? He thinks the individual mandate is deeply, deeply unpopular?

OK, I'll give him the last one. The individual mandate is moderately unpopular. Of course, it's also crucial to the functioning of the law, and McConnell knows perfectly well that Obama won't allow it to be repealed. So that leaves the device tax and the 30-hour rule. The former is mostly opposed by medical device lobbyists, while the latter is mostly opposed by medium-sized businesses who want the ability to cancel health coverage for workers merely by reducing their workweek to 39 hours. My wild guess is that neither of these things is deeply, deeply unpopular with the American people.

But they are unpopular with interest groups that Republicans care about. So they're on the chopping block.