How did the FBI's investigation into the Trump-Russia connection get started, anyway? Former CIA director John Brennan says he was the one who got the ball rolling:

I encountered . . . intelligence that revealed contacts and interactions between Russian officials and U.S. persons involved in the Trump campaign,” Brennan said, adding that he did not see conclusive evidence of collusion but feared that Trump associates were wittingly or unwittingly being used to advance the interests of Moscow.

....Brennan testified that he was disturbed by intelligence that surfaced last year showing a pattern of contacts between Russian agents or representatives and people with links to the Trump campaign. “That raised concerns in my mind,” Brennan said....With that remark, Brennan appeared to identify the point of origin of the FBI investigation that began in July — the first time a U.S. official has provided insight into what prompted the bureau probe.

That's from the Washington Post. Brennan was testifying before Congress about Russian interference in the 2016 election, and the New York Times adds this disheartening tidbit:

On Aug. 4, as evidence of that campaign mounted, Mr. Brennan warned Alexander Bortnikov, the director of Russia’s Federal Security Service, known as the F.S.B., not to meddle in the election. Not only would interference damage relations between the two countries, he said, it was certain to backfire.

“I said that all Americans, regardless of political affiliation or whom they might support in the election, cherish their ability to elect their own leaders without outside interference or disruption,” Mr. Brennan said. “I said American voters would be outraged by any Russian attempt to interfere in election.”

Mr. Brennan’s warning proved futile. Though intelligence agencies are unanimous in their belief that Russia directly interfered with the election, it has become a divisive partisan issue, with Democrats far more likely than Republicans to accept the conclusion. President Trump has declared that “Russia is fake news” and tried to undermine the conclusions of his own intelligence services.

I don't blame Brennan for thinking that Russian interference in the election would outrage everyone regardless of party. I suppose I might have thought the same thing. But it ain't so anymore:

As always, click the link for the whole story.

Last week, a bunch of security goons working for Turkish president Recep Tayyip Erdogan waded into a demonstration outside the Turkish embassy in Washington DC and started beating up the protesters. A few days ago, the Washington Post's Philip Bump made a pretty good case that Erdogan did more than just watch as this happened. He actually ordered his guards to attack. Rich Lowry has the right response:

This is second offense for the Turks. A year ago, they beat up protesters and disfavored journalists outside an Erdogan talk at the Brookings Institution in Washington. One reporter wrote of that earlier incident, “Never seen anything like this.” If you hang around President Erdogan long enough, though, you’ll see it all.

....The Trump administration is obviously not putting an emphasis on promoting our values abroad. But it’s one thing not to go on a democratizing crusade; it’s another to shrug off an assault on the rights of protesters on our own soil. If nothing else, President Donald Trump’s nationalism and sense of honor should be offended. Not only did the Turks carry out this attack, they are thumbing their noses at us by summoning our ambassador over it.

The Turkish goons who punched and kicked people should be identified and charged with crimes. They are beyond our reach, either because they are back in Turkey or have diplomatic immunity. But we should ask for them to be returned and for their immunity to be waived. When these requests are inevitably refused, the Turkish ambassador to the U.S. (heard saying during the incident, “You cannot touch us”) should be expelled.

It's obvious that Turkey is a delicate problem. On the one hand, they're a NATO member, and their location makes them a critical player in the war against ISIS. On the other hand, Erdogan is steadily converting Turkey into a totalitarian state. In the real world, sometimes you overlook this because you need allies and you don't always have the option of choosing someone who's pure and unsullied. But even if you accept this, Turkey is on thin ice since the Kurds are also our allies and Turkey interferes pretty seriously with our ability to team up with them. Even from a strictly realist/strategic perspective, our alliance with Turkey comes with a price.

I won't pretend to have the answer. It's above my pay grade. But ordering your embassy security to attack protesters in the US who are lawfully and peacefully assembled is a whole different thing. That deserves a strong response even if it might cause strategic tension. Enough's enough.

Jon Chait says the Trump White House has made a $2 trillion mistake:

Trump has promised to enact “the biggest tax cut in history.” Trump’s administration has insisted, however, that the largest tax cut in history will not reduce revenue, because it will unleash growth....But then the budget assumes $2 trillion in higher revenue from growth in order to achieve balance after ten years. So the $2 trillion from higher growth is a double-count. It pays for the Trump cuts, and then it pays again for balancing the budget.

It's true that the budget summary document includes a line item called "Effect of economic feedback" (in Table S-2) that comes to $2.062 trillion over ten years. Is that the same as the economic feedback that will pay for tax cuts? Who knows, really. It's all just made-up nonsense anyway. But here's an interesting thing. In the detailed projections, the Trump budget projects lower tax revenue than the final Obama budget:

What's up with that? Does the Trump budget not include any economic feedback after all? But even if it doesn't, why is their projection lower than Obama's? Is it so they can use this lower number as a new baseline for comparison when they unveil their growth-exploding tax plan later in the year?

I know, I know: who cares? The Trump numbers are just random gibberish plucked from the sky. Still, you'd think they could at least make them agree from one spreadsheet to the next. Where's the economic feedback in the tax revenue numbers?

Over at the Weekly Standard, Michael Warren interviews budget chief Mick Mulvaney:

If a budget proposal is a message about priorities, it's clear entitlement reform isn't even on President Trump's radar. When starting on 2018 budget proposal, Mulvaney came to the president with a one-page list of entitlement programs to reform.

"We went down the list: Yes, Yes, No, No, Yes, No, Yes, No, No," said Mulvaney. "The nos were all Social Security and Medicare. And that's it. He said, 'I promised people on the campaign trail I would not touch their retirement and I would not touch Medicare, and we owe it to them.'"

That's quite a trick memory Trump has. He actually promised not to touch Social Security, Medicare, and Medicaid. But he seems to have forgotten all about that last one. What happened?

Oh.

Well, this is a kick in the gut. In tonight's season finale of Supergirl, the good guys unearth a weapon originally designed by Lex Luthor as a way of encouraging Superman to self-deport himself by irradiating the atmosphere with kryptonite. At the moment, however, the threat to Earth is from Daxamites, whose weakness isn't kryptonite, but lead:

At least Superman has the good sense to look unhappy about this. On the bright side, if irradiating the atmosphere with lead ends up causing more crime, that's a sort of job security for him, isn't it?

According to the Washington Post, James Comey wasn't the only person that President Trump pressured regarding the FBI's Russia investigation:

Trump made separate appeals to the director of national intelligence, Daniel Coats, and to Adm. Michael S. Rogers, the director of the National Security Agency, urging them to publicly deny the existence of any evidence of collusion during the 2016 election.

Coats and Rogers refused to comply with the requests, which they both deemed to be inappropriate, according to two current and two former officials, who spoke on the condition of anonymity to discuss private communications with the president....Trump’s conversation with Rogers was documented contemporaneously in an internal memo written by a senior NSA official, according to the officials. It is unclear if a similar memo was prepared by the Office of the Director of National Intelligence to document Trump’s conversation with Coats.

....In addition to the requests to Coats and Rogers, senior White House officials sounded out top intelligence officials about the possibility of intervening directly with Comey to encourage the FBI to drop its probe of Michael Flynn....“Can we ask him to shut down the investigation? Are you able to assist in this matter?” one official said of the line of questioning from the White House.

This. Is. Nuts. Trump is not only corrupt, he's an unbelievable moron. He personally asked the NSA director and the overall director of national intelligence to publicly weigh in on an ongoing investigation. Not only that, he basically asked them to lie, since they weren't privy to what the FBI was doing. In what universe did Trump think that either of them would respond positively to such a blunt request? Or that this kind of thing wouldn't leak?

What's more, in addition to directly asking Comey to shut down the FBI investigation, he apparently had some of his aides call senior intelligence officers to ask them to intervene with Comey. There are two big questions here:

If there really are contemporaneous memos from Comey, Rogers, and maybe Coats, and if all three can be called to testify about their conversations with Trump, then what more do we need? This is Nixon-level stuff.

This post is long and wonky and probably not worth your time to read. You have been warned! But it's something I've been wrestling with for a while, and this is basically a way of getting my thoughts in order so that I can continue pondering it.

The subject is inflation. Specifically, what's the best way to measure inflation? I'm talking here about the best general index, not specialized things like CPI-X (an attempt to measure inflation for the elderly) or core PCE (useful to the Fed as a way of judging the strength of the economy). The most common measure of inflation is the Consumer Price Index (CPI), and that's what you see in the headlines each month when the BLS reports a new inflation number.

But CPI has its problems, and lots of people prefer the Personal Consumption Expenditure index (PCE). Scott Winship has led the charge on this, and you can read a pretty readable explanation of his views here. Long story short, Winship makes a good case for the problems with CPI, but I'm not thrilled with PCE either. I'm usually interested in measuring the lived experience of people—especially the non-rich—and in my opinion PCE uses a weighting system that obscures this.

So what's the best index? First off, there are plenty of times when it doesn't matter. Here's a chart showing CPI and PCE over the last ten years:

They're nearly identical. If you're comparing something to last year, or even to ten years ago, just go ahead and use CPI. It doesn't really make any difference. Here's a comparison over 20 years:

There's a little more difference, but still not that much. Obviously this difference might be important in an academic or professional economic setting, but for everyday journalistic use, you can use CPI for a comparison of anything between a year and 20 years ago. It's going to be fine.

But what if you want to go back further? Here are both indexes going back to 1978:

Now we're up to a difference of 21 percent. That's enough to really matter. Luckily, the BLS has created a series called CPI-U-RS that's become pretty popular. I like it because it seems to hit the right sweet spot between fixing the problems with CPI but retaining better weightings than PCE. In terms of the actual things that people use and buy, I think that CPI-U-RS is probably the best measure we have.

Unfortunately, it only goes back to 1978. However, before then there's only a tiny difference between CPI and PCE. Here they are from 1929 to the present:

So the best index to use is PCE (indexed to 1978=104) from 1929-1977 and CPI-U-RS from 1978-present. It would be nice if BLS would merge the two series and give the result a snazzy name like CPI-A1, but they don't. Until then we'll just have to home brew it ourselves.

In some ways, it's sort of entertaining to have a president who's literally learning the most basic facts of the world on the job:

President Trump began a two-day visit to Israel on Monday with a blunt assessment for Prime Minister Benjamin Netanyahu: If Israel really wants peace with its Arab neighbors, the cost will be resolving the generations-old standoff with the Palestinians....“I was deeply encouraged by my conversations with Muslim world leaders in Saudi Arabia, including King Salman, who I spoke to at great length. King Salman feels very strongly and, I can tell you, would love to see peace with Israel and the Palestinians.”

It's an open question whether a Palestinian peace deal would really produce comity with the rest of the Arab world, but it's certainly a prerequisite and has been for decades. But I guess Trump hadn't really considered that a serious obstacle until he heard it face-to-face from the king.

Anyway, we all know where this is going, right? Benjamin Netanyahu wants to stay on good terms with Trump, and Trump wants a peace deal. Everyone on the planet knows perfectly well that Netanyahu has no interest in this, but he'll string Trump along anyway. A "peace process" will be set up, Jared Kushner will preside over a meeting or two, and Netanyahu will settle back and wait for some kind of bombing or other terror attack to declare that he tried but the Palestinians just can't be dealt with. Every neocon in America will immediately jump on the bandwagon and insist that this is the final straw. Things were so hopeful thanks to Trump's goodwill, but they bombed innocent women and children while Israel was earnestly trying to make peace! They're savages! Netanyahu will ask Trump for a statement of support, and of course Trump will provide it because terrorists are bad. And that will be that.

The whole thing will be a ridiculous charade, and everyone except Trump will know it.

Lunchtime Photo

I was out in Santa Monica for a few hours last week, and that means a bunch of Santa Monica pictures got added to the lunchtime photo queue. This one is a picture of a name painter on the pier.

What's interesting technically is that I actually wanted more grain in the photo. I was hoping for that old-school Tri-X-pushed-to-ISO-1600 look. But even at ISO 3200, there's really not a lot of grain here. I'll have to try this again someday at ISO 12800.

Here's a helluva weird story from Jim Puzzanghera of the LA Times:

The House Republican legislation scaling back Dodd-Frank financial regulations would reduce federal budget deficits by $24.1 billion over the next decade....Would reduce federal spending by $6.9 billion from 2018 through 2027....The bureau received $565 million in the 2016 fiscal year....The House Republican legislation would reduce the bureau’s funding to $485 million in 2018, and the CBO estimated that Congress would keep annual funding at about that level, adjusting for inflation, over the next decade.

So the bill would (a) reduce funding by $800 million, (b) reduce spending by $6.9 billion, and (c) reduce deficits by $24.1 billion. How do we get from $800 million to $24.1 billion?

I'm glad you asked! And trust me, you're going to love the answer. Here's how it breaks down:

This is a work of art. The savings come almost entirely from two places: eliminating the Orderly Liquidation Fund and modifying the way Dodd-Frank agencies are funded. Here's the impressive part: neither of these things actually saves any money.

The OLF is funded entirely by the financial industry. If the government has to liquidate a big bank, it foots the bill and then recoups the money via a fee on the banking sector. However, the money has to be spent immediately, while it gets recouped over time. So it's possible that, say, the feds would spend $10 billion to rescue a bank in 2027, but all the money would be recouped in later years. That counts as a $10 billion deficit in the the ten-year window 2018-2027.

So CBO guessed the probability of the OLF being used in each of the next ten years, along with the possible cash flow imbalances, and then calculated the expected value. They came up with $14.5 billion. CBO acknowledges that this estimate has "considerable uncertainty," and that's true. More to the point, though, the whole thing is just gimmickry. Using the OLF will cost the government nothing (or close to nothing), but expenses might fall inside the ten-year window while revenues fall outside the ten-year window. That's all.

Then there's the agency funding. It gets reduced $800 million, but somehow that becomes a deficit reduction of $9.2 billion. This one is even more impressive. Two agencies are affected—NCUA and CFPB—which currently get their funding from outside sources. This means their outlays count as "direct spending." Under the Republican law, their funding would come from Congress and be subject to annual appropriations. For some reason—and I admit this remains inscrutable to me—reducing "direct spending" and replacing it with the same amount of appropriated spending counts as deficit reduction even though CBO assumes that actual funding levels won't change.

This is the immaculate conception of congressional legislation. It doesn't actually reduce spending more than trivially, but thanks to obscure budget gimmicks it gets scored as a $24 billion reduction in the ten-year budget deficit. It's magic! Maybe it's the power of the orb at work.1

1You all know what this refers to, don't you?