Kevin Drum

Supreme Court Approval: It's All Partisan, Baby

| Mon Jul. 14, 2014 3:11 PM EDT

Andrew Prokop draws my attention this morning to a Gallup chart of Supreme Court approval ratings that I've never seen before. It shows approval by political affiliation, and it's kind of interesting. Here it is with my annotations:

There are five big spikes over the past 15 years, and three of them have obvious causes. In 2001 Republican approval spiked after the Bush v. Gore decision; in 2012 Democratic approval spiked after the court upheld Obamacare; and in 2014 Republican approval spiked after the Hobby Lobby decision. But what happened in 2005 and 2009?

In 2005-06, Republican approval spiked but Democratic approval was stable. Was this because of Bush's re-election or because Roberts and Alito were named to the court? Or both? But if that were the case, shouldn't Democratic approval have gone down?

And in 2009, Democratic approval spiked. Was this because of Obama's election or because Sotomayor was named to the court? Or both?

I'm not sure. If these two spikes were due to presidents being elected, what happened in 2013? Why no spike? And if it's due to justices being nominated, why no Democratic love for Elena Kagan in 2010? Or is there something else going on? I can't think of any big Supreme Court decisions that could account for the 2005 and 2009 spikes. What other possibilities are there?

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If Congress Wants to Know Who's Responsible for the Immigration Crisis, It Should Look in a Mirror

| Mon Jul. 14, 2014 1:11 PM EDT

Why do we have an enormous backlog of immigration cases along our southern border? Well, as far back as 2006 the immigration backlog had already reached 169,000 cases, so the Bush administration asked for more funding for immigration judges. Congress ignored the request. Then, in 2008, we passed a law guaranteeing judicial proceedings for children who arrive from countries other than Canada or Mexico. That increased the backlog further, and when Barack Obama took office he tried to at least fill all the existing judicial vacancies. But as Stephanie Mencimer reports, that wasn't nearly enough:

Immigration judges can expect to handle 1,500 cases at any given time. By comparison, Article I federal district judges handle about 440 cases, and they get several law clerks to help manage the load. Immigration judges have to share a single clerk with two or three other judges. The lack of staffing creates an irony that seems to be lost on the current Congress: Too few judges means that people with strong cases languish for years waiting for them to get resolved, while people with weak cases who should probably be sent home quickly get to stay in the United States a few years waiting for a decision.

....Today, there are 243 judges—just 13 more than in 2006 and 21 fewer than at the end of 2012—and more than 30 vacancies the government is trying to fill. All this despite the fact that the immigration court backlog has increased nearly 120 percent since 2006. And that was before the kids started coming.

Obama has tried to get funding for more judges as part of the annual budgeting process. No luck. He's tried to pass comprehensive immigration reform that included funding for more judges. No luck. Now he's trying to get emergency funding for the border crisis that would include money for more judges. So far, no luck.

There are, obviously, multiple causes of the current border crisis. As usual, though, Congress is one of them—and, in particular, obstructive congressional Republicans who aren't really much interested in doing something that would fix an ongoing border crisis that provides them with useful political attack ads. If Congress needs someone to point the finger of blame at, all they have to do is look in a mirror.

Obamacare is Working, and It Will Probably Continue to Work

| Mon Jul. 14, 2014 12:12 PM EDT

Tyler Cowen isn't satisfied with current answers to the question of how well Obamacare is working. But although no one has firm answers to the questions he asks, I think we know more than he implies we do—especially when you widen your scope beyond just the details of the Obamacare transition over the next few years. Here are a few quick responses to his questions:

1. Five to ten years from now, how much do we think employment will have gone down as a result of ACA?

Take a look at Europe. The answer almost certainly is (a) perhaps a little, but not much, and (b) it's going to be swamped by other factors anyway. In fact, if Obamacare eventually leads to the end of employers being responsible for health insurance, it could end up helping employment. More generally, though, if you're worried about employment trends, then health care taxes and mandates should be the least of your concerns. They're just a blip by comparison to everything else going on.

1b. How will the effort to introduce greater equality of health care consumption fare if wage and income inequality continue to rise?  Will this attempt at consumption near-equalization require massively distorting incentives?

No. Even if we move to full universal health care, it will likely raise marginal tax rates by something in the neighborhood of 6-7 points. That's nothing to sneeze at, but the bulk of it will replace current spending by employers and will do little to distort anything. The remainder is simply too little to introduce more than a modest amount of distortion in a $15 trillion economy.

2. Will ACA even have improved overall health in America?

Probably a little bit, but not a lot—though it depends on how you measure it. Especially in the under-65 age group, for example, it will do little to reduce mortality. However—and this is something I can't repeat often enough—this is not the main point of universal care anyway. The main point is to improve quality of life and reduce the life-shattering financial consequences of serious medical emergencies.

3. Given that prices in the individual insurance market already seem to have gone up 14-28 percent, and may go up more once political scrutiny of insurance companies lessens, what is the overall individual welfare calculation from this policy change?

Actually, prices will probably go up less in future years. The initial increase was a one-time response to the new requirements of the law, especially the addition of lots of sicker people to the insurance pool. In the future, given the competition between insurance companies, increases are likely to roughly match the rate of health care inflation.

4. Given supply side constraints, how much did ACA increase the consumption of health services in the United States?

We don't know yet. But obviously the answer is that, yes, any kind of universal health care entitlement will increase consumption. Once again, though, look at Europe. We have decades of experience in lots of different countries with a wide array of different forms of universal health care, and in every case health consumption is lower than in the US. There may well be birthing pains associated with Obamacare, but in the longer run there's simply no reason to think that it inevitably has to lead to a significant increase in consumption.

5. How much of the apparent slowdown of health care cost inflation is a) permanent, b) not just due to the slow economy, and c) due to ACA?  Or how about d) the result of trends which have been operating slowly for the last 10-20 years?

Obviously historical evidence is never conclusive, but the historical evidence we have points very, very strongly to a permanent slowdown. There's a lot of variability in medical inflation, but one of the most underreported trends in health care reporting has been our steady, 30-year-long decline in medical inflation. There's no special reason to think this is suddenly going to change.

If I were allowed only one answer to all these questions, it would be this: Just look at the rest of the world. Health care is not an area where we're confined to econometric studies and CBO models. There are dozens of countries that have implemented national health care in dozens of different ways, and we can look at how they've actually done in the real world. Almost universally, the answer is that they've done better than us on virtually every metric. Unless you really, truly believe that the United States is a unique outlier to the laws of economics, there's very little reason to believe that national health care in America would fare any worse.

Sacramento Should Leave AB32 Alone

| Mon Jul. 14, 2014 11:20 AM EDT

The LA Times scratches its editorial chin today over the prospect that California's cap-and-trade program will increase the price of gasoline next year:

Gas prices already have risen by close to 50 cents a gallon since the beginning of the year, for reasons that have nothing to do with AB 32. The prospect of adding 15 cents more — though it's relatively minor compared with the overall price increase — is daunting to many drivers. Assemblyman Henry T. Perea (D-Fresno) has introduced a bill to delay the extension of the law to transportation fuels for three additional years.

That won't do at all....The state must give drivers strong incentives to take fewer trips, carpool, use public transit and purchase electric or fuel-efficient vehicles. At the same time, state officials must remain sensitive to the effect a price increase will have on low-income and working-class Californians, especially those who commute long distances in areas where robust public transportation systems have not been built.

....The best solution to this dilemma was proposed this year by Senate leader Darrell Steinberg: Rather than extending AB 32, impose a carbon tax on gasoline, at least for a transitional period. But make it revenue-neutral by giving the money back to taxpayers — and especially low-income taxpayers — through tax credits on the state's personal income tax.

Huh? Why should we replace one tax with another, and then rebate some of it to low-income taxpayers? If that's what we want to do, why not just keep the cap-and-trade fees we already have and offset them with Steinberg's tax credits? What am I missing here?

Nothing Left to Steal?

| Mon Jul. 14, 2014 10:57 AM EDT

Megan McArdle points out that cars are a lot harder to steal than they used to be:

Other forms of crime are also getting less lucrative. “Small-time marijuana dealer” is no longer a viable career option in several states. Robbery is also getting tougher. As credit card transactions have come to dominate cash, the potential return from mugging someone, or knocking over a gas station, has fallen dramatically. Even burglars are facing some challenges: Expensive televisions are now too big to carry unless you bring a dolly and a truck, home theater systems are often wired into the wall, and at least in my circles, women don’t wear as much fancy jewelry or mink as they used to. For a while, small electronics made up the cash gap for burglars, muggers, and purse snatchers, but cell phone manufacturers are putting in “kill switches” starting in 2015, which will torpedo that market.

Well, perhaps in years to come thieves will turn to technology to improve their productivity. I don't know how, but then again, we rarely predict technological revolutions in advance, do we? Maybe new smartphone apps will allow thieves to target more lucrative mugging victims? Or geolocation apps will predict which homes are likely to contain the most easily fencible items? Or maybe sophisticated data mining operations will produce new and innovative opportunities for blackmail. Beats me. But somehow offense and defense always seem to keep up with each other, don't they?

Economic Growth Looks Pretty Grim These Days

| Sun Jul. 13, 2014 11:16 AM EDT

Via James Hamilton, the Atlanta Fed is now making its GDP forecasts publicly available. As you can see, they've gotten steadily more pessimistic since April and are now predicting a growth rate of 2.6 percent in the second quarter.

Now, there are two way to look at this. The glass-half-full view is: Whew! That huge GDP drop in Q1 really was a bit of a blip, not an omen of a coming recession. The economy isn't setting records or anything, but it's back on track.

The glass-half-empty view is: Yikes! If the dismal Q1 number had really been a blip, perhaps caused by bad weather, we'd expect to see makeup growth in Q2. But we're seeing nothing of the sort. We lost a huge chunk of productive capacity in Q1 and apparently we're not getting it back. From a lower starting level, we're just going to continue along the same old sluggish growth path that we've had for the past few years. All told, GDP in the entire first half of 2014 hasn't grown by a dime.

I am, by nature, a glass-half-empty kind of person, so feel free to write off my pessimism about this. Nonetheless, the GHE view sure seems like the right one to me. It's just horrible news if it turns out that during a "recovery" we can experience a massive drop in GDP and then do nothing to make up for it over the next quarter. It's even worse news that the unemployment rate is going down at the same time. I know that last month's jobs report was relatively positive, but in the longer view, how can unemployment decrease while GDP is flat or slightly down? Not by truly decreasing, I think. It happens only because there's a growing number of people who are permanently left behind by the economy and fall out of the official statistics.

But hey. This is just a forecast. Maybe the Atlanta Fed is wrong. We'll find out in a couple of weeks.

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Friday Cat Blogging - 11 July 2014

| Fri Jul. 11, 2014 2:53 PM EDT

For a variety of reasons, fresh catblogging just didn't happen this week. So I'm going to do what everyone else does when they fail to meet an editorial deadline: run some old stuff and pretend it's an extra-special feature. So here you are: rarely seen archival footage from January 14, 2007, Domino's first day at home after we picked her up from the shelter. As you can see, she immediately made her way to a book about a magical cat who refrains from eating its shipmate. This was a good influence, I think.

A Progress Report on "Reform Conservatism"

| Fri Jul. 11, 2014 12:40 PM EDT

Does the new generation of "reform conservatives" represent real change for the Republican Party? In policy terms, not really. They've offered up a few variations on popular conservative themes (reducing taxes via child tax credits instead of cuts in top marginal rates, for example), but for the most part they've just nibbled around the edges. David Frum, however, says this is still a good start:

What matters most about the reformers is not the things they say but the things they don’t. They don’t abuse the long-term unemployed. They don’t advocate tighter monetary policy in the midst of the worst slump since the 1930s. They don’t urge an immigration policy intended to drive wages even lower than they have already tumbled.

They don’t pooh-pooh the risks of a government default on its obligations, as many conservatives did when radicals in the GOP forced debt-ceiling confrontations in 2011 and 2013. They don’t blame budget deficits for the slow recovery from the crisis of 2009. They don’t shrug off the economic and social troubles of 80 percent of the American nation.

Fair enough. At the same time, there have always been successful conservatives who were tonally distinct from the tea party. Paul Ryan is the best-known example. He's mild-mannered and speaks in the language of an accountant. He always seems reasonable and willing to engage. He doesn't participate in tea party histrionics. In short, he doesn't say any of the things Frum mentions above.

And yet, Ryan remains a tea party darling, and for good reason: his budget is a radically right-wing enterprise. Perhaps the most genuinely radical, genuinely right-wing enterprise in all of Washington.

So the question for the reform conservatives is: What's next? Are they trying to build credibility with conservatives so they can later nudge them in a new direction? Or are they mostly just trying to put a friendly veneer on an essentially tea partyish agenda? We don't know yet, because so far they haven't been willing to take many risks. And with good reason. As a friend emailed just a few minutes ago, "The reformers are one bad suggestion away from being fully Frumanized out of the party."

I wish the reformers luck. And I don't really blame them for their timidity so far. Still, it's far too early to tell how serious they are. We'll just have to wait and see.

Does Financial Literacy Matter?

| Fri Jul. 11, 2014 11:56 AM EDT

We recently received the grim news that American schoolkids are behind their international peers when it comes to financial literacy. We can add this to the pile of grim news about American schoolkids being behind their international peers in math, science, reading, and every other subject imaginable.

Is this actually true? Well, it depends on which tests you rely on and which countries you compare to. And when you disaggregate by income and race you often end up with different results. Still, it's a good horror story, and one we can't seem to get enough of. The financial literacy debacle fits right in.

But forget for a moment whether American high school students really suck at financial literacy. The Economist raises an entirely different question: does it even matter?

Perhaps most important, courses in personal finance do not appear to have an impact on adult behaviour. As Buttonwood has pointed out, the knowledge that students acquire in school when they are in their teens does not necessary translate into action when they have to deal with mortgages and credit-card payments later in life. One study, for example, found that financial education has no impact on household saving behaviour. As a paper by Lewis Mandell and Linda Schmid Klein suggests, the long-term effectiveness of high-school classes in financial literacy is highly doubtful. It may simply be the case that the gap in time is too wide between when individuals acquire their financial knowledge, as high-school students, and when they're in a position to apply what they have learned.

Now, I've long had my doubts whether any of the actual knowledge I learned in high school matters. Habits matter. Basic skills matter. The ability to figure out how to figure out stuff matters. Learning to sit still and concentrate for half an hour at a time matters. But trigonometry? Catcher in the Rye? The history of the Gilded Age? That's not so clear. Maybe financial literacy falls into the same category.

Alternatively, it may be that education has little impact on our behavior in general. We all know that the way to lose weight is to eat less and exercise more, and yet that knowledge does us little good. Most of us overeat anyway. Likewise, even if we know that interest charges on credit card debt can eat us alive, we might just go ahead and buy that snazzy new big-screen TV anyway.

Who knows? Maybe education outside of (a) basic skills and (b) highly specific skills used in our professions really doesn't matter much. If that turned out to be true, I can't say it would surprise me an awful lot. Being a Renaissance Man may be overrated.

Prior Experience Doesn't Matter (Much)

| Fri Jul. 11, 2014 10:53 AM EDT

Tyler Cowen points to yet another story today about how HR departments are using big data to hire and manage employees, and it's fairly interesting throughout. However, my appreciation for the power of this approach was certainly enhanced when I read the following:

For Xerox this means putting prospective candidates for the company’s 55,000 call-centre positions through a screening test that covers a wide range of questions....The results are surprising. Some are quirky: employees who are members of one or two social networks were found to stay in their job for longer than those who belonged to four or more social networks (Xerox recruitment drives at gaming conventions were subsequently cancelled). Some findings, however, were much more fundamental: prior work experience in a similar role was not found to be a predictor of success.

This was something I always scratched my head about back when I was a hiring manager. Obviously you want someone with work experience that's related to the job you're trying to fill, but an awful lot of my fellow managers seemed pretty obsessed with finding candidates with almost identical experience. I understood the attraction of hiring someone who seemed like they could be slotted in immediately and hit the ground running, but it still seemed misplaced. Which would you rather hire? Someone fairly good with exactly the right experience, or someone really good who might take a month or two to learn some new things? I'd choose the latter in a heartbeat.

On the other hand, I suppose valuing experience highly might be a good idea if you really had no faith in your ability to distinguish good from really good. And the truth is that most of us probably don't. So maybe finding perfect fits makes more sense than I gave it credit for. After all, back in the Middle Ages we didn't have access to Xerox's whiz-bang big data.