Kevin Drum

Road Funding Isn't Broken. Why Fix It?

| Tue Jan. 6, 2015 1:44 PM EST

James Pethokoukis is skeptical that even with gasoline prices plunging toward the two-dollar mark, Congress will consider raising the gasoline tax. Me too. But then there's this:

Of course, another idea — as transportation experts Matthew Kahn and David Levinson wrote in a 2011 report — is to just freeze the gas tax as is and use revenue solely to bolster existing roads and bridges, including the addition of new pricing schemes to reduce congestion. Funding for new capacity would come from a new federal highway bank, which would loan money to states contingent on meeting stringent performance tests and demonstrating ability to repay the loans. Other options include axing the tax completely and letting states fund their own projects or public-private partnerships. How about some fresh, innovative thinking on infrastructure rather than defaulting to the status quo?

There are plenty of places where we could use fresh thinking. But is this really one of them? It's infrastructure development. The simplest and most straightforward way of doing it is to raise money via taxes and then spend it. Loans aren't innovative. Dumping it all on the states isn't innovative. Public-private partnerships aren't innovative.

In fact, all of this is the opposite of innovative. They're just Rube Goldberg mechanisms to avoid transparent taxation and spending, something that we already do way too much of via subsidies and tax expenditures. Here's my idea of innovative:

  1. We figure out how much we want to spend on transportation infrastructure.
  2. We decide which taxes are the fairest, most efficient funding source.
  3. We set tax rates to match (1) and (2).
  4. We spend the money.

That's clear and transparent. It's reasonably efficient. It's an appropriate way to fund public goods. What's not to like?

Generally speaking, my point here is that just because something is traditional doesn't mean it's a dinosaur. We should pick and choose our targets for reform and innovation, not use them merely as buzzwords. If you want to build a road, nothing much has changed over the past century. You just need to raise the money and then break ground. You might want to do more or less of it, or build different kinds of roads, or build roads to different places. But funding them? We already know how to do that. Why muck it up?

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The Itsy Bitsy Ambitions of John Boehner

| Tue Jan. 6, 2015 10:44 AM EST

You can't accuse John Boehner of starry-eyed idealism:

When I ask him to name his top priority, he lays out not a grand legislative bargain but a seemingly modest managerial goal that has eluded him for much of his time at the top: exercising enough control over his conference to pass spending bills through regular order.

Um, OK. That seems doable. But I'm not so sure about this:

The idea of a Boehner-Obama bargain late in the game is no idle fantasy....Boehner told me “bipartisanship” was in fact one of his top priorities for 2015, and, in private, in the wake of the 2013 shutdown debacle, Boehner told his inner circle that he has no problems passing big legislation “by working directly with the Democrats” if his own conference defies him again.

....That’s the way it worked in December: Two-thirds of Republicans joined about one-third of Democrats to pass a Boehner government-funding plan....When I asked Boehner if he worried Republicans would slam him for dealing with Democrats, he blew a puff of smoke and answered, “I don’t care.”

It's true that during the recent lame-duck session, Boehner was willing to pass a compromise budget that alienated much of his own caucus and required lots of help from Democrats to pass. But will he be willing to do that when it comes to a "big deal on taxes, entitlements and government spending, trade and immigration"? I have my doubts, no matter how much we hear that Boehner and Obama are really tighter buddies than you'd think. It's not just that Boehner really, truly has to be willing to defy a big chunk of his caucus, after all. He also has to be willing to take the risk of making genuine compromises in order to get a sizeable chunk of Democrats on board. Outside of budget deals, I've simply seen no evidence that Boehner is willing to do that—or, even if he is, that he has the mojo within his own caucus to get most of them to agree to such a deal.

But we'll see. Maybe Boehner will surprise us. I just wouldn't bet the farm on it.

Republicans Will Never Allow Guantánamo To Be Closed

| Tue Jan. 6, 2015 10:05 AM EST

I guess you can add this to the list of President Obama's executive actions designed to circumvent an unhelpful Republican Congress:

In a series of secret nighttime flights in the last two months, the Obama administration made more progress toward the president’s goal of emptying the military prison at Guantánamo Bay...Now 127 prisoners remain at Guantánamo, down from 680 in 2003, and the Pentagon is ready to release two more groups of prisoners in the next two weeks; officials will not provide a specific number.

President Obama’s goal in the last two years of his presidency is to deplete the Guantánamo prison to the point where it houses 60 to 80 people and keeping it open no longer makes economic sense.

Hmmm. Will Republicans be willing to close Guantánamo if it no longer makes economic sense to keep it open? Color me skeptical. This is a tough-on-terrorism issue, not a budget issue. If I had to guess, I'd say that Republicans would refuse to close Guantánamo if there were even a single prisoner left there. If it becomes a US version of Spandau, well, that's just fine. Closing it is for appeasing, weak-kneed, liberals, not rock-jawed severe conservatives.

In fact, I could easily see this becoming a stock question during the Republican primaries. "Would you ever close Guantánamo?" The candidates will then take turns trying to top each other with ever more absurdly hawkish answers, the same way they did with immigration in 2012. Like this:

Candidate 1: I will never close Guantánamo. These are the most dangerous people in the world.

Candidate 2: Not only wouldn't I close it, I'd expand it.

Candidate 3: Expand it and make it more secure. I'd build a moat.

Candidate 4: And an electrified fence.

Candidate 5: I'd take away their Obamacare!

At that, everyone would look admiringly at Candidate 5 and silently give him the victory.

It's Omnicom's World, We Just Live In It

| Tue Jan. 6, 2015 9:31 AM EST

Luke O'Brien has a wonderful little story in Politico about the trials and tribulations of being on Russia's PR team these days, and it's worth a read if you have a bit of time to kill. But if you don't have the time, I was intrigued by just the list of names that peppered the piece. Here you go:

Ketchum, the giant PR agency on the Russia account....turned to The Washington Group....owned by Omnicom....Alston & Bird....Clark & Weinstock, an Omnicom company....APCO Worldwide....Diversified Energy Communications Ltd....action-movie star Steven Seagal....Global Strategic Communications Group.

Someday, we will all work for Omnicom, with an occasional job on the side for Global Strategic Communications Group. It sounds lovely, doesn't it? Almost like working for the dark side of a James Bond movie.

Repeat After Me: Competition Is Good. Competition Is Good.

| Mon Jan. 5, 2015 8:21 PM EST

Did you know that companies facing no competition are likely to charge you more? It's true! But in case you'd like a bit of evidence for this truism, Binyamin Appelbaum directs our attention to a clever study of mortgage rates from the Chicago Fed. It turns out that when the federal government authorized the mortgage refinancing program called HARP, they set up the rules in a way that discouraged anyone from participating aside from the original lender. This meant that, effectively, the original lender had little or no competition for the refinanced loan.

The results are shown on the right. The HARP rules took effect for mortgages with a loan-to-value ratio of 80 percent or higher. Private label mortgages, which didn't fall under the new rules, show a normal range of interest rate spreads at all LTV values. But loans backed by Fannie Mae, which did fall under the new rules, show a sharp discontinuity upward precisely at an LTV of 80.

In other words, at exactly the point where lenders faced no effective competition thanks to HARP rules—i.e., Fannie-backed loans with an LTV of 80 or above—interest rate spreads suddenly increased by about 0.2 percent. Without competition, lenders were free to charge a little more, and they did.

I know: you're shocked. And in case you're tempted to think that 0.2 percent doesn't really seem like that much, the authors point out that it adds up fast: "While the anti-competitive features of HARP may appear to have curtailed borrower gains by relatively small amounts, they resulted in sizable increases in profitability for a subset of lenders. These results further highlight the importance of restoring full competitiveness to mortgage refinancing markets."

Quite so. Competition is good. We've paid less and less attention to this over the past few decades, and we do so at our peril. It's the heart and soul of capitalism.

Iowa to Democrats: Please, Please Have a Real Race So We Can Get Lots of Your Money

| Mon Jan. 5, 2015 1:15 PM EST

Last night I noticed a Wall Street Journal piece about Iowa Democrats being slow to "rally" around Hillary Clinton, but I only read the first couple of paragraphs before I got bored. Today, Ed Kilgore tells me I quit too soon. If I had read to the bottom, I would have learned that this phenomenon probably has nothing really to do with a desire for a more populist candidate:

State Democratic officials also want a contested race because that boosts the party apparatus and fundraising....“When we have these candidates out here running for office, we invite them to county dinners and the numbers swell at these events,” said Tom Henderson, chairman of Democratic Party in Polk County, which includes Des Moines. “So it is a great, great service for the Democratic Party to have these candidates running for office.”

Kilgore explains further:

You have to appreciate that candidates in both parties for state and local office in Iowa (and to a lesser extent, in other early states) are accustomed to enjoying the benefit of world-class mailing lists, state-of-the-art campaign infrastructures, and top-shelf campaign staffers from all over the country. These goodies come to them courtesy of presidential candidates, proto-presidential candidates, people who want to work on presidential campaigns, and people who want to influence presidential campaigns. This is why Iowans so fiercely protect their first-in-the-nation-caucus status, and also why they hate uncontested presidential nomination contests. So of course they don't want HRC to win without a challenge.

Roger that. In any case, talk is cheap right now. My guess is that everything changes once HRC actually announces her candidacy. When that happens, I'll bet everyone starts rallying just fine. Iowa Democrats might be eager for their quadrennial infusion of money and pandering, but not so eager that they want to risk being caught on the losing side. Once the pressure is on to become an early HRC supporter or else spend the rest of the year on the Clinton shit list, well, I have a feeling an awful lot of early supporters are suddenly going to come out of the woodwork. We'll see.

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Without Fox News, There Would Have Been No Iraq War

| Mon Jan. 5, 2015 12:24 PM EST

Max Ehrenfreund points to an interesting tidbit this morning. A pair of researchers have released a working paper that attempts to figure out if watching Fox News makes you more conservative. They do this by exploiting the fact that channel numbers on cable systems are placed fairly randomly throughout the country, and people tend to watch channels with lower numbers. Thus, in areas where Fox has a low channel number, it gets watched a little bit more in a way that has nothing to do with whether the local viewers were more conservative in the first place.

So does randomly surfing over to Fox News tend to make you more right-wing? Yes indeed! "We estimate that Fox News increases the likelihood of voting Republican by 0.9 points among viewers induced into watching four additional minutes per week by differential channel positions." And this in turn means that we owe the Iraq War to Fox News: "We estimate that removing Fox News from cable television during the 2000 election cycle would have reduced the average county's Republican vote share by 1.6 percentage points."

And what about MSNBC? It had no effect until the 2008 election, after it had made the switch to liberal prime-time programming. At that point, it becomes pretty similar to Fox in the opposite direction. But the effect is subtly different:

The largest elasticity magnitudes are on individuals from the opposite ideology of the channel, with Fox generally better at influencing Democrats than MSNBC is at influencing Republicans. This last feature is consistent with the regression result that the IV effect of Fox is greater than the corresponding effect for MSNBC.

....Table 16 shows the estimated persuasion rates of the channels at converting votes from one party to the other. The numerator here is the number of, for example, Fox News viewers who are initially Democrats but by the end of an election cycle change to supporting the Republican party. The denominator is the number of Fox News viewers who are initially Democrats. Again, Fox is more effective at converting viewers than is MSNBC.

The difference in persuasion rates is significant: the study finds that in the 2008 election, a full 50 percent of Fox's left-of-center viewers switched to supporting Republicans. For MSNBC, the number of switchers was only 30 percent. That's a big difference.

Now, in real-world terms this is still a smallish effect since neither channel has a lot of regular viewers from the opposite ends of their ideological spectrums in the first place. Still, this is interesting. I've always believed that conservatives in general, and Fox in particular, are better persuaders than liberals, and this study seems to confirm that. But why? Is Fox's conservatism simply more consistent throughout the day, thus making it more effective? Is there something about the particular way Fox pushes hot buttons that makes it more effective at persuading folks near the center? Or is Fox just average, and MSNBC is unusually poor at persuading people? I can easily believe, for example, that Rachel Maddow's snark-based approach persuades very few conservative leaners to switch sides.

Anyway, fascinating stuff, even if none of it comes as a big surprise. Fox really has had a big effect on Republican fortunes over the past two decades.

Facts Are Useless Things — Politically Speaking

| Mon Jan. 5, 2015 11:04 AM EST

Jared Bernstein thinks it makes more sense to push for an increase in the gasoline tax than to try to enact a full-blown carbon tax. But he admits the point is moot: Republicans aren't going to give either one the slightest consideration:

Yet here again, the action is sub-national, and some states have moved on this. As with all those state minimum wages, this creates a useful natural experiment wherein we can collect data on the impact of these state gas tax increases on their economies, budgets, and residents’ incomes. That way, if facts should once again matter, we’ll have some evidence as to the actual impact versus the ideologically inspired cartoon impact.

Damn! Did I miss out on the period in American history when facts used to matter? I'm bummed. Those must have been interesting times.

Republicans Are Picking Exactly the Wrong Time to Push for the Keystone XL Pipeline

| Mon Jan. 5, 2015 10:15 AM EST

The New York Times tells us what to expect when Congress reconvenes this week:

Republicans hope to strike early with measures that are known to have bipartisan support. The House is set to pass legislation this week expediting the Keystone XL pipeline; the Senate is making it the first order of business as well. The House will also take up a measure that would change the new health care law’s definition of full-time workers to those working 40 hours rather than the current 30 hours — another proposal that has drawn backing from Republicans and Democrats in the House and Senate.

....Mr. Obama, who will embark this week on a series of policy-related trips in advance of the State of the Union address on Jan. 20, says he is open to working with the Republican Congress but draws the line at unraveling some of his major domestic initiatives, particularly on health care, Wall Street restrictions and the environment. The Keystone XL pipeline bill could present him with an immediate decision about starting the year with a veto, and Senate Democrats are confident they could sustain one.

I wonder how big a deal the Keystone XL pipeline is these days? It won't come on line for years, so current conditions shouldn't logically affect anything. But the world doesn't operate according to logic, and at the moment the world is awash in oil. Prices have plunged, OPEC is engaged in a production war, and gasoline is selling for two bucks a gallon. Does the American public really care very much right now about a pipeline that makes it easier for Canadians to ship their oil to Japan via the Gulf of Mexico?

I'm not sure, but I suspect Republicans may be choosing the wrong moment to take a stand on Keystone XL. Democrats can probably hold it up in the Senate without paying any real price, and even if they can't, Obama can veto it without paying any real price. It's lost its salience for the time being.

I suppose it's too late for Republicans to change their plans, but they'd probably be better off picking other fights. Changes to Obamacare could spark battles they're able to profit from. Keystone XL probably won't.

Lead and Crime: Some New Evidence From a Century Ago

| Sun Jan. 4, 2015 10:48 AM EST

And now from the future to the past: specifically, the period from 1921 to 1936. Let's talk about homicide.

James Feigenbaum and Christopher Muller recently published an intriguing paper that looks at the correlation between the introduction of lead pipes in American cities at the turn of the 20th century and the increase in the murder rate 20 years later. Southern cities, it turns out, mostly opted out of lead piping (mainly because they lacked nearby lead smelters and refineries), so F&M present separate results for northern and Midwest cities where the vast bulk of lead pipe construction took place.

Their basic results are on the right. Cities with at least some lead piping had murder rates that were, on average, 8.6 percent higher than cities with galvanized iron or wrought iron pipes. Other causes of death were mostly unrelated. Only the murder rates changed1.

Now, there are several things to say about this. On the positive side, this study avoids some of the confounding factors of other studies. Lead paint and gasoline lead, for example, tend to be concentrated in poor neighborhoods, which means that correlations with crime might be due to hyper-local socio-geographic factors rather than lead itself. But F&M's study avoids this problem: lead piping generally served entire cities, so it affected everyone equally, not just the poor. And since the likelihood of using lead pipes was mostly a factor of how close a city was to a lead refinery (thus making lead pipes cheaper), there's no special reason to think that cities which used lead pipes were sociologically any different from those that used iron pipes.

On the negative side, it's risky to look solely at homicide numbers. This is because the absolute number of murders is small, especially on a city-by-city basis, and that means there's a lot of noise in the numbers. This is especially true when you're limited to a period of time as short as 15 years. There's also the fact that this was an era when lead paint was widely used, and that's very hard to tease out from the use of lead in pipes. Finally, there's the usual problem of any study like this: what do you control for? The use of lead pipes is plausibly unrelated to anything else related to crime, but it's impossible to know for sure. The authors do control for black population, foreign-born population, occupations, home ownership, and gender breakdown, and that reduces their effect size from 11.4 percent to 8.6 percent. Might some other control reduce it even further?

Plus there's the anomaly of Southern cities. Very few of them used lead pipes, but some did, and their murder rates were essentially no different from any other Southern cities. Why? It's possible that this is because their use of lead pipes was small (F&M have data on lead pipe use by city, but not on how much lead piping was used in each city). But it's still odd.

Finally, there's a fascinating aspect to this study: when you study lead and crime, you need to concentrate on young children, since they're the ones primarily harmed by lead exposure. So you want to correlate lead exposure to crime rates 20 years later. As near as I can tell, F&M do this, but only by accident: their lead pipe data comes from 1897 but the earliest reliable homicide data starts in 1921. So the proper time lag is there, but it doesn't appear to be deliberate. They do mention the time lag briefly in their discussion of a confirming bit of evidence toward the end of the paper, but nowhere in the main body.

In any case, this is yet another small but persuasive bit of evidence for the link between lead exposure in children and increased rates of violent crime when those children grow up. Despite the study's few weaknesses, it really is plausible that lead piping is exogenous to any other factor related to crime rates, and this makes F&M's discovery pretty credible as a causal factor for the difference in murder rates between lead-pipe and iron-pipe cities, not just a spurious correlation. Interesting stuff.

1Actually, not quite. They tested for cirrhosis, suicide, heart disease, pneumonia, tuberculosis, auto accidents, influenza, diabetes, childbirth, syphilis, whooping cough, measles, typhoid, scarlet fever, train accidents, and malaria. All were uncorrelated except for cirrhosis and train accidents. The latter two are unexplained, though lead exposure actually is related to cirrhosis, and it's possible that reductions in impulse control might lead to more train accidents. Still, a bit odd.