Kevin Drum

It Looks Like Germany is Ready to Let Greece Collapse

| Thu Jun. 18, 2015 11:05 AM EDT

Last-ditch talks between Greece and the rest of Europe are scheduled to start today. Nobody is very optimistic:

There is little sign that either side is softening its position....In Germany especially, the fear is that providing new loans to Greece without extracting more spending cuts represents a fateful step toward a so-called transfer union, with wealthier nations providing handouts to Greece and other weaker countries. “If a small country can blackmail the other members into a transfer union without conditions and controls, the euro cannot survive,” said Adam Lerrick, a sovereign debt expert at the American Enterprise Institute, a research organization based in Washington.

....Both sides are girding for a euro exit.

The Greek central bank warned on Wednesday that the country’s economy would be devastated. And bankers say that in the last week, Greeks have pulled more than €1.5 billion from their deposit accounts. Within the European Stability Mechanism, Europe’s newly formed rescue vehicle, preparations are being made to bolster other weak countries in the event of a contagion panic.

While polls in Greece still show overwhelming support of the euro, a majority of Greeks are fed up with the harsh austerity measures that have been a condition for the €240 billion in loans that have been disbursed to the country.

I have the advantage of living in California, where this is all a fairly academic debate. It's even interesting, in a way. Will both sides blink at the last second? If they don't, and Greece leaves the euro and then defaults on its loans and devalues its currency, will it work? How much pain will it cause? Will Greece recover fairly quickly?

Those are interesting questions for anyone who doesn't actually have to live with the answers. For the Greeks themselves, though, the result is going to be horrible either way. It's just a matter of which way is slightly less horrible. For the rest of Europe, it's possible that it will all be a big nothingburger. Then again, nobody thought the default of Creditanstalt would supercharge the Great Depression. So who knows?

What a mess. Both sides are right, and both sides are wrong. But so far Europe has done next to nothing for Greece. They've made lots of loans, but mainly so that Greece could pay back its debt to shaky European banks. It's been every bit as disingenuous and self-interested as all the cheap loans those banks made to Greece in the first place so that Germans and others could enjoy access to cheap Greek products during the aughts. They enjoyed the boom from those loans and supported it with monetary policy that favored Germany but overheated Greece, and then when the economy went sour they set monetary policy continent-wide to favor Germany yet again, not the folks they'd been shoveling money to all those years. And when Greece's economy collapsed, they just sat back, talked about following the rules, and demanded that Greece let their economy collapse even further.

It's not as if Greece bears no blame for what happened. A lot of people share in that. But Germany has been the cynical manipulator of events all the way back to 2000, tacitly approving capital flows to Greece when it helped the German economy and then orchestrating billions in loans when German banks ended up in trouble. And now that German banks aren't in trouble anymore, bye bye loans. Time to pull up the ladder.

Whatever else happens, it's a good time to be German and it's a crappy time to be Greek. Welcome to the European "union."

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TPP, TPA, and TAA: Explaining the Unexplainable

| Wed Jun. 17, 2015 9:33 PM EDT

Even granting that I haven't followed the TPP treaty debate all that closely, the latest maneuvering to get it passed is a little puzzling. As you may recall, the original strategy was to pair up TPA, which most Democrats oppose, with TAA, which most Democrats like, in hopes of attracting enough Democratic votes to pass the whole package. With these preliminaries out of the way, Congress could then vote on TPP itself. It didn't work. Dems voted heavily against TAA because they knew it would sink TPA too. So what's next?

Hold on. That probably barely sounded like English to some of you. Here's an acronym primer:

TPP = Trans Pacific Partnership, a trade treaty between the United States and a bunch of other countries around the Pacific Rim. It's been under negotiation for years and will be ready for a ratification vote soon.

TPA = Trade Promotion Authority, aka "fast track." This comes before the TPP vote, and guarantees that the treaty text will be submitted to Congress for an up-or-down vote with no amendments allowed. Without it, the treaty is dead, since obviously all the other countries won't allow the US to unilaterally makes changes.

TAA = Trade Adjustment Assistance. Trade agreements with poor countries often lead to job losses in the US, as jobs get moved overseas. TAA is a laundry list of measures designed to help workers who lose their jobs because of the treaty, and it's supposed to make trade treaties more tolerable to organized labor. It very decidedly failed to do so this time.

Now go read the first paragraph of this post again.

Right. So where were we? Oh yes: The TPA+TAA package bombed with anti-treaty Democrats, and it needed at least a few Democratic votes to pass. So what's next?

On Thursday the House will vote on just the fast-track portion—also known as Trade Promotion Authority, or TPA—on the understanding that the workers’ aid would be approved later.

....In a renewed push to win support for the fast-track bill, Mr. Obama huddled Wednesday at the White House with pro-trade Democrats. House Speaker John Boehner (R., Ohio) and Senate Majority Leader Mitch McConnell (R., Ky.), meanwhile, said they would find a way to separately pass legislation renewing the workers’ aid program, also known as Trade Adjustment Assistance or TAA, hoping to shore up the Democratic support necessary for the new plan.

Hmmm. TPA actually passed the House last week, even though TAA had already been voted down earlier in the day. So I guess the idea here is that pro-treaty Democrats will vote for TPA as a standalone bill too. I mean, if they were willing to vote for it last week after TAA had been defeated, why not vote for it this week with no TAA? Following that, it's just a matter of sending the standalone TPA bill to the Senate and finding out if a few Democrats there will still vote for it even without TAA.

It's all a little weird and desperate, but it might work. Republicans are swearing that if TPA passes, they'll bring up TAA for a vote later, which is supposed to appease Democratic concerns about job losses. Dems only voted against TAA in order to kill TPA, so if TPA has already passed there's no longer any reason for them to vote against TAA.

Of course, even if Republicans allow a vote on TAA, it also needs a few Republican votes to pass, and the problem here is the opposite: Republicans have little reason to vote for TAA once TPA has already passed and there's no longer any need to appease Democrats. But Democrats can't pass it alone. They need some Republican votes too. So do they trust the GOP leadership to deliver those votes?

Jesus. What a rat's nest. If you didn't understand any of that, try reading it again. And then again. If it still doesn't make sense, just forget the whole thing and eat a quart of ice cream. You'll be better off.

Benghazi Hearings Now a Trip Down Memory Lane

| Wed Jun. 17, 2015 1:19 PM EDT

Jonathan Allen on the Trey Gowdy clown show better known as Benghazi! hearings:

Republicans finally stripped away any pretense that they are more interested in the Benghazi attack than in attacking Hillary Clinton. With the nine-hour interrogation of bit player Sid Blumenthal Tuesday, they jumped the shark.

The House Select Committee on Benghazi deposed the Clinton confidant in a closed hearing room in a sub-basement of the Capitol. Blumenthal’s never been to Libya. He doesn’t know anything special about the Benghazi attack. He did sometimes forward "intelligence" memos from an ex-CIA officer to his longtime friend Hillary Clinton.

Not surprisingly, the committee — tasked with investigating the Benghazi assault — learned absolutely nothing from Blumenthal about the terrorist attack that killed four Americans, including Ambassador Chris Stevens, in September 2012.

However, by spending all that time on Blumenthal, they met someone who does know something about Hillary Clinton. Indeed, Blumenthal’s appearance on Capitol Hill — where he was last a prominent figure during Bill Clinton’s impeachment saga — felt like part of a national time warp in which Americans are forced to relive the partisan warfare of the 1990s, when Republicans summoned Clinton aides to testify about an endless string of investigations. A Clinton confidant testifying before Congress is the only thing more '90s than a Bush and a Clinton running for president.

Apparently the questioning of Blumenthal was so transparently aimed at gathering campaign material against Hillary that Democrats on the committee want the full transcript released. They probably also want it released because Republicans in the past have had a bad habit of selectively releasing tiny little parts of transcripts purpose-designed to make Democrats look bad.1 Best to nip that in the bud.

There are so many things that I thought Republicans would eventually calm down about. Obamacare. Benghazi. Climate change. Iraq. Putin. Obama's betrayal of Israel. But no. Granted, campaign season is upon us, and that's when things always get hot, but still. Benghazi? Seriously? How many metric tons of evidence does it take for them to admit that it was a tragedy but not an act of treason?

1Though, in fairness, I don't think Gowdy has ever done this.

Obamacare for Blue States But Not For Red: Dream or Nightmare?

| Wed Jun. 17, 2015 11:36 AM EDT

Speaking of King v. Burwell, here's the thing about it that I've always really wondered about. Suppose the plaintiffs win and Republicans can't agree on a plan to do anything about it. Subsidies get eliminated in 34 states, almost all of them red. This basically guts Obamacare for anyone in, say, the bottom third of the income spectrum, which is virtually all Obamacare users. A few middle-class users with pre-existing conditions will still take advantage of it, which will cause either a big death spiral or a little one among insurance companies, but rates will surely go up. Bottom line: the extent of the chaos is a little hard to predict, but for all practical purposes Obamacare goes away in red states.

But in blue states? It's business as usual. California will continue to hoover up federal subsidies and its exchange will be open for business as usual. Ditto for the liberal hellholes of New York and Taxachusetts and so forth.

Bottom line: We will have a thriving social welfare program for health care in the blue states—funded by everyone's tax dollars—and nothing in the red states. Is that tolerable? Is it sustainable? Red states won't be able to do much about it, aside from caving in and tacitly supporting Obamacare by starting up their own exchanges. So what happens? Does this eventually cause congressional Republicans to cave in completely and pass the infamous four-word fix? Do they hold out because they hate Obamacare just that much? Or what?

We've never had a major social spending program limited solely to the blue states who support it. It's terra incognita. So what would happen?

NOTE: I continue to think the Supreme Court will do the right thing and rule against the plaintiffs in King. That would make this all moot. But you never know.

Republicans All In On Gutting Obamacare Subsidies

| Wed Jun. 17, 2015 10:49 AM EDT

The New York Times reports that Republicans are nervous about what might happen if they win their court case to slash Obamacare subsidies in some states:

“Doing nothing is not an option,” said Senator Bill Cassidy, Republican of Louisiana....Mr. Cassidy, a physician who has provided care to uninsured patients in Louisiana’s charity hospital system, said he could easily imagine how the White House might respond: “The president brings a woman in the middle of chemotherapy up on a stage to point out that she can no longer have her insurance because the Supreme Court struck down the subsidies.”

The consequences could be felt in statehouses and on Capitol Hill....Of the Senate seats up for election next year, 24 are held by Republicans, and 22 of those are in federal exchange states that could lose their subsidies. Asked if she hoped the court would rule for the plaintiffs, Senator Susan Collins, Republican of Maine, paused a moment, then said: “Yes, I guess I do. It would provide an opportunity to transition to a new law, or an improved version of the Affordable Care Act.” But she added, “I don’t think it would be fair to cut off people who have been using Obamacare subsidies.”

Note that Susan Collins is allegedly one of the most moderate Republicans in the Senate. Even so, she wants to win King v. Burwell. Sure, it would throw everything into chaos and cause panic for millions of people, including thousands in her own home state. Nevertheless, she's in favor because she claims to believe it would lead to a new and better law. She of all people knows perfectly well that this is entirely chimerical, but that gives her only momentary pause. She's still rooting for the chaos and immiseration.

If that's how Collins feels, I can only imagine how the rest of the Republican caucus feels. They wouldn't even experience a minor twinge about cutting off people currently using subsidies, as Collins does. They'd just be rubbing their hands in glee because a victory would be a big win against President Obama. And these days, what else matters? Cassidy may be right about the optics, but I wonder how much effect that would have on the true believers who control the Republican Party these days? Probably not much.

Mirror, Mirror On the Wall, Who's the Most Reactionary of Them All?

| Tue Jun. 16, 2015 11:23 PM EDT

Over at Wonkblog, Pablo Barberá uses Twitter to rank all the presidential candidates from most liberal to most conservative. I'll leave it up to the experts to debate whether his methodology is sound, since, you know, Twitter. Anyway, here it is:

What I liked about this ranking was that Barberá included a handful of media outlets in order to provide some landmarks for comparison, and he had the good taste to include Mother Jones as one of them. It turns out we rank in between Martin O'Malley and Lincoln Chafee, and right smack in the ideological middle of the congressional Democratic caucus.

Is that good or bad? I don't know. But I figured everyone would want to know.

POSTSCRIPT: Also, note where Scott Walker is. The guy is really conservative.

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Paul Ryan's Vision of a Dickensian Hellhole Is Up For a Vote Next Year

| Tue Jun. 16, 2015 7:00 PM EDT

Jon Chait points out today that it doesn't really matter very much whether Hillary Clinton moves a little leftward, a little center-ward, or frankly, in any other direction during the upcoming presidential campaign. Oh, it might help her get elected, but once in office Republicans aren't going to pass any of her proposals, no matter what they happen to be. Nonetheless:

The presidential election carries hugely important stakes, not just in policy realms where the president wields significant influence on her own, like foreign policy and judicial appointments, but also on domestic policy. It’s just that the stakes have nothing to do with Clinton’s proposals. What’s at stake is the Paul Ryan budget.

....Jeb Bush has already endorsed the Ryan budget. Marco Rubio has voted for it and said, “by and large, it's exactly the direction we should be headed.” The other candidates have positioned themselves to their right....The overall thrust is perfectly clear: deep cuts in marginal tax rates along with large reductions in means-tested spending, and a deregulation of the energy and financial industries. Its enactment would amount to the most dramatic rollback of government since the New Deal.

....News coverage has oddly failed to frame this question as the center of the election. Journalists like personal drama, and they prefer to place the candidates and their individual ideas in the center of the portrait.

In fairness, the general election is a long way off. It's pretty understandable that campaign reporters are currently spending most of their time on primary jockeying and not on the details of policy proposals—especially since most of the candidates haven't yet done more than outline their domestic agendas anyway.

That said, no one took this very seriously in 2012, even though the Ryan budget was at stake then too. I'll toss out three reasons I suspect the same thing will happen this time too:

  1. The eventual Republican candidate will insist that the Ryan budget is "a great roadmap" and "the direction our administration will move in," or some such waffle. But he will refuse to flatly endorse the document itself ("As the Constitution requires, details will be negotiated as part of the congressional budgeting process blah blah blah"), and this refusal will be taken at face value.
  2. As I've mentioned enough times to be a bore about it, Republicans generally get a pass from the press corps when they advocate some militantly right-wing position. It's taken as little more than an applause line they "have" to deliver to appease the base, not something they'll actually do once they're in office.
  3. And in the case of the Ryan budget, the truth is that when Republicans are out of power they do always say that the budget is a looming apocalypse and needs to be slashed—but when they're in power it usually turns out they like spending money too. Sure, they always have a period of remorse and backbiting after they've been turfed out of office, swearing that next time they'll slash the budget for sure. But they never do. They just run big deficits. So it's hardly surprising that seasoned campaign reporters take this stuff with a grain of salt when they hear it.

So are Republicans serious about it this time? Beats me. I don't really want to risk finding out, but I honestly have no idea.

Corporations Want to Follow Your Every Move, Whether You Like It Or Not

| Tue Jun. 16, 2015 1:39 PM EDT

Last year the Commerce Department put together a group to make recommendations for regulating facial recognition technology. The group included nine privacy advocates, but Dan Froomkin reports that it didn't go well:

At a base minimum, people should be able to walk down a public street without fear that companies they’ve never heard of are tracking their every movement — and identifying them by name — using facial recognition technology,” the privacy advocates wrote in a joint statement. “Unfortunately, we have been unable to obtain agreement even with that basic, specific premise.”

....After a dozen meetings, the most recent of which was last week, all nine privacy advocates who have participated in the entire process concluded that they were totally outgunned. “This should be a wake-up call to Americans: Industry lobbyists are choking off Washington’s ability to protect consumer privacy,” Alvaro Bedoya, executive director of the Center on Privacy & Technology at Georgetown Law, said in a statement.

People simply do not expect companies they’ve never heard of to secretly track them using this powerful technology. Despite all of this, industry associations have pushed for a world where companies can use facial recognition on you whenever they want — no matter what you say. This position is well outside the mainstream.”

I had no idea that anyone was even considering the regulation of facial recognition software, so this is news to me. It's yet another indication that in the future we will have virtually no privacy left at all. Either that or we'll all start walking around in tinfoil-shielded space suits whenever we leave our tinfoil-wallpapered houses.

Jeb Bush Doesn't Want to Repeal Obamacare. Maybe.

| Tue Jun. 16, 2015 12:04 PM EDT

This is interesting from Sarah Kliff:

Jeb Bush laid out his top policies Monday in a speech announcing his run for the 2016 Republican nomination. But he left out one big Republican priority: repealing Obamacare....[This] reflects the changing politics of Obamacare. As Obamacare becomes more and more entrenched, it builds a constituency. As more people sign up for Obamacare, it becomes increasingly difficult to take away both practically and politically. So Republicans, who once ran and won calling for its end, are beginning to abandon the line.

Jeb has been fuzzy on Obamacare for a while, to the point where it's been hard to know where he actually stands. It's clear enough that he doesn't like Obamacare—it's a "monstrosity" and the "greatest job suppressor of the recovery"—but he never goes much beyond this kind of pro forma denunciation. So it's not surprising that he didn't give it a lot of attention in his announcement speech.

Still, it's something to watch. Will he be gung ho for repeal once he's on a debate stage with all the other candidates? Or will he stay soft and get pilloried? And if he does, how will this affect him with Republican voters?

Have any of the other ten GOP candidates who have announced so far gone soft on Obamacare repeal? This should be a research project for someone other than me. Inquiring minds want to know.

Public: Congress Should Restore Obamacare Subsidies If Supreme Court Kills Them

| Tue Jun. 16, 2015 10:47 AM EDT

So how does the general public feel about the possibility of the Supreme Court cutting off Obamacare subsidies for half the country in King v. Burwell? Kaiser asked them:

Nearly two-thirds think Congress should pass a law that makes everyone in all states eligible for subsidies. Unsurprisingly, this sentiment is strongest among Democrats and weakest among Republicans. In a related question, among those living in states that use the federal exchange—that is, the mainly red states that would lose subsidies if King v. Burwell succeeds—less than a third think their state should just shrug and refuse to create a state exchange that would reinstate the subsidies.

Now, Greg Sargent points out that a huge majority of respondents haven't even heard of King v. Burwell or know what it means. So take this with a grain of salt. On the other hand, if King succeeds and subsidies suddenly disappear, I suspect everyone in the country will suddenly know exactly what it means. Sargent is pessimistic about where this will lead:

Let’s face it, once any post-King battle gets going, there will be plenty of opportunities for Republicans to roll out the old Obamacare Fog Machine once again. Republicans could pass something that temporarily extends subsidies but also repeals the individual mandate, and once Obama vetoes it, blame him for killing their effort to help all those millions of people. More generally, they can blame Obamacare itself for kicking all those millions off of Obamacare, and then argue that this is another way the law continues to victimize Americans, an argument they are already experimenting with rather creatively.

These narratives are of course tortured and incoherent, and Democrats may be able to break through the clutter by pointing out that the problem could be fixed very easily if Republicans wanted to join Dems in doing so....But it’s still possible Republicans could either not care about the damage they will sustain or mitigate it sufficiently. Once the both-sides-to-blame punditry kicks in alongside the GOP Obamacare Fog Machine, for many people this could just come across as a far-away Washington argument, with little clarity around why the parties can’t agree on a way to restore health coverage for millions — why can’t the two parties get along??? — and why they lost it in the first place.

Yeah, the public response to this could go either way. We already know that Republicans will respond loudly and with one voice. But how about Democrats? If King goes against them, will Democrats unite behind a simple narrative and be willing to loudly defend Obamacare with the same passion that Republicans oppose it? That's what it will take. We'll see if they have it in them.