Kevin Drum

Resentment and Outrage Are All That Matter in Europe Now

| Sat Jun. 20, 2015 3:12 PM EDT

Larry Summers thinks it will be a catastrophe if Greece repudiates its debt and "financially separates from Europe." Greece will become a failed state; Europe will face a refugee crisis; and both Europe and the IMF will face huge defaults on their loans. Oh, this might not cause financial contagion throughout all of Europe, but then again, that's what everyone said about Long-Term Capital Management, subprime mortgages, and the fall of Lehman Brothers. And look what happened there.

So what does Summers think should happen? Here's his prescription:

Greek Prime Minister Alexis Tsipras needs to do what is necessary to make reaching an agreement politically feasible for his fellow Europeans....He needs to be clear that he will accept further value-added tax and pension reforms to achieve primary surplus targets this year and next, but that he expects a clear recognition that if Greece does its part, debt will be written off on a large scale.

German Chancellor Angela Merkel and European authorities must do what is necessary to make policy adjustments politically tenable in Greece. That means acknowledging that the vast majority of the financial support given to Greece has gone to pay back banks rather than to support the Greek budget. They must agree on debt relief and recognize the degree of adjustment in Greek spending that has taken place: with nearly 30 percent of government workers laid off. It also means announcing their intention to accelerate economic growth throughout Europe.

In case that wasn't clear, here's a translation: the leaders of Europe are idiots. Everyone with a room temperature IQ has known for years that something like this is the deal that needs to be made. It's been discussed endlessly in meeting rooms, op-eds, scholarly papers, and conferences. Not only is it not a secret—or rocket science—it's been the obvious solution forever. But Europe vs. Greece is now like the Hatfields vs. the McCoys. Nobody cares anymore how it started, whose fault any of it was, or what the catastrophic results of continued obstinacy will be. They don't even care much about inflicting pain on their own people as long as they also inflict pain on the other side.

They are idiots. Not stupid, mind you, but idiots all the same. They know what needs to be done. They're just too committed to their own resentment and outrage to do it.

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It's Long Past Time For South Carolina to Stop Flying the Confederate Flag

| Sat Jun. 20, 2015 1:04 PM EDT

As I'm sure everyone knows by now, flying the the Confederate battle flag on the grounds of the state house is hardly a longtime South Carolina tradition. In fact, it's only been up since 1961. I was googling around on a different but related subject and happened to come across this account of how it happened. It's written by Brett Bursey and based mainly on the recollections of Daniel Hollis. In 1959 President Eisenhower commissioned a national Civil War Centennial, and Hollis was named a member of South Carolina's commission to plan the state's observance of the 100th anniversary of the War Between the States.

Here's his recollection:

Hollis remembers the day the Confederate flag was hoisted over the State House to commemorate the war. The centennial kicked off on April 11, 1961, with a re-creation of the firing on Fort Sumter. The flag went up for the opening celebrations.

"The flag is being flown this week at the request of Aiken Rep. John A. May," reported The State on April 12. May didn't introduce his resolution until the next legislative session. By the time the resolution passed on March 16, 1962, the flag had been flying for nearly a year. (This explains why the flag is often erroneously reported to have gone up in 1962).

"May told us he was going to introduce a resolution to fly the flag for a year from the capitol. I was against the flag going up," Hollis said, "but I kept quiet and went along. I didn't want to get into it with the UDC [United Daughters of the Confederacy] girls." The resolution that passed didn't include a time for the flag to come down and, therefore, "it just stayed up," Hollis said. "Nobody raised a question."

....The day the flag went up, headlines in the local newspapers were full of unrest. Besides the centennial controversy, the news that week included:

  • Sen. Marrion Gressette, the head of the State Segregation Committee, created in 1951 to recommend measures to maintain segregation, was supporting a resolution condemning former North Carolina Gov. Frank Graham, who had spoken at Winthrop College defending the civil rights movement and calling for integration.
  • Thurmond was fighting in Congress to keep federal funding for segregated schools. Political sentiment against school integration was so strong that state politicians vowed to stop all funding to public schools rather than integrate.
  • The Freedom Ride with integrated bus loads of civil rights workers was on the road, and there were reports of violence along the route.
  • The major story of the week was Kennedy's executive order to end segregation in work places that do business with the government. The forced integration of South Carolina's mills outraged politicians and editorial writers.

Hoisting the Confederate flag over the State House didn't generate any controversy at the time. Perhaps those most offended by it were too busy fighting real-life battles to expend any energy on symbolic ones.

So the flag went up partly to commemorate the Civil War and partly as a fairly safe way to protest against the civil rights movement. In either case, it's hardly a legacy issue that strikes at the honor of the Palmetto State. It was originally intended to stay up for only a year, and South Carolinians would do well to remember that. The year is long since up. Take it down.

Friday Cat Blogging - 19 June 2015

| Fri Jun. 19, 2015 2:55 PM EDT

This is our latest horror story. For reasons unknown (and they're always unknown, aren't they?) Hopper has decided that it's great fun to jump up on the second-story bannister and walk around. We can't think of any way to stop her from doing this, but one of these days she's going to set a paw wrong and go flying off the wrong side. Being a cat, maybe it won't hurt her. But it's a twelve-foot drop, and some of it is onto a hardwood floor. We have visions of splat going through our heads.

What do we do? Put up a net, like those ones they have on the Golden Gate Bridge to catch jumpers? Get rid of the quilts and install razor wire? Put cat-size exercise weights on Hopper's feet so she can't jump so high? There's got to be an answer.

No Matter How You Slice It, Obamacare Reduces the Federal Deficit

| Fri Jun. 19, 2015 2:40 PM EDT

We now live in the blessed era of dynamic scoring, something that Republicans have lusted over for decades. When the Congressional Budget Office makes economic projections, it can no longer just look at spending and taxes and subtract one from the other to get deficits. No siree. First they have to pay homage to the Laffer Curve and acknowledge that lower taxes will supercharge the economy and higher taxes will tank the economy. Then they recompute how much tax revenue they're really going to get.

Anyway, CBO is now required to do this, so here's their projection about how Obamacare will affect the federal deficit. Under the old-fashioned method, it will lower the deficit by $118 billion in 2025. But using the sleek new dynamic scoring system insisted on by Republicans, the truth becomes evident and Democratic evasions are exposed for all the world to see. Obamacare will, um, still reduce the deficit. But only by $98 billion.

In truth, this stuff is so open to interpretation and assumptions (and future congressional action) that neither number means much. Still, if you want to know if Obamacare pays for itself using our best estimates, it does. Even using dynamic scoring, it pays for itself. That's more than Republicans ever do with their programs.

Cell Phone or Porsche? Cable TV or First Class Travel? Quien Es Mas Macho?

| Fri Jun. 19, 2015 1:35 PM EDT

Via Brad DeLong, I see that Matt Bruenig has finally taken on a question that's bugged me for years. The question, in a nutshell, is this: Adjusted for inflation, would you rather live today with an income of $30,000 or back in the 1980s with an income of $60,000?1 Would the extra income be enticing enough to persuade you to give up 300 channels of high-def TV, cell phones, and universal access to the internet?

Now, the reason for asking this question usually has something to do with how we measure inflation. If you answer no—that is, you'd prefer today's world even with a lower income—it suggests that our inflation measures are inadequate. I mean, you're saying that $30,000 today buys more satisfaction than $60,000 in 1980 even though these are real, inflation-adjusted numbers. In other words, people today are quite a bit better off than official figures suggest. Officially, if your income had dropped in half over the past three decades, you'd be in dire shape. But in fact, this thought experiment suggests you're actually happier. So maybe income hasn't dropped in half in any practical sense.

This becomes meta-meta-economic very fast, so it's best not to get wound up in it right now. Because the thing that's always bugged me about this question is not so much its philosophical implications, but that it asks someone today what they'd think of living in the past. But that's rigged. I grew up in the world of today. I'm accustomed to all the gadgets at hand. The idea of giving them up naturally sounds horrible.

But that's not the only way to think of it. How about if we asked someone in 1980 about their preference. Would you rather have twice your current income, or would you rather have better TVs, portable phones, and instant access to all the information in the world? Well, these folks aren't accustomed to all that stuff. Sure, it sounds cool, but jeez, would I really use it much? Hmmm. I think I'll go with the extra income.

In other words, it's all a matter of what you're accustomed to. If you've been sleeping on the ground all your life, you have no trouble sleeping on the ground. Who needs a bed? If, like me, you've been sleeping on a bed all your life, you'd become a wreck trying to sleep on the ground. You'd pay a considerable sum of money just for an air mattress and a blanket.

Now, if you're still reading this, you may be nodding along a bit but nonetheless thinking that it's all just dorm room BS. We can't go back in time and ask people about the internet and cell phones, so what's the point of bringing it up? There are two reasons. First, I just wish more people realized that asking this question of current consumers stacks the deck and therefore doesn't tell us nearly as much as we think it does. Second, Matt Bruenig has come up with a clever way that kinda sorta does allow us to go back in time and ask people this question.

As he points out, we have a group of people who did indeed lead adult lives in the 80s and are still with us: senior citizens. And they can decide which technologies they want to use. So what do they choose?

Using smartphone adoption as a proxy for these people's technological preferences, it's clear that the people who actually lived as adults through both technological periods overwhelmingly prefer older technologies:

Judging from these people's preferences, you'd have to conclude that, in fact, older technologies are preferable to newer technologies. You don't need a hypothetical to determine whether living in the past was better: these are people who lived in the past and the present and clearly prefer the way they lived in the past, at least when it comes to the technologies that are supposed to have made life dramatically better (as incomes stagnated).

Now, this is obviously not a bulletproof comparison. Maybe old people just get stubborn, and that's all there is to it. Or maybe cell phones are a bad comparison. Even (or especially) senior citizens would probably be unwilling to go back to the medical technology of 1980. Plainly this is not the final answer to the tech vs. money question.

Still, it's an interesting approach, and it would be interesting to try to extend it. Behavioral economics tells us that people respond to losses much more strongly than gains, so asking people to give up something they like really is stacking the deck—especially if they have little conception of what the extra income in 1980 would gain them. People will always react far more intensely to a sure loss than to an offer of something new.

Anyway, more like this, please. For example, how about turning this around. Which would you prefer: (a) a doubling of your income right now, or (b) a world with driverless cars, internet chips implanted in your brain, and vacation flights to the moon? For a lot of people, this would not be an obvious choice at all.

1Note that this question is normally asked with bigger numbers: say, $50,000 vs. $100,000. I lowered it because I think it makes a difference. $30,000 really starts to make you think, doesn't it?

Texas Rejected the Confederate Battle Flag On Its License Plates. The First Amendment Will Survive.

| Fri Jun. 19, 2015 11:36 AM EDT

Texas offers its driving public a vast array of specialty license plates. Most of them are designs submitted by private organizations, which then go through an approval process by the Texas Department of Motor Vehicles Board. If they approve it, it goes on sale.

Recently, the Sons of Confederate Veterans submitted a design that included the Confederate battle flag. They were turned down. Yesterday the Supreme Court upheld the Board's decision on the grounds that license plates are government speech, not private speech, and therefore the government gets to decide what it does and doesn't want to say. The dissenting minority called this ridiculous: If you see a license plate that says "Drink Pepsi," would anyone seriously think the government of Texas was endorsing Pepsi? Of course not. It's private speech.

It's a sticky wicket. It's also one I don't understand. Here's an excerpt from the majority opinion:

The Board must approve every specialty plate design proposal before the design can appear on a Texas plate. And the Board and its predecessor have actively exercised this authority. Texas asserts, and SCV concedes, that the State has rejected at least a dozen proposed designs.

....This final approval authority allows Texas to choose how to present itself and its constituency. Thus, Texas offers plates celebrating the many educational institutions attended by its citizens. But it need not issue plates deriding schooling. Texas offers plates that pay tribute to the Texas citrus industry. But it need not issue plates praising Florida’s oranges as far better. And Texas offers plates that say “Fight Terrorism.” But it need not issue plates promoting al Qaeda.

Right. Nor do they have to approve a design celebrating the KKK or Lee Harvey Oswald. Doesn't this seem more germane than a fight over First Amendment issues? Unless Texas is literally required to accept anything and everything that's submitted, they obviously have to be allowed to reject designs they find offensive. At that point, it's just a matter of what process is required to decide a design is offensive. That's it.

Now, if the Supreme Court thinks their process is defective, that's fine. Tell them what minimum requirements they have to fulfill. But surely that's the only real issue at hand. The Board plainly has the right to turn down designs. The only question is how they go about it. Why not issue a ruling on these grounds instead?

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John Kasich Completely Misunderstands the Teachings of Jesus

| Fri Jun. 19, 2015 10:48 AM EDT

Ed Kilgore points me toward a Politico profile of John Kasich that demonstrates pretty vividly why he's not likely to make a dent in the Republican primaries. Here he is at a conference hosted by the Koch brothers last year:

At one point, according to accounts provided by two sources present, Randy Kendrick, a major contributor and the wife of Ken Kendrick, the owner of the Arizona Diamondbacks, rose to say she disagreed with Kasich’s decision to expand Medicaid coverage, and questioned why he’d expressed the view it was what God wanted.

The governor’s response was fiery. “I don’t know about you, lady,” he said as he pointed at Kendrick, his voice rising. “But when I get to the Pearly Gates, I’m going to have an answer for what I’ve done for the poor.”

The rest of the Republican Party, needless to say, believes that St. Peter is going to ask them what they did to keep the poor from suckling on the tits of the rich. Because that's what the Bible say. See, right here: When it comes to paying poor laborers whatever he feels like, "Is it not lawful for me to do what I will with mine own?" Jesus once said in a quote taken entirely out of context.

Obviously Kasich doesn't know his Bible. Help the poor indeed. Who can blame Bobby Jindal, Nikki Haley, and 20 audience members for stalking out? Kasich needs to bone up on the real Bible before he spouts off again.

Jeb Bush Has Announced the Perfect Republican Economic Plan

| Thu Jun. 18, 2015 3:03 PM EDT

Rand Paul says his secret to success is that his tax cut plan will supercharge economic growth. Jeb Bush says his secret to success is that merely by being president he will supercharge economic growth.

I guess I have to give this round to Paul. He at least tried to come up with some math salad to justify his belief that a Rand Paul presidency will bring about economic nirvana. Bush simply declared ex cathedra that he'd make the economy grow at an astonishing 4 percent per year. Why? "It's a nice round number. It's double the growth that we are growing at. It's not just an aspiration. It's doable."

Um, OK. He gets points for copping to a sort of amiable idiocy, I suppose. But in case you're interested, here's economic growth since the Reagan administration:

Reagan managed 4 percent growth four times in eight years. George H. W. Bush managed it zero times. Bill Clinton did it five times in eight years. George W. Bush did it zero times. Barack Obama has (so far) done it zero times. And no president in history has averaged 4 percent growth over the course of his presidency. No one.1

If you want all the gory details, Matt Yglesias has much more here about just how unlikely this kind of growth is. But politically speaking, the details aren't what's interesting. What's interesting is that Bush's comment is an unusually clear peek behind the curtain, one that demonstrates how unseriously Republicans take the economy. It's all just cotton candy for the gullible. Cut taxes on the rich and this will—somehow—supercharge the economy. Slash regulations and this will—somehow—unleash business activity and supercharge the economy. Now Bush has decided to dispense with even the mumbo jumbo explanations. He's distilled the GOP economic message down to its essence: Elect me president and—merely because I'm a Republican and I say so—I'll supercharge the economy.

And there's more. If you assume the economy is going to skyrocket, there's no need to address niggling concerns about spending or budget deficits. There will be money for everything! And when it doesn't happen? Oops. Sorry. Next time we'll get serious for sure. Honest.

1OK, OK, it's true that FDR did it. How? By starting at the bottom of the worst depression in history and ending with the biggest wartime boom in history. This basically makes the case for just how unlikely this is to ever happen again.

Fast Track Is Now Back on a Fast Track to the Senate

| Thu Jun. 18, 2015 1:15 PM EDT

Well, the House just passed standalone fast-track authority for the Trans-Pacific Partnership treaty. Now it's on to the Senate, where 14 Democrats voted for it back when it was paired up with TAA, the assistance program for workers who lose their jobs because of the treaty. Will the Gang of 14 still vote for it as a standalone bill? By my count, if there are more than four or five defections, it will fail. Stay tuned.

If it passes, TAA will then get a second vote too, free of fast-track entanglements: "Republicans have decided to tuck the worker assistance components into a noncontentious trade preference bill related to Africa, and send it back to the House for final passage."

So there you have it. Stay tuned.

POSTSCRIPT: I still don't have a firm opinion on the treaty since I failed to delve into it over the weekend. Sorry. Unfortunately, my proxy guides aren't working for me either. On the anti side, I'm no big fan of the IP clauses in the treaty. On the pro side, I'm influenced by the fact that it's supported by both President Obama and Ron Wyden, my favorite senator. So I'm still on the fence.

I Read Rand Paul's Flat Tax Plan So You Don't Have To

| Thu Jun. 18, 2015 12:14 PM EDT

Rand Paul talks taxes in the Wall Street Journal today:

My tax plan would blow up the tax code and start over. In consultation with some of the top tax experts in the country, including the Heritage Foundation’s Stephen Moore....

Hmmm. I think we can probably stop there. If Stephen Moore is one of the brains behind this, we can be pretty sure it's the usual hodgepodge of innumerate nonsense he's famous for. But at least Paul's op-ed doesn't lack for tea party applause lines! Here are my favorites: "seized by the IRS," "rogue agency," "harass anyone who might be adversarial to President Obama’s policies," "economic steroid injection," "rot in the system," and "crony capitalists and lobbyists exploded his noble crusade."1

In any case, I'll save you the trouble of reading the whole thing. It's the usual flat-tax utopia: One rate for everyone, no deductions, end of story. No discussion of how to define "income," of course, which is what makes the tax code complicated in the first place. But no matter. According to Paul, the rich will end up paying 14.5 percent in taxes, with no loopholes to pay less. Given that the rich currently pay about 22 percent of their income in federal taxes, they should be pretty happy about that. They should also be pretty happy that he's getting rid of the estate tax entirely.

And the middle class? Well, they no longer have to pay payroll taxes. Just 14.5 percent of their income.

Happy days! And how will this add up? The usual way: it will supercharge the economy blah blah blah, and we'll all be making such huge buckets of cash that tax revenues will go up. Easy peasy.

The song never changes with these guys. But it's a siren song, and Americans have never been very good at math. I'm sure it will sound good to lots of people, and it will sound great to the lucky few. Hell, I figure it would save me personally $15,000 a year, maybe more. Rand Paul 2016!

1That would be Paul's buddy Steve Forbes, whose noble flat-tax crusade in 1996 went nowhere thanks to the shadowy forces of....Bob Dole.