Kevin Drum

Making Republicans Mad Is All Part of the Plan to Pass the Iran Deal

| Thu Jul. 16, 2015 12:51 PM EDT

Why is President Obama talking so much about the Iran nuclear deal? It's not as if he's likely to convince many Republicans to support it, after all. Jonathan Bernstein says the answer lies in the unusual way Congress is being forced to vote on the deal: the agreement takes effect unless Congress votes to disapprove it. Obama can veto any resolution of disapproval, and it only takes one-third of Congress to sustain that veto. In other words, all Obama needs are Democratic votes. And the best way to get those votes is to take advantage of the power of polarization:

By speaking out in favor of something, and doing it repeatedly, presidents tend to polarize public opinion along party lines. If he needed bipartisan support, the best strategy would be to keep his mouth shut.

But Obama doesn't need any Republican help. He just needs Democrats to stick together, and not base their votes on interest-group attachments or, for that matter, on their personal views.

While Obama thinks the Iran agreement should win on its actual merits — otherwise he wouldn’t have agreed to it! — not everyone sees it the same way. He can try to give swing voters in the House and Senate substantive reasons to support it. But this wouldn't be as efficient as simply getting the Democrats to act as partisans.

As Bernstein says in his teaser sentence, "A strategy that makes Republicans mad will unite Democrats." So Obama is talking and talking and talking, and conservative media is getting madder and madder and madder. That tends to unite liberals, even those who are strong supporters of Israel and might otherwise be reluctant to support a deal that Israel opposes.

Republicans are cooperating beautifully, aren't they? Obama must be very pleased.

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America's Best Poverty-Fighting Tool May Be Even Better Than We Thought

| Thu Jul. 16, 2015 11:54 AM EDT

The Earned Income Tax Credit has long been one of the wonk's favorite poverty-fighting tools. It's a tax credit available only to those who work, so it works as a powerful incentive to find employment. It also acts as a subsidy for low-paying jobs, which are often the only ones that the poor can find. And the money comes from the government, so it doesn't distort labor markets or meet resistance from employers, as the minimum wage does.

Today, Dylan Matthews points to an interesting new paper suggesting that the EITC is even better than we thought. Take a look at the chart on the right, which shows what happened after the 1993 EITC increase. It's focused on single women with children, the biggest beneficiaries of the EITC. The red line shows how benefits increased for mothers with children compared to women without children: the difference is about $1,700. The blue dots (with error bars) show the difference in employment. By 1998, employment among mothers with children had gone up about 8 percent compared to women without children. Quite clearly, the EITC subsidy was a big incentive for mothers to find jobs.

It's the combination of these effects—more employment and the direct effect of the tax credit—that makes EITC a more powerful poverty fighter than previously thought.

So why not extend the EITC to cover more people (men, women, the childless, the very poor, etc.) and make it more generous, instead of focusing on raising the minimum wage? Virtually every serious economist on both left and right would support this. Some might have different kinds of wage subsidies they like better, but all of them prefer the EITC to the minimum wage.

The answer, of course, is that the minimum wage is paid by employers. The EITC is paid by the government. Therefore it has to be funded by the government. And that means either raising taxes to cover the cost, or else slashing some other social program. Republicans refuse to do the former and Democrats refuse to do the latter. In the latest round of this game, both Paul Ryan and Barack Obama agree that the EITC should be increased, but neither is willing to accept the other's funding proposal. Matthews provides the gory details:

Because Obama and Ryan both fund their plan in ways that are totally unacceptable to the other side, they haven't come to a deal to pass this plan. Obama would pay for the expansion by raising taxes on hedge fund managers and rich self-employed people, while Ryan would cut other safety net programs and "corporate welfare," which is this case means specifically energy subsidies the Obama administration likes. Ryan has explicitly rejected Obama's funding mechanism, and it's hard to imagine Obama accepting Ryan's.

So we have a stalemate, even though both Ryan and Obama and practically everyone else believe an increased EITC is one of the most effective anti-poverty tools we have. What's worse, outside the wonk world the EITC has been losing ground among Republican politicians for decades. It's now generally viewed by the tea party set as just another giveaway to the moochers and takers, culminating in the widespread belief during the 2012 campaign that the poor ought to pay more taxes, not less. More on this grubby history here.

The Latest From Greece: A Quick Rundown

| Thu Jul. 16, 2015 10:45 AM EDT

A quick summary of Greece to start my morning (or ease you into lunch if you're on the East coast):

  • The Greek parliament has passed the first batch of legislation demanded by the Europeans.
  • This seriously split Syriza, and could even lead to the downfall of the government. In the meantime, there was rioting in the streets of Athens.
  • The European Central Bank responded by providing €900 million to Greece's banks. It's not much, and capital controls will stay in place for a while. But it keeps the ATMs churning out €60 per day, which is better than €0 per day.
  • Mario Draghi, the head of the ECB, said it was "uncontroversial" that Greece needs substantial debt relief. It all depends on Greece keeping its side of the deal. So now both the ECB and the IMF—two-thirds of the Troika—are publicly on board with debt relief.

That's about it for now. Amid the chaos, things are moving forward. Nonetheless, the religious types among you should give thanks daily that you don't live in Greece.

Photo of the Day: A Tiny Little Piece of Pluto -- In Hi-Res!

| Wed Jul. 15, 2015 3:28 PM EDT

Here it is: the first high-res frame of Pluto from yesterday's flyby. Apparently all the frames will be available on Friday, at which point we'll have high-res imagery of the entire planet.

Yes, planet. Anyone want to take a look at this and still claim that Pluto is just a second-rate little dwarf? Come on. Grumpy is a dwarf. Pluto is a planet.

The Technical Experts Weigh In, And They're Pretty Impressed With the Iran Deal

| Wed Jul. 15, 2015 1:09 PM EDT

Arms control guru Jeffrey Lewis has long been skeptical that we could conclude a nuclear deal with Iran. Now that we have, he's pored through the entire document and he says he's impressed:

Max Fisher: Why is this a good deal?

Jeffrey Lewis: It's a good deal because it slows down their nuclear program — which they say is for civilian purposes but could be used to make a bomb, and which we think was originally intended to make a bomb. And it puts monitoring and verification measures in place that mean if they try to build a bomb, we're very likely to find out, and to do so with a enough time that we have options to do something about it.

There's a verifiable gap between their bomb option and an actual bomb. That's why it's a good deal.

....Max Fisher: A lot of what you wrote throughout 2014 was skeptical. Not of the idea of the Iran deal, but rather skeptical that they could make it work, that they would get there in time, that they would have all the right conditions.

Jeffrey Lewis: That's right. I had no faith whatsoever that they could pull this off.

Max Fisher: Now that we're here, what grade would you give it?

Jeffrey Lewis: I would give it an A.

....Max Fisher: We did a post just rounding up tweets from arms control analysts on what they're saying about the Iran deal, and it was really hard to find arms control analysts who seem to be critical of the deal on the non-proliferation merits. Maybe there are some we just missed, but it seems like the consensus was overwhelmingly positive, which was so interesting to me because it's very different from the conversation among Middle East policy analysts, which is much more divided. Why do you think that is?

Jeffrey Lewis: ....As a deal, this is what deals look like. Actually, they usually don't look this good....I see it as a really straightforward measure to slow down an enrichment program that was going gangbusters.

So you ask, "Does it slow it down?" Yes. "Does it slow it down in a way that is verifiable?" Yes. "Does it slow it down more than bombing it would?" Yes. "Okay, good deal."

This is the kind of feedback I've been waiting for. Do technical experts who actually understand the nuances of the deal language think this is a good agreement? And apparently most of them do.

Conversely, the critics have mostly been focused on the fact that the deal eventually lifts the economic sanctions on Iran that have been in place for the past few years. This will improve the Iranian economy and give them more money to support terrorist groups like Hezbollah and the Houthis.

This is true, of course, but it was the whole point of the negotiations from the start. To oppose it on those grounds is basically to say that we should simply keep the sanctions in place forever. But that's not even remotely feasible. Sanctions never last forever, especially when they have to be upheld by the entire international community. If the US flatly refused to negotiate, eventually the Chinese and Russians would drop out of the sanctions regime, followed by the Europeans, and then we'd be the only ones left. And sanctions from the US alone just wouldn't have much impact on Iran.

In other words, the arguments in favor of the treaty are looking a whole lot more thoughtful and realistic than the arguments against it. But it's primary season for Republicans, so I suppose that doesn't matter all that much. Iran is bad, therefore a deal with Iran is bad. It's good enough for the campaign trail.

Do Republicans Really Want to Scuttle the Iran Deal?

| Wed Jul. 15, 2015 11:43 AM EDT

Greg Sargent reports that Republicans are gearing up to torpedo the Iran nuclear deal:

Republicans are very, very confident that they have the political advantage in the coming battle in Congress over the historic Iran deal announced yesterday. Multiple news reports today tell us that Republicans are gearing up their “attack plan,” and those reports are overflowing with GOP bravado.

Well, of course they are. That's just smart politics. If you want to build a bandwagon, you have to act like a winner.

In fact, though, Republicans have very little chance of blocking the deal. To do so they have to vote to disapprove the agreement, which President Obama will veto. Then they have to round up a two-thirds vote to override the veto. That's very, very unlikely.

(And why this odd procedure where the deal takes effect unless Congress disapproves it? They can thank one of their own, Sen. Bob Corker, for proposing this unusual procedure. And anyway, his legislation passed 98-1, so it was pretty unanimously the will of the Senate. The theory behind it was that Obama could simply enact any deal as an executive order without involving Congress at all, and this was at least better than that.)

But then Sargent brings up another one of those 11-dimensional chess conundrums:

But here’s the question: Once all the procedural smoke clears, do Republicans really want an endgame in which they succeeded in blocking the deal? Do they actually want to scuttle it?

Perhaps many of them genuinely do want that. But here’s a prediction: as this battle develops, some Republicans may privately conclude that it would be better for them politically if they fail to stop it. The Iran debate may come to resemble the one over the anti-Obamacare lawsuit that also recently fell short.

The idea here is that if Congress kills the deal, several things will happen. First, the rest of the signatories (UK, France, Germany, EU, China, Russia) will still lift their sanctions if Iran meets its end of the bargain. So that means the sanctions regime will effectively disintegrate. Second, our allies will blame us for tanking the deal. Third, Iran will have an excuse for pushing the boundaries of the agreement and remaining closer to nuclear breakout than they would be if the deal were intact.

And Republicans would take the bulk of the blame for all this. Do they really want that? This is an international agreement, after all. Conservatives like Angela Merkel, David Cameron, and Vladimir Putin have approved it. If we don't, will they conclude that the US is no longer a partner worth negotiating with? These are things worth pondering, especially if Republicans expect one of their own to be president 18 months from now.

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Planned Parenthood "Sting" Video Is Yet Another Right-Wing Nothingburger

| Wed Jul. 15, 2015 10:45 AM EDT

Yesterday I watched the (now infamous) hidden video from the Center for Medical Progress, which allegedly shows a couple of undercover "buyers" for a fetal tissue procurement company having lunch with Deborah Nucatola, director of medical services for Planned Parenthood. And it was obviously pretty fishy. Nucatola was talking very openly about how they dispose of fetal tissue from abortions, and doing it in a way that exhibited no stress and no sense at all of being involved in a shady operation. The price per specimen was $30-100,which obviously covered no more than shipping and normal handling. It plainly wasn't enough for this to be an illegal for-profit business.

So I shrugged and went on with my day. Then the video landed on the front page of the Washington Post and it went mainstream. I assume Fox has been running it on a 24/7 loop as well. But as near as I can tell, it's completely bogus. The video tries to imply that Planned Parenthood is performing illegal abortions and that it's selling fetal tissue for profit, also a felony. But there's not the slightest evidence of either. In fact, as Media Matters points out, if you watch the unedited video it's crystal clear that the charges for the fetal tissue they sell are designed only to cover the actual costs of the process. Nucatola says repeatedly that affiliates want to "break even," not make a profit.

So there's basically nothing here. Bioethicists have been debating for years whether it's a good idea to sell fetal tissue, and as you can imagine, they've been disagreeing for years and show no signs of ever coming to a consensus. Some think it's wrong and some think it's OK. That's not surprising since some people think abortion is wrong and some think it's OK. And if you think abortion is wrong, you're certainly not going to be happy about the sale of tissue from aborted fetuses.

Nonetheless, it's a common practice, and one that's critical for a lot of medical research. What's more, it's only done if the mother wants the tissue donated.

So: scandal? Not hardly. Is it wrong? If you think abortion is murder, then of course you think it's wrong. If you think abortion is morally benign, as I do, then you're glad to see donated tissue being used in important medical research. And that's pretty much that. In the end, this is just another sad attempt at a sting video that goes nowhere once you get beyond the deceptive editing. It's time for conservatives to find a different toy to manufacture fundraising opportunities for their base.

The IMF Throws a Monkey Wrench Into the Greek Soap Opera

| Wed Jul. 15, 2015 12:26 AM EDT

The Greek drama continues. Just as it appears that Greece has capitulated to every demand short of selling off the Parthenon, one-third of the Troika1 is having second thoughts:

The International Monetary Fund threatened to withdraw support for Greece’s bailout on Tuesday unless European leaders agree to substantial debt relief, an immediate challenge to the region’s plan to rescue the country.

The aggressive stance sets up a standoff with Germany and other eurozone creditors, which have been reluctant to provide additional debt relief.

Reluctant? Yeah, I guess you could put it that way. But it would be a mite more accurate to say that it will be a cold day in hell before Angela Merkel agrees to any debt relief for Greece.

In any case, there's a weird kabuki-like character to this whole thing. Everybody agrees that Greece will never pay back all the debt it owes. Just not gonna happen. So why don't Greece's creditors bite the bullet and face reality? It's not because the Germans and others are stupid and don't realize they're never getting all their money back. It's because....

Well, it's not entirely clear why. Officially, Germany says that under EU treaties it's illegal to forgive debt. I'm not sure anyone really believes that, though. Unofficially, no one wants to write down the debt because it's the thing that keeps Greece under the EU lash. The only reason Europe can demand draconian austerity measures from Greece is because they can threaten to withhold the loans Greece needs to keep servicing its massive debt. This would throw Greece into default and economic chaos—which is precisely the threat that forced Greece to accept the European terms for a new bailout a few days ago.

Still, why not write down a big chunk of the debt? There would still be enough left to keep Greece under control. This is where things get even fuzzier. One answer is that it sets an uncomfortable precedent. If Greece gets a big debt writedown, why shouldn't Portugal and Spain and Italy? Another answer is that the size of the Greek debt really does matter, if only cosmetically. Europe wants Greece to cut its spending and run a balanced budget. The bigger Greece's debt service, the more it has to cut spending to achieve balance.

Does any of this make sense? Sure, from a certain point of view—namely that of a European public that's fed up with Greece and doesn't want its leaders using their tax dollars to pull Greece's fat out of the fire. But the IMF doesn't have to worry about European public opinion. It wants to face reality and just admit what everyone already knows. And here's the reality. First, even with a big writedown, Greece will still be safely under the Troika's thumb. Second, from an economist's perspective all that matters about Greece's finances is that it achieves primary budget balance—that is, balance not counting debt payments. So the IMF doesn't care about squeezing the Greek budget beyond all reason based on an artificial debt number.

In any case, the IMF has supported debt relief for some time, but has only now decided to go public as a way of exerting pressure on Europe. Will it work? No telling. As always, stay tuned. The soap opera never ends.

1For those of you who haven't been following this stuff religiously, the Troika consists of the EU, the European Central Bank, and the IMF. These are the three entities that Greece owes money to.

Maybe We Should All Read the Iran Deal Before We Take a Stand On It

| Tue Jul. 14, 2015 2:27 PM EDT

Paul Waldman has already rounded up a few Republican reactions to the Iran deal, so I'll just steal this paragraph from him:

Scott Walker said it “will be remembered as one of America’s worst diplomatic failures.” Jeb Bush called it “dangerous, deeply flawed, and short-sighted.” Marco Rubio said it “undermines our national security.” And as usual, Lindsey Graham wins the award for the most unhinged conclusions: the deal is “akin to declaring war on Sunni Arabs and Israel,” he told Bloomberg News. He also said: “You’ve created a possible death sentence for Israel.”

And here's some more:

"This ‘deal’ will only embolden Iran," said House Speaker John Boehner. It "appears to further the flawed elements of April’s interim agreement," said Senate Majority Leader Mitch McConnell. And even Bob Corker was critical: "I begin from a place of deep skepticism that the deal actually meets the goal of preventing Iran from obtaining a nuclear weapon."

So here's the thing: Not a single one of these comments suggests why the deal is such a bad one. It just is. We're left with two possibilities:

  1. All of these guys have read the agreement, and they have specific criticisms but just don't feel like sharing those with us.
  2. They haven't read the agreement and have no real idea what's in it, but oppose it anyway.

I'm going with Door #2. Anyone want to take the other side of that bet?

And by the way, in the interest of fairness you could say pretty much the same thing about a lot of liberals, who seem to be jubilant about the deal but haven't really explained exactly what's so great about it. Maybe all of us could stand to take a deep breath and spend some time letting experts examine the deal language before taking maximal positions on it.

In the meantime, it looks like a decent agreement to me after a first look at the deal outline—certainly better than doing nothing and letting Iran build a bomb whenever it wants, anyway. But I'll wait to see what nuclear experts have to say before I go any further. A few days won't kill me.

UPDATE: Obviously not everyone agrees with me. A spokesman for Hillary Clinton said the Iran deal was "a really good first step," etc., but "at the same time, she also is going to read it." National Review's Patrick Brennan is having none of it:

Yes, it’s a long agreement, only released to the public early this morning, but that has stopped almost no one on earth from forming an opinion of whether they think it is a good or bad deal by this afternoon. The questions at hand are complicated, but not that complicated. As with the trade debate (until the very last minute), Hillary Clinton isn’t deliberating, she’s obfuscating.

So there you have it. Everyone else formed an opinion instantly without bothering to read the actual agreement, so what the hell is up with Hillary? She should be ashamed of herself for showing an interest in anything other than affinity outrage (or glee). Reading is for appeasers.

Highways Are Now Being Held Hostage to Lower Corporate Taxes

| Tue Jul. 14, 2015 1:16 PM EDT

I somehow missed that this was a real thing, but apparently there are finally serious moves afoot to replenish the Highway Trust Fund. Will this happen by sensibly returning the gasoline tax to its old rate? Don't be silly. Instead we're going to do it in the least sensible way possible:

A bipartisan proposal, to be introduced soon in Congress, would tax the estimated $2 trillion in foreign profits held by U.S. corporations in overseas accounts....The tax would generate tens of billions of dollars for the federal Highway Trust Fund, which will run out of money at the end of the month. Lawmakers have been in a desperate scramble to replenish the fund, which helps pay for new roads, bridges and other transportation infrastructure.

....Supporters said the plan would reduce incentives for companies to reincorporate overseas, a controversial tax-reducing tactic known as inversion that has drawn the ire of Democrats...."These proposals would right the ship, provide a potential funding source for transportation reauthorization and allow the United States to compete on a level playing field," [Sen. Chuck Schumer] said.

Hold on. We're going to take all those overseas profits that are currently untaxed, and levy a one-time tax on them in order to fund roads and bridges? Why would Republicans and the business community support this? Here's why:

"In a perfect world, you wouldn't tie tax reform to the Highway Trust Fund," said Curtis S. Dubay, a tax expert at the conservative Heritage Foundation. But lawmakers see the need to find highway funding "as a forcing mechanism to get something done" on international taxes.

A "forcing mechanism"? Please go on:

The U.S. Chamber of Commerce and National Assn. of Manufacturers have said they opposed a forced repatriation of foreign earnings simply to replenish the Highway Trust Fund.

But including it as part of a shift from the current international tax system — a move that would reduce corporate tax bills over the long term — changes the equation, said Dorothy Coleman, who handles tax policy for the manufacturers group.

....Business groups want changes to the international tax system to be made as part of a broader overhaul that includes lowering the corporate tax rate for domestic earnings as well. Senate Majority Leader Mitch McConnell (R-Ky.) has indicated that he prefers a comprehensive tax overhaul.

Roger that. The business community is willing to support a small, one-time gimmick that will cost around $200 billion or so—and free them to repatriate all their foreign earnings and bring that money back to the US—but only if it's tied to a large, permanent corporate tax change that will save them far more in the long run. Suddenly it all makes sense.

The devil is in the details, of course, and those won't be available for months. If the final bill is revenue neutral on corporate taxes, maybe this is a decent short-term dodge. If it cuts corporate taxes significantly, then not so much. Stay tuned.