Kevin Drum

Meet the 'Christie Democrats'

| Fri Jun. 24, 2011 11:59 AM EDT

The New Jersey legislature on Thursday joined Wisconsin, Ohio, and a handful of other states by drastically scaling back pension and health-care benefits for government workers and curbing collective bargaining rights for public-sector unions. All told, 750,000 public-sector workers will end up forking over thousands of dollars more each year to fund their pension and health-care benefits—in part to plug a $52 billion hole in New Jersey's state pension fund.

But there's a key distinction between New Jersey and the other states that passed similar bills: Democrats control the legislature.

Unlike Wisconsin and Ohio, where newly elected Republican majorities in the legislature and new Republican governors rammed through unpopular bills curbing bargaining and benefits, in New Jersey, Democrats gave a Republican governor, Chris Christie, the votes he needed. The state Senate passed the bill 24 to 15, with 8 Democrats bolting from their party to support Christie. In the Assembly, the vote was 46 to 32 in favor of the measure, and 14 Democrats sided with Republicans.

So what happened? After all, this is New Jersey we're talking about, where public-sector unions are traditionally a pillar of support for Dems in fundraising, get-out-the-vote, and at the ballot box. According to the New York Times, Christie was able to cobble together support for his bill, which he called a model for other state legislatures, by taking advantage of the Garden State's old-school, city-centric political system:

In his campaign to rein in the unions and shrink government, Mr. Christie has often been helped by New Jersey’s unique political culture, where local political machines still dominate some areas, and many state legislators also hold local government jobs. That gives striking influence in Trenton to mayors, county executives, and local party bosses who struggle with rising labor costs and have repeatedly sided with the governor’s push to cut benefits and wages.

There's another intriguing narrative here—namely, how the state Democratic Party functions effectively after a handful of its members backed a bill hugely unpopular with the Democratic base. What we'll likely see, per the Newark Star-Ledger, is a growing schism among New Jersey Democrats:

Today's union protest, like other recent demonstrations, did nothing to stop the bill. But it did highlight the growing fissures in the state Democratic Party. While Sweeney and Oliver were pushing the bill, the chairman of the state party, Assemblyman John Wisniewski (D-Middlesex), was rallying protesters with two-dozen other Democrats. "I represent the Democratic wing of the Democratic Party," he said. Bob Master, a leader in the Communications Workers of America, said Democrats should not be "collaborating" with Christie.

Opponents of Christie's bill have a nickname for those Democratic "collaborators": Christie Democrats. That will be a damning label to hang around a Democrat's neck when re-election rolls around.

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Bombing the Moon

| Fri Jun. 24, 2011 8:40 AM EDT

Following up on my GOP mind games post, Ezra Klein makes a smart observation in this morning's Wonkbook on how the GOP transformed tax increases from an important, necessary option in the deficit debate into something evil and extremist. To prove his point, Ezra uses a clever rhetorical trick: he swaps "bomb the moon" for any mention of taxes in Republican statements made after yesterday's deficit talks drama:

"We've known from the beginning that bombing the moon would be a poison pill to any debt-reduction proposal," Senate Minority Leader Mitch McConnell said in a speech on the Senate floor. See? Or: "President Obama needs to decide between his goal of bombing the moon, or a bipartisan plan to address our deficit," said McConnell and Sen. Jon Kyl in a joint statement. Or: "First of all, bombing the moon is going to destroy jobs," said Speaker John Boehner. "Second, bombing the moon cannot pass the US House of Representatives—it's not just a bad idea, it doesn’t have the votes and it can’t happen. And third, the American people don’t want us to bomb the moon."

"Bombing the moon" would actually make these statements more accurate. A bipartisan deficit-reduction proposal, almost by definition, includes revenue increases. That, along with the spending cuts, is what makes it bipartisan. And unpopular? Tax increases, particularly if targeted at the wealthy, show themselves again and again to be among the most popular ways to reduce the budget deficit. The most recent Washington Post/ABC News poll found that 57 percent of Americans though the best way to reduce the deficit was "a combination" of tax hikes and spending cuts, and polls that have tested specific policies have found vastly more support for raising taxes on the rich than for GOP mainstays like cutting Medicare and Social Security and discretionary funding that goes to programs like education.

The quotes Ezra uses come after Rep. Eric Cantor and Sen. Jon Kyl, the number two GOPers in their respective chambers, bailed on the bipartisan deficit reduction talks led by Vice President Joe Biden. Cantor went first, saying he wouldn't continue negotiating if any form of a tax increase was on the table, including cutting $21 billion in subsidies for big oil companies. "Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue," Cantor said in a statement. Kyl followed Cantor out the door soon after.

Apparently, Cantor forgot that the US is not under one-party rule, and that his constituents elected him to do what's expected of all politicians: compromise. The Biden-led deficit negotiations are intentionally bipartisan, and to claim that Democrat-backed tax increases are non-negotiable, as Cantor believes, defies logic. It's not negotiating if one side refuses to give any ground whatsoever. Either Cantor is more intransigent and bound to conservative orthodoxy than we thought, or he's setting up House Speaker John Boehner to be the fall guy who cuts a deal with the Democrats on a short-term deficit reduction plan. Or both.

What's clear is that any deficit reduction plan must include new revenue of some kind. After all, it was partly the Bush tax cuts of 2001 and 2003 that got us into this mess in the first place. Not filling that $2.6-trillion hole with new revenue would be madness.

The New Civil Liberties Fight

| Fri Jun. 24, 2011 4:30 AM EDT
Gulet Mohamed, a 19-year-old Virginian, behind bars in a Kuwaiti deportation facility. His family and lawyer allege that he was detained and beaten at the behest of the United States government—a charge the government denies.

Kevin is on vacation this week, so Andy Kroll and I will be filling in.

During the Bush years, America's chattering classes were engaged in a grand argument: should the people we had captured in the war on terror be handled by the courts, or by some other process? Civil libertarians argued that terrorist suspects who were not US citizens should have meaningful access to trials in federal courts.

Civil libertarians have lost that argument. The defeat is total: in the White House, on Capitol Hill, in the courts, and, crucially, in the court of public opinion. Indefinite detention of non-citizen terrorist suspects without charge or trial remains the official policy of the United States, and none of the most infamous non-citizen terrorist suspects will be tried in federal court.

President Barack Obama's administration hasn't added any new prisoners to Guantanamo, but as things stand, it's only a matter of time before that happens. Eventually, there will be another Republican president, and the GOP's position is clear: Mitch McConnell, the party's leader in the Senate, took to the Washington Post op-ed page on Tuesday to call for two Iraqi nationals captured in his home state of Kentucky to be transferred to Gitmo. "Guantanamo is the place to try terrorists," the headline blared.

Some liberals defend the Obama administration's record on civil liberties by arguing that standing up for the rights of terrorist suspects would be political poison for the White House. Perhaps they're right. But it would be foolish to assume that the battle lines on this issue are static, or that hardliners see a bright line between how we should treat non-citizen terrorist suspects and how we should treat terrorist suspects who are American citizens.

The Joe Liebermans of the world see no such bright line. If we as a society have decided that non-citizen terrorist suspects shouldn't have the right to a real trial before we lock them away indefinitely, it's only a short leap to the idea that all terrorist suspects should have fewer rights.

Why shouldn't we be consistent? Why are non-citizen terrorist suspects captured abroad "unprivileged belligerents" while those captured in the US are simply criminals? Why are American-born terrorists criminals and not unprivileged belligerents? Does the difference between committing a crime and being illegally at war with the United States really just depend on where you are captured or where you are born? The Obama administration does not have compelling answers to these questions. Its compromises and cave-ins on civil liberties have left its counterterrorism policy an inconsistent mishmash of Miranda warnings for foreigners and proxy detention and Hellfire missiles for Americans.

But forget foreigners—they're screwed. The rights of US citizens are at the heart of today's fight over civil liberties in the war on terror. And, not coincidentally, the rights of US citizens suspected of terrorism are on retreat on a whole host of fronts.

The family of Anwar al-Awlaki, a US citizen who is reportedly on a list of people the military is authorized to kill without charge or trial, lost their court case to force the government to explain why it believes it has the legal right to order his death. Young Muslim American men travel overseas only to discover that they're on the no-fly list when they try to return—and that they can't go home unless they answer the FBI's questions. Americans with dark skin tones and "suspicious" names find US-government-owned GPS devices on their cars. The PATRIOT Act gets renewed while everyone is busy talking about how great it is that the SEALS killed Osama bin Laden. And senior members of Congress call for US citizens suspected of terrorism to be stripped of their citizenship and sent to—where else—Guantanamo.

The rights of all people accused of terrorism have been dramatically rolled back over the past ten years. So don't expect that American citizenship will protect you when the government decides that you might be a terrorist, too.

Yemen Is Not A Good Place To Imprison Terrorist Suspects

| Thu Jun. 23, 2011 10:56 PM EDT

Kevin is on vacation this week, so Andy Kroll and I are filling in a bit.

The Washington Post reports on a massive jailbreak of Islamic militants from one of Yemen's largest prisons:

Among the escapees Wednesday were members of an al-Qaeda cell that has killed foreign tourists and tried to attack the U.S. Embassy in Yemen and other Western targets, according to Yemeni officials. [Al Qaeda in the Arabian Peninsula] was behind the attempted bombing of a Detroit-bound commercial flight on Christmas Day 2009 and the mailing of bombs on cargo planes destined for the United States....

...The prison break Wednesday, though far from the first in Yemen, came at a moment of political crisis in the country and seemed likely to heighten fears among U.S. counterterrorism officials that AQAP is gathering strength as the authority of the central government weakens.

Even in the best of times, Yemen was not a great place to imprison radical Islamists. The prisons there have always been leaky at best, and the central government's authority didn't extend very far past the capital. Now the country is even more wracked by chaos and intranational violence than usual, and AQAP has scored some successes—the latest being this prison break. The Obama administration has apparently decided, in the wake of the Christmas Day and cargo bomb attacks, that this is a threat worthy of a semi-secret drone war but not, well, an "actual" war.

In a "real" war, we'd go in and detain these guys ourselves, rather than relying on incompetent and potentially backstabbing proxies. That doesn't, thankfully, seem to be on the table right now. (I don't think America can afford another land war in Asia.) But the war on terror does produce some odd paradoxes. In today's world, it's easier, politically and legally, for America to vaporize a foreigner it suspects of terrorism than it is to keep that person in prison. That's pretty weird.

The Tax Holiday Road to Ruin

| Thu Jun. 23, 2011 2:38 PM EDT

Is there a more terrible idea getting serious play in policy circles than a corporate "tax holiday"? That's when corporations that have put off paying American taxes get a one-shot chance to move that money into the US at the steeply discounted rate of 5 percent. Kevin has dismissed the proposal as a "scam," but I wanted to point out a new Center for Budget and Policy Priorities report thoroughly dismantling the idea.

Proponents—like the WIN America campaign, a group backed by major pharmaceutical, energy, and technology corporations—claim a new tax holiday will "strengthen our economy, pay down our debt, put people back to work, and invest up to $1 trillion in America." But the last tax holiday, in 2004, did nothing of the sort, CBPP says. "The evidence shows that firms mostly used the repatriated earnings not to invest in US jobs or growth but for purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to their shareholders," the report's authors write. "Moreover, many firms actually laid off large numbers of US workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders."

Here are three more solid reasons why tax holidays are a dumb idea, per CBPP:

  • Repeating the tax holiday would increase incentives to shift income overseas. If Congress enacts a second tax holiday, rational corporate executives will conclude that more tax holidays are likely in the future. That will make corporations more inclined to shift income into tax havens and less likely to make investments in the United States.
  • The claim that a tax holiday would increase domestic investment by freeing multinationals from cash restraints is extremely dubious. U.S. non-financial corporations currently have $1.9 trillion in cash and other liquid assets, the highest level as a share of total corporate assets since 1959. The ten companies lobbying hardest for a new tax holiday alone have at least $47 billion in cash and other liquid assets that could be used for domestic investments—without triggering additional tax liability.
  • Some of the biggest beneficiaries of a tax holiday would be firms that have aggressively shifted income overseas. Companies in the technology and pharmaceutical industries have been particularly aggressive in shifting income abroad because they rely on intellectual property, which is relatively easy to shift to other countries as a tax avoidance strategy. Half of all repatriations from the 2004 tax holiday came from companies in these two sectors alone. The same corporations and sectors would stand to benefit disproportionately—and enormously—from a second tax holiday."

It seems that a tax holiday would have, in the long term, the opposite of its intended effect: it would encourage companies to shift cash out of the US. It's hard to see any upside whatsoever for American workers—or the American economy at all, really—from another tax holiday. That is, unless you're a member of Congress who depends on hefty campaign donations to stay in Washington. In that case, a tax holiday is exactly what the doctor ordered. I've even drafted a working title for such a piece of legislation: "The Keeping Corporations Happy and the Contributions Rolling In Act of 2011."

A mouthful, yes. Anyone else have a better name?

Quote of the Day: Cantor Bails

| Thu Jun. 23, 2011 10:33 AM EDT

From House Majority Leader Eric Cantor, explaining why he's bailing out of budget negotiations with the Obama administration:

I believe that we have identified trillions in spending cuts, and to date, we have established a blueprint that could institute the fiscal reforms needed to start getting our fiscal house in order. That said....Democrats continue to insist that any deal must include tax increases....Given this impasse, I will not be participating in today’s meeting and I believe it is time for the President to speak clearly and resolve the tax issue.

Roger that. Trillions in spending cuts already agreed to, but there can't be one dime in tax increases of any kind. Would any conservative apologists like to continue pretending that Democratic aversion to spending cuts is pretty much the same kind of thing as the Republican jihad against tax increases? Anyone? Ross?

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GOP Mind Games, Job-Killing Edition

| Thu Jun. 23, 2011 9:32 AM EDT

It's an article of faith among congressional Republicans that, if you repeat a talking point often enough, no matter how inaccurate it is, it will eventually take root in the minds of Americans. Case in point: A new Bloomberg poll finds that 55 percent of Americans believe spending and tax cuts are the best way to lift the US labor market and lower unemployment, now at 9.1 percent, as opposed to more government spending.

That's straight out of House Republicans' "cut-and-grow" playbook, in which the road to economic prosperity entails slashing corporate tax rates and billion-dollar cuts to "job-killing government spending."

Except that's not true.

Alan Blinder, a Princeton economics professor and former Fed vice president, thoroughly debunked the GOP's claims on Tuesday in a Wall Street Journal op-ed titled "The GOP Myth of 'Job-Killing' Spending." Blinder writes:

The generic conservative view that government is "too big" in some abstract sense leads to a strong predisposition against spending. OK. But the question remains: How can the government destroy jobs by either hiring people directly or buying things from private companies? For example, how is it that public purchases of computers destroy jobs but private purchases of computers create them?

Blinder easily knocks down claims that the 2009 federal stimulus—roughly $600 billion in spending and $200 billion in tax cuts—failed to create jobs, pointing to Congressional Budget Office data that shows the net job gain was at least 1.3 million and perhaps as high as 3.3 million. What's more, Blinder debunks the idea that the federal deficit and the uncertainty that comes with it has caused companies to scale back business investments, which in turn impacts hiring and economic growth. Except such investment soared in the past year, increasing 14.7 percent. Ultimately, Blinder argues for another round of stimulus—specifically, giving businesses that grow their payrolls a tax credit—while calling for a serious long-term deficit reduction package.

And Blinder isn't the only expert to dismantle the GOP's economic position. In an interview with Yahoo News' Lookout blog, a former top economic aide to George W. Bush said the GOP's cut-and-grow agenda doesn't make any sense. "That wouldn't square with the way we normally think about economic activity in a depressed economy," said Andrew Samwick, now an economics professor at Dartmouth. Samwick, like so many other economists, points out that increased spending is a proven way to ramp up hiring and spark economic growth. Slashing spending does the opposite.

Yet Republicans have hammered away with their cut-and-grow mantra so much that they've convinced a majority of Americans to believe the unbelievable. You've got to hand it to Republicans: They may be wrong, but they are convincing.

Quote of the Day: Bernanke Not On Board the Austerity Train

| Wed Jun. 22, 2011 3:25 PM EDT

OK, maybe Ben Bernanke isn't willing to do much more to help out our anemic economy, but at least he did say this today:

I don't think that sharp, immediate cuts in the deficit would create more jobs. I think in the short run that we're seeing already a certain amount of fiscal drag coming from state and local governments from the withdrawal of previous federal stimulus, so I think in the short run, you know, the fiscal tightening is at best neutral and probably somewhat negative for job creation.

Am I wrong, or is this the bluntest he's been yet about the idiocy of his fellow Republicans and their austerity agenda?

Fed: The Economy Stinks, Our Work Is Done

| Wed Jun. 22, 2011 1:42 PM EDT

Via the New York Times, the Federal Reserve announced today it's ending efforts to bolster the country's tepid economic recovery:

The nation’s central bank said Wednesday that it would complete the planned purchase of $600 billion in Treasury securities next week as scheduled, and then suspend its three-year-old economic rescue campaign, leaving in place the aid it already is providing but doing nothing more, for now, to bolster growth.

"The economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee had expected," the Fed said in a statement. "The committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline."


The statement offered hope that the pace of growth would increase, noting that many factors restraining the economy are likely to be temporary, including the impact of higher energy prices and the disruptions to manufacturing caused by the Japanese earthquake. Automakers already are planning sharp increases in production to compensate for the lost volume.

So that's it. Apart from sticking with rock-bottom interest rates, the Fed is turning to a hope-and-wait strategy to see if economic growth, job creation, and consumer spending pick up in the coming months. Thanks a lot, Ben Bernanke.

Remember, front and center in the Fed's mission is crafting monetary policy "in pursuit of maximum employment." Right now, twenty-five million Americans can't find full-time jobs. Fourteen million Americans can't find any work. The Fed knows this: "Recent labor market indicators have been weaker than anticipated," the organization said today.

Ezra Klein nailed it this morning on the Fed's failure to fulfill its mission and spark a stronger, faster economic recovery:

[The Fed's efforts have had] a modest impact on the worst economy since the Great Depression. The anger at the Fed isn't coming because people have suddenly developed strong and nuanced views on quantitative easing. It's coming because people are angry about the state of the economy, and the Fed is one of the major forces in the economy. The way to have avoided it wouldn't have been to do less, but to do better, which would've meant doing more.

A growing number of economic policymakers—former Fed vice chairman Alan Blinder, former CEA chair Christina Romer, former associate director for the Fed's monetary affairs division Joseph Gagnon—believe that would've been, and in many cases, still is, possible. They argue that the bank's underwhelming impact on the recovery is evidence not of the Fed's inability to more effectively fight the recession, but its unwillingness to do what was needed to fight the recession. Larger and more aggressive asset purchases, price-level targeting, and various other dips into unconventional measures were and are needed. But all that would've been economically more effective and politically easier a year ago, or even two years ago, than it is today. Today, the Fed is under intense criticism, which limits its freedom of action. Having not done enough, they're now unable to do more.

On Jose Antonio Vargas, Undocumented Immigrant

| Wed Jun. 22, 2011 12:16 PM EDT
Jose Antonio Vargas.

Kevin is on vacation, so Andy Kroll and I are filling in for a few days.

In April 2008, Jose Antonio Vargas, then a reporter at the Washington Post, shared a Pulitzer prize for the paper's coverage of the Virginia Tech shootings. Last September, he published a 6,200-word profile of Facebook's Mark Zuckerberg in the New Yorker—the result of what he later called his "dream assignment." By any yardstick of traditional journalism, Vargas had made it.

This morning, the New York Times published Vargas' confession: he's an undocumented immigrant, and he's apparently committed a number of fraud-related crimes in order to obtain the documents he needed to stay in the country and keep working. It's hard to summarize Vargas' story—he didn't even know he was undocumented until, at 16, he applied for a learner's permit—so you should read the whole thing.

I'm sympathetic to Matt Yglesias' view that we should empathize with all people who come to the United States in search of a better life, even if, unlike Vargas, they do so knowing that what they're doing is illegal. But I've also worked with foreign-born journalists who've paid thousands or tens of thousands of dollars and waded through miles of red tape and seemingly senseless regulations—including, sometimes, returning to their home countries for a period—in order to work in this country.* (This applies outside of journalism, too, of course.) I wonder how they're feeling about Jose Antonio Vargas this morning.

*UPDATE: As discussed in the comments, these senseless hurdles are a central part of the problem.