Kevin Drum

Gay Marriage Getting More Popular

| Thu Aug. 12, 2010 2:36 PM EDT

And now for some good news:

It's only one poll, but it's clearly part of a multi-decade trend that's been moving in the right direction at the rate of a little over 1% a year. Until recently that is: in the past three years, polling on this question has improved at the rate of 3-4% a year. And this might end up being the greatest legacy of Vaughn Walker's decision in the Proposition 8 case. His opinion might not have much influence on the Supreme Court when they end up ruling on the issue, but it probably does have an impact on public opinion. People respond to the opinions of thought leaders and authority figures, and when judges and politicians start speaking out more openly about this, it makes it safer for ordinary citizens to follow suit. Some of that is probably what's happening here.

What's also remarkable — though not new — is the huge gender divide on this question: men are obviously far more threatened by the idea of same-sex marriage than women are. Being thought a sissy during childhood is a common and scarring experience for boys, but being thought a butch or a tomboy probably isn't such a wide or traumatizing experience for girls. In this particular case, men remain far more trapped in their traditional gender roles than women.

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Fannie and Freddie

| Thu Aug. 12, 2010 1:45 PM EDT

Felix Salmon — tanned, rested, and ready — reads three op-eds about Fannie Mae and Freddie Mac in the New York Times today and comes away unimpressed. Whatever you might think of Fannie and Freddie, they aren't going away anytime soon:

The fact is, as John Carney says in his own op-ed (the most sensible, but also the narrowest, of the three), that the FHA and Frannie now back more than 95 percent of new mortgages. If they simply stopped buying new mortgages, the entire housing-finance business in the US would come to a screeching halt. No one could buy, no one could sell, and home values would be entirely hypothetical for years.

Yes, it's possible to slowly build an entirely private system of mortgage lending. But you can't do that overnight, as Poole seems to think. And he's completely wrong, too, when he says that “if the home finance market were fully private, then it would bear the losses from its own mistakes in pricing and insurance”. Not true: when there's a major housing crash, the government ends up bailing out the lenders whether they're public or private. Look at Ireland.

Two thoughts come immediately to mind. First, the only reason Fannie and Freddie are semi-public institutions in the first place is because the private markets wanted nothing to do with buying up mortgages when the idea was first broached. The original plan was that the FHA (created in 1934) would guarantee home loans and private industry would then step in to create a secondary market. But private industry wasn't interested, so in 1938 Fannie Mae was created to do it instead. So the question is: what's changed since then? If private industry wasn't interested in 1934, what makes us think they'd be interested now?

The answer, of course, is that lots of things have changed. But that's a two-edged sword and it leads to the second obvious thought: most European countries don't have anything similar to Fannie and Freddie, and they still manage to sell lots of houses there. There are pluses and minuses to the European model (and there have been proposals in the past to create an EU-wide GSE like Fannie and Freddie), but still, the fact that the European housing market exists and works adequately suggests that the U.S. could get by without Fannie and Freddie if we wanted to.

But, as Felix says, we probably can't get rid of them too quickly. We don't need another housing bubble, but neither do we need another housing crash. So while a private secondary market might be able to take Fannie and Freddie's place, it's going to take a while to create one that keeps the housing market working smoothly. In the meantime, we should concentrate on workable foreclosure reform and sensible housing policies, not bubble-era stuff like $1000-down mortgages. Fannie and Freddie need to be taken care of, but there's no rush.

The Permanent Campaign Meets the Obstructionist Senate

| Thu Aug. 12, 2010 1:07 PM EDT

Dan Drezner puts two and two together and wonders what it adds up to:

Executive branch burnout is a bipartisan phenomenon, and as the article notes, the real-time news cycle is only making things worse. This is particularly true on the foreign policy beat. Even if it's 3 AM in Washington, it's 6 PM somewhere else, and someone is doing something that will require an American response....After four years, even policy principals will find their brains going to mush.

On its own, this phenomenon wouldn't be that big of a deal — indeed, some personnel churn is likely a good thing, prevents groupthink and all that. The problem is that this trend is intersecting with another one — the increasing length of time it takes to appoint and confirm high-level personnel. With greater fixed costs involved in vetting and sheparding people through the confirmation process, presidents will be exceedingly reluctant to let these people go, which means that many of them will stay on for longer than perhaps they should.

The 24/7 news cycle has been partly responsible for turning the executive branch into a permanent campaign, and the kind of grueling schedule Dan is talking about here is what this mostly reminds me of. Nobody seriously thinks that even a superman can handle the rigors of a presidential campaign for more than 12-18 months, but that's what high-level White House positions have become. In fact it's worse than that. A guy like Robert Gibbs, for example, spent a couple of years in the pressure cooker atmosphere of the Obama campaign and then went straight into the frenzied atmosphere of the White House press room. Is it any wonder if maybe he's starting to crack a bit after nearly four years of this?

Obama Gains in the Polls!

| Thu Aug. 12, 2010 12:53 PM EDT

Here's a trivial little tidbit from the latest NBC/Wall Street Journal poll:

What a difference a couple of months makes. Nothing at all has changed in Obama's actual handling of the BP spill, of course. He's doing exactly the same things he was doing back in June. But now the leak has finally been capped, and that must mean he's doing a better job, right?

Fascinatingly, though, the poll also includes a comparison to approval ratings of George Bush's handling of Hurricane Katrina, and in that case time definitely didn't heal all wounds. In the immediate aftermath of the storm Bush's approval-disapproval rating was 48-48. A year later it had dropped to 36-53. I guess by 2006 people were just really, really tired of George Bush.

 

Do We Have a Debt Time Bomb?

| Thu Aug. 12, 2010 12:09 PM EDT

Carmen Reinhart and Kenneth Rogoff say (approximately) that when a government's debt level gets above 90% of GDP, that's a warning sign. Based on a massive database of past financial crises collected in their recent book, This Time is Different, they suggest this is the level at which growth starts to stall and economies go into a tailspin.

The title of the book, of course, is ironic: their whole point is that, in fact, this time isn't different. We should pay attention to all this economic history. Still, you could pretty reasonably argue that the postwar global economy really is distinct from the gold-standard-based economies of the previous few centuries, so maybe you should confine yourself to looking at just the past 60 years. Reinhart and Rogoff's latest crack at their argument goes back over a century, and Paul Krugman narrows it down:

Skeptics like me quickly questioned the causal interpretation of the correlation. [The single U.S. data point was due to postwar demobilization.] We pointed out that other episodes of high debt and low growth, like Japan since the late 1990s, were arguably cases in which causation ran from collapsing growth to debt rather than the other way around.

So surely the question is how much of the correlation survives once we restrict ourselves to cases in which the causation is plausibly from debt to poor growth, rather than likely being spurious or reversed. But R-R don’t offer any response to that question. They do give us a list of peacetime high-debt episodes: [List follows]

....If I’m reading this right, then the postwar cases other than Japan — which I’ve argued looks like reverse causation — are Belgium, Ireland, and Italy. Are these cases enough to bear the weight now being placed on that supposed 90 percent red line?

The causation-correlation argument is obviously an important one. Still, we now have six postwar data points (Krugman leaves out Greece), all in advanced Western economies. This is a small enough sample that it's tempting to treat every episode as a special case: the U.S. doesn't count because of postwar demobilization, Japan doesn't count because causation probably ran in the other direction, Italy doesn't count because its government is famously dysfunctional, Greece doesn't count because it hasn't been a rich country very long, etc.

This is good reason to look at the data skeptically. The problem is that it also provides us with a strong temptation to ignore data we don't want to see. But even given the caveats, we now have centuries of data points that R&R say support their thesis, and half a dozen that seem to be highly relevant to our current circumstances: namely that the U.S. is now above the 90% threshold if you use gross debt as a measure, and below it but getting there fast if you count only debt held by the public. Either way, it's a warning sign.

Overall, I'd say that R&R's data supports the policy that both Krugman and I endorse: stimulus now to help the economy recover from a financial shock, combined with credible future austerity and tax plans to reduce the deficit. This time might indeed be different, but I wouldn't bet the ranch on it.

How Obama Whiffed on Foreclosure Reform

| Wed Aug. 11, 2010 10:16 PM EDT

Atrios on the Obama administration's weak response to the recession:

I'm sympathetic to the argument that a bigger stimulus couldn't have gotten through Congress. So what did they do wrong? They failed to actively support judicial bankruptcy for primary residence first mortgages (aka cramdown) and they totally screwed up HAMP. The latter was entirely under their control and the former would have stood some chance of passing if the White House had thrown its weight behind it. It didn't.

Actually, it's even worse than that! Stephen Labaton of the New York Times, who has done some of the best reporting on the legislative nuts and bolts of financial reform, wrote the definitive account last June of how the banking industry teamed up with Republicans and centrist Democrats to defeat the cramdown proposal. Their secret? Lots of money, a solid front of opposition from Republicans, and, yes, a lethargic effort by the White House:

In the end, the banks’ startling success in defeating the provision, which was pushed hardest by Senator Richard J. Durbin, Democrat of Illinois, caught even their lobbyists by surprise. Not only did they defeat the cramdown provision, but the banks walked away with billions in new bailout money.

....While Mr. Obama reaffirmed his support for the proposal shortly after becoming president, administration officials barely participated in the negotiations, a factor that lobbyists said significantly strengthened their hand. Lawmakers who have discussed the issue with the administration said that the president’s senior aides had concluded that a searing fight with the industry was simply not worth the cost.

Moreover, Timothy F. Geithner, the Treasury secretary, did not seem to share Mr. Obama’s enthusiasm for the bankruptcy change. Mr. Geithner was lobbied by the industry early. Two days after he was sworn in, he invited Mr. Fine from the community bankers to his office for a private meeting. The association, with influential members in every Congressional district, is one of Washington’s most powerful trade groups.

....While Mr. Durbin had trouble rounding up Democratic votes, Republican leaders kept their members — and potential renegade banks — in line....There was no counterweight to that legislative muscle. Bankrupt homeowners do not have a political action committee or lobbyists.

Mr. Fine reports that the political action committees run by his association alone have built a war chest of nearly $2 million, a 40 percent jump over the last year, even though members have had to cut other expenses in the recession. “The banks get it,” Mr. Fine said. “They understand you need a strong political action committee to get access to the fund-raisers. That’s where the lawmakers are.”

Italics mine. And I hope you paid attention to the first one: not only did the banks kill the cramdown proposal, they walked away with billions in extra bailout money for their trouble. And remember, this all happened in April of 2009, when the banking industry was at its absolute nadir. Isn't America great?

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Quote of the Day: On the Uses of Rudeness

| Wed Aug. 11, 2010 9:25 PM EDT

From Paul Krugman, supplying some unsolicited advice to White House press secretary Robert Gibbs:

Rudeness at the proper moment can serve a purpose — as I hope I’ve demonstrated over the years.

Roger that.

Independents Rule

| Wed Aug. 11, 2010 6:05 PM EDT

Via Annie Lowrey, here's a Pew poll measuring knowledge of current events:

I guess you can try to draw some conclusions from the fact that Republicans are more likely to know that Greece got a bailout from the EU while Democrats are more likely to know who the prime minister of Great Britain is. But I'm not sure what. What's more interesting, I think is that independents do better than partisans of either stripe on virtually every question. The differences aren't huge, but they're quite clear.

What makes this odd is that independents are traditionally stereotyped as being less interested in politics and more apathetic than partisans. And maybe they are. But for a bunch of disengaged couch potatoes, they sure seem to know a fair amount about current affairs.

BP's Deep Secrets

| Wed Aug. 11, 2010 4:36 PM EDT

Julia Whitty reports on the ongoing cleanup of the Gulf oil spill:

"BP's two prime cleanup methods — setting out boom and using dispersant — completely undermine each other," [says Carl Safina, marine conservationist and cofounder of the Blue Ocean Institute]. The containment and absorbent boom that BP is deploying around beaches and marshes — largely ineffectively — is designed to do just that: contain and absorb oil. But the Corexit dispersant BP has flooded onto the leaking wellhead 5,000 feet down, and sprayed from the air onto the surface — some 2 million gallons in total — is designed to break up the oil. "Which one is it?" asks Safina. "Do you want to contain it or disperse it? It makes absolutely no sense to be doing both. Let's face it, with pollution, you count your lucky stars if you have what's called point-source pollution, that is, a single identifiable localized source of pollution, like the Deepwater Horizon. So what's BP doing with that? They're turning it into the worst pollution nightmare of them all: non-point-source pollution."

That's because untreated oil quickly rises to the surface, where it can be skimmed with relative ease. But treated with dispersant, it becomes a submerged plume, unlikely to ever float to the surface, and destined to migrate through underwater currents to the entire Gulf basin and eventually the North Atlantic. "Oil is toxic to most life," says Steiner. "And Corexit is toxic to most life. But the most toxic of all is oil that's been treated with Corexit. Plus, dispersants may well kill the ocean's first line of defense against oil: the natural microbes that break oil down for other microbes to eat." The EPA has never seriously examined Corexit's effects on marine life (see "Bad Breakup"). Now it'll get the biggest and baddest field experiment of all time, as the flora and fauna of the shallows and the deep scattering layer collide with the dispersed plumes.

Julia's piece, as a friend jokingly says, isn't written in the inverted pyramid style. It's a close look not at the surface of the Gulf — the part everyone sees — but at its deepest reaches, where dispersed oil is likely to remain for years or decades, interrupting food chains and delicate ecologies in ways we can only begin to guess at. This is the stuff BP would just as soon no one pay attention to, and it's not a story that can be easily summarized. But if you really want to understand what's happening in the Gulf, put aside a few minutes and read the whole thing.

And when you're done? Just click here for the rest of our coverage of the BP spill from this month's issue of the magazine.

Yes, Google Is a Little Bit Evil

| Wed Aug. 11, 2010 3:03 PM EDT

So what's the story on the Google/Verizon proposal that would allow carriers to offer high-speed networks to favored customers at a higher price than standard internet access? Would it spell the end of net neutrality?

There are two parts of the proposal. The first would essentially eliminate the principle of net neutrality over wireless networks. So within that piece of the internet, the answer is yes.

But what about the wireline network? There, the VG proposal is a little more subtle. Basically, they suggest that the current internet — which their document calls the "public internet" — should remain governed by strict net neutrality that treats everybody equally. However, carriers would be allowed to construct complementary networks that discriminate freely. The subtext here is that while well-heeled corporations could indeed buy better service, the public internet — i.e., the one we all know and love today — would be unaffected.

So: is this true? David Post is a strong supporter ("indeed, I'm a religious zealot") of the current end-to-end design of the internet, a design that essentially enforces net neutrality at the protocol level by placing all processing at the endpoints of the network and allowing the network itself to do very little aside from dumb transport of bits. Here's his take:

The problem is that there are many things an E2E inter-network (like the one we have) can’t do that people want their inter-network to do and would pay to have it do, and businesses serving those people want to provide those things. Things like guaranteed delivery of packets; the E2E network can’t promise that your packet will arrive at its destination, because that would require the network to keep track of your transmission as it moves along....[etc.]

The problem then boils down to: is there a way to preserve the E2E network — the open, nondiscriminatory inter-network — while simultaneously allowing people to get the services they want? Now in fact, that’s not exactly the question, because we know the answer to that one. There are already thousands, hundreds and hundreds of thousands, of non-E2E networks that do lots and lots of internal processing and provide lots and lots of services the E2E Internet does not provide. Your cell phone provider’s network, for instance. Most corporate wide area networks, for instance. Obviously, if Verizon wants to build a separate network and offer all sorts of glorious services on it, it can do so. The real net neutrality problem is this: if Verizon uses the Internet’s infrastucture to provide those services, will that somehow degrade the performance of the E2E Internet or somehow jeopardize its existence? Put another way: if Verizon can figure out a way to provide additional services to some of its subscribers using the Internet infrastructure in a way that does not compromise the traffic over the E2E inter-network, why should we want to stop them from doing that?

I think this is a good way of putting the question, though I'd expand it a bit. First, there's a technical question: can Verizon (and other carriers) segregate traffic over current backbones without degrading the performance of other traffic? I'm skeptical on fundamental grounds, but as Post says, there's always the chance that "technological innovation can do things that I usually cannot foresee." And it's certainly true that content delivery vendors like Akamai already provide high-speed access for a fee by pushing the boundaries of the current architecture of the internet as far as it will go. So maybe Post is right. But there's also an economic question: if carriers put all their capital development into high-speed dedicated networks, does this mean they'll simply let the current public internet deteriorate naturally as traffic increases but bandwidth doesn't keep up? That seems pretty likely to me.

If you're a pure libertarian, your answer is, "So what?" If there's a demand for high-performance public access, then the market will deliver it. If there's not, then there's no reason it should. But there's a collective action problem here: if the public backbone deteriorates, there's nothing I can do about it. As an individual, obviously I can't afford the kind of dedicated high-speed network that Disney or Fox News can. But the public backbone is a shared resource. Unless lots of my fellow users are willing to pay for high-speed service, I can't get it. And if access to most of the big sites is fast because they're paying for special networks, what are the odds that people will care all that much about all the small sites? Probably kind of slim.

Again: who cares? If most people don't care much about high-speed access to small sites as long as they have fast access to the highest-traffic sites, then that's the way the cookie crumbles. There's no law that says the market has to provide everything Kevin Drum wants.

Still, there are real benefits to providing routine, high-speed internet infrastructure to everyone. It means that small, innovative net-based companies can compete more easily with existing giants. It means schoolchildren can get fast access to a wide variety of content, not just stuff from Microsoft and Google. It means we have a more level playing field between content providers of all kinds. Sometimes universal access is a powerful economic multiplier — think postal service and electricity and interstate highways — and universal access to a robust internet is to the 21st century what those things were to the past. If, instead of an interstate highway system, we'd spent most of our money building special toll roads for Wal-Mart and UPS, would that have been a net benefit for the country? I'd be very careful before deciding that it would have been.

For now, then, count me on the side of a purer version of net neutrality, in which the backbone infrastructure stays robust because everyone — including the big boys — has an incentive to keep it that way. I'm willing to be persuaded otherwise, but Verizon and Google are going to have to do the persuading. And it better be pretty convincing.