Kevin Drum

Democrats and the Tax Bill

| Tue Nov. 9, 2010 4:13 PM EST

Steve Benen is tired of Republicans acting as if they're in the majority already. In particular, they're refusing to consider a permanent extension of middle-class tax cuts along with a temporary extension of tax cuts for the wealthy:

Cantor and other Republicans are barking orders, declaring proposals dead, as if they were in the majority. So perhaps now would be a good time to point a minor detail: Bush-era tax rates expire at the end of the year, and between now and then, there's a large Democratic majority in both chambers.

....It seems to me Democrats can get out of their defensive crouch and tell the GOP what's going to happen — there will be a vote on a tax-cut package, and it will feature a permanent cut in middle-class tax rates, and a temporary extension of rates for the wealthy. They can either vote for it or against it. If Senate Republicans refuse to allow the chamber to consider the package, they will have killed the only opportunity available to keep Bush-era tax rates alive, and will be responsible for bringing back Clinton-era rates for everyone.

Well, yes, Democrats could do this. If they weren't idiots, anyway. But they were idiots before the election, and as near as I can tell they're still idiots now. Plus, they still don't have 60 votes in the Senate, and Republicans can still chew up several weeks of calendar time obstructing a tax bill and cackling into their beers while Democrats scurry around haplessly pleading for a vote or two. And they will.

At this point, I think their best bet is to skip the tax bill entirely and focus on other things. Allow the Bush tax cuts to expire completely and let the 112th Congress deal with it. With no election in the offing and the Blue Dogs nearly wiped out, Democrats can be the obstructionists this time around. After all, tax cuts for the rich aren't very popular, gridlock isn't very popular, and Republicans aren't very popular. If nothing passes, they'll get the blame. So why make things easy for them?

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Quote of the Day: Goldbuggery

| Tue Nov. 9, 2010 2:12 PM EST

gold coinsFlickr/tao_zhyn (Creative Commons).

From Megan McArdle, on the idea of gold as a hedge against economic apocalypse:

The only scenario I can think of in which it makes sense to stockpile a lot of gold is one where you and your household goods are unexpectedly teleported into the sixteenth century. If you worry a lot about this, then by all means, stockpile gold. But you should also probably take the precaution of stockpiling antibiotics and how-to books on dentistry.

I've never really understood the obsession that end-of-the-worlders have with gold. Canned goods, sure. Guns and ammo, sure. But gold? If the country collapses and my bomb shelter is full of food and medicine and electric generators, do you think I'm going to trade any of that stuff to you in return for a few Krugerrands? What kind of idiot do you think I am?

In any case, I wondered out loud a few months ago about the runup in gold prices, which doesn't make sense as a reaction to our recent financial collapse since the runup started around 2001. Nor does it make sense as an inflation hedge inspired by recent Fed actions, since the runup started in 2001. Nor does Glenn Beck's recent popularity explain it, since the runup started in 2001. Etc.

What does seem to explain it is that China deregulated gold in 2001, and apparently the Chinese are famous gold bugs. And there are a lot of Chinese. India — which I understand also has a large population — liberalized its gold market in the 1990s, and since then has become a gold sink as well: "In the January-March quarter this year, India was the strongest performing gold market in the world....Gold jewellery demand rose from 37.7 tonnes to 147.5 tonnes....With an estimated 10 million marriages a year taking place in India, wedding-related demand accounts for a substantial proportion of overall jewellery demand."

So take your pick. Gold prices are going up because of fears that the end times are near, gold prices are going up because of fears of nonexistent inflation, or gold prices are going up because two billion Chinese and Indian consumers are lapping the stuff up. The first two might be playing a role, but I'll put my money on Door #3. As for how long the runup lasts, don't ask me. I'd guess it depends mostly on gold demand in China and India, and even in my most expansive moments I wouldn't pretend to know anything about that. I'm willing to bet that most of the people who bloviate endlessly on the subject don't either.

Exit Poll Nonsense

| Tue Nov. 9, 2010 1:13 PM EST

Matea Gold and Jordan Steffen of the LA Times do yeoman work today trying to show that women were an outsize part of the Democratic loss last week:

"I think women just did not see an economic narrative that was meaningful to them," said pollster Celinda Lake. "It really has to speak to the kitchen table. It can't just speak to banks and Wall Street."

During a year when the economy was the dominant concern in the electorate, single women were likely to feel those pressures even more acutely. "Unmarried women are the most economically vulnerable group, particularly if they have children," said Anna Greenberg, a Democratic pollster. "While there has been a lot of discussion in this recession about men and manufacturing jobs, it still is the case that unmarried women are the poorest. If they feel their concerns aren't being addressed by Obama and the Democrats around the economy, it sort of makes some sense there was a decline."

This kind of thing pisses me off. One of the reasons I do a biannual review of the exit polls is precisely to head off this kind of nonsense. Not that Gold and Steffen had to read my post to figure out what was going on: their own chart shows that nothing special was happening among women. Overall, Republicans did about 7-8 points better than in 2006. Among women, they only did 6 points better. Among unmarried women, they only did 4 points better. Among married women, they only did 4 points better. In other words, women were more loyal than average to Democrats this cycle. They switched in lower numbers than most other groups. Far from feeling economic pressures "more acutely," they apparently felt them less acutely by a small margin.

But stories need narratives, whether they're correct or not. "Nothing special happening among women" might be accurate, but I guess it doesn't make a very good headline.

Liberals vs. Progressives

| Tue Nov. 9, 2010 12:23 PM EST

A conservative-ish friend was visiting me a couple of weeks ago and wanted to know what the word "progressive" meant. It's just someone who's really far to the left, isn't it? I said no, not really, it was basically a term born a few years ago when liberals decided that the word "liberal" was irreparably tarnished and we needed something new to call ourselves. But beyond that, honestly, I wasn't entirely sure.

Turns out I'm not alone. Chris Moody explores the etymology of the word here, and apparently no one else really knows for sure either. Enjoy. But there's one thing he misses: Glenn Beck has been spending a ton of time and energy demonizing the word "progressive" over the past couple of years, and I suspect my friend was reacting to the fallout from that. So trying to find a new word didn't work. No matter what we call ourselves, conservatives are going to do their best to make it unfit for polite company. Probably best not to worry too much about it.

The GOP's Problem

| Tue Nov. 9, 2010 2:50 AM EST

Anne Applebaum writes today about the Senate election in Alaska, which pitted a tea partier who refused to endorse actual spending cuts against an old-style pol who bragged about bringing home the bacon. It highlighted the Republican Party's root problem in all its squalid glory, and the winner, as we all know, was Lisa Murkowski, the old pol:

When offered a direct choice, in other words, the majority of Alaskans chose the corrupt, big-spending Republican Party of Murkowski over the shallow, hypocritical radicalism of [Joe] Miller.

If nothing else, Alaskans' interesting choice must be keeping the Republican leadership awake at night: When faced with the reality of actual funding cuts, a year or two from now, might not other Republican voters suddenly feel they need someone like Murkowski, too? This must be a particular dilemma for the new Republican speaker, John Boehner....Poor Boehner must feel pulled in two directions, particularly because so many Republicans — and so many Americans — don't practice what they preach. They want lower taxes, higher defense spending, more Social Security and, yes, balanced budgets. They want the government to leave them alone, but at the same time they aren't averse to the odd federal subsidy. They like the way Miller talks, but, in the end, will they vote for Murkowski?

Answer: they'll vote for the Murkowskis of the world. Even the tea partiers will vote for the Murkowskis if the alternative is losing spending they care about. And that's the only spending that matters since there isn't enough spending they don't care about to make even a dent in the federal budget deficit. Boehner, I assure you, knows this perfectly well. There aren't too many ways to square this circle, so the smart money says the next couple of years are going to be full of fireworks, most of them very carefully designed to obscure the fact that Republicans aren't really serious about trying to cut much of anything. It should be very productive.

Our Unbalanced World

| Tue Nov. 9, 2010 2:17 AM EST

One of the effects of the Fed's new quantitative easing program is that it will weaken the dollar slightly and possibly reduce the U.S. trade deficit a bit. That's a positive thing, but the Wall Street Journal reports that international reaction to the Fed's program is growing increasingly harsh:

Global controversy mounted over the Federal Reserve's decision to pump billions of dollars into the U.S. economy, with President Barack Obama defending the move as China, Russia and the euro zone added to a chorus of criticism.

....On Monday, China's Vice Finance Minister Zhu Guangyao said the U.S. isn't living up to its responsibility as an issuer of a global reserve currency. The Fed's move doesn't "take into account the effect of this excessive liquidity on emerging-market economies," he said.

The top economic aide to Russian President Dmitry Medvedev said Russia will insist at the G-20 summit that the Fed consult with other countries ahead of major policy decisions.

....German Finance Minister Wolfgang Schäuble lashed out at U.S. pressure on Berlin to rein in the country's surging exports, telling Der Spiegel magazine, "The American growth model...is stuck in a deep crisis."

This is just crazy. Exporting countries like China and Germany have relied on the United States as the ultimate consumer nation for years. The whole world has. And everyone knows this is unsustainable. Schäuble calls it a "deep crisis" and he's right.

But they're addicted to it every bit as much as we are, which is why they go nuts when we take (extremely modest) measures to weaken the dollar in an effort to get our trade balance just a bit more balanced. So they need to make up their minds. Do they think America can run trade deficits forever? Or do they think we need to get our trade house into some semblance of order? If it's the latter, do they think we should start doing it now, or should it always be put off until "someday"? What exactly do they want?

Trade deficits can't last forever. Period. The only question is whether America's trade deficit goes away slowly and steadily, or if it goes away all at once during some kind of global panic. The rest of the world, to judge by their hysteria over the Fed's actions, is willing to risk the panic as long as it happens sometime in the future and mostly affects us. I'm not.

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DADT and the Courts

| Tue Nov. 9, 2010 1:55 AM EST

Responding to my post earlier today about Republicans, not Democrats, being primarily responsible for blocking repeal of Don't Ask Don't Tell, Glenn Greenwald tweeted:

DADT was gone - done - and Barack Obama brought it back, probably for years. That's just a fact.

Glenn was talking about the fact that the Department of Justice is appealing a September district court ruling that held DADT unconstitutional. But this is an argument I have a real problem with. It's not because I have a problem with court rulings on issues like this, but because I have a problem with district court rulings on issues like this being used as a handy excuse for presidents to overturn laws they don't like.

Let's face it: if you pick your jurisdiction right you can probably find a district court judge to rule just about anything unconstitutional. It would be easy, for example, to find a district court judge somewhere to say that the healthcare reform law was unconstitutional. If this happened in 2013 and President Palin decided not to appeal the ruling, thus overturning the law, what would we think of this? Not much, and rightfully so. A district court judgment is just flatly not sufficient reason to overturn an act of Congress.

I guess the reason this is on my mind is that George Bush is back in the news, and it strikes me that this is the same category of reasoning he used to justify the use of torture on enemy combatants. Bush, of course, didn't bother with the fig leaf of a court ruling, but he used OLC memos to provide the same kind of excuse to uphold only the laws he wanted to uphold. A lot of liberals spent a lot of time condemning this at the time, and we were right to do so. This is really not a tactic we should be defending now just because the law at stake is one we don't like.

On a different note, I sometimes think that Republicans must be busting a gut over all this. Here they are, working loudly and relentlessly to prevent the repeal of DADT, and what's the result? Lots of liberals sniping at each other. You can almost hear Karl Rove cackling over his Diet Coke. Political strategy rarely pays off so beautifully.

The Senior Vote

| Mon Nov. 8, 2010 3:53 PM EST

Speaking of senior citizens and how they voted this year, why did they suddenly decide to vote en masse for Republicans? Part of the reason is that everyone voted en masse for Republicans this year. Still, seniors switched in even higher numbers than most groups, despite the fact that the economic turndown actually affects them less than most other age groups. Here's one explanation:

“I’ve been saying since August 2009, that there was a tsunami — in this case a senior citizen tsunami — headed towards Capitol Hill,” said Jim Martin, chairman of the 60 Plus Association, a conservative campaign group targeted toward older voters. “That tsunami came ashore.”

....“I think that there is a level of fear that has grown with seniors vis-à-vis the Obama health care plan,” said Republican pollster Steve Lombardo. “Anytime that there’s change, I think seniors are going to be more concerned that that change is going to affect them in a negative way.”

Well, yeah. Seniors might very well be concerned that Medicare changes are going to affect them in a negative way. But there's that pesky passive voice again. Why were seniors concerned about this? No fancy political science is needed here: the answer is tens of millions of dollars spent on demagogic advertising like this. There's no need to get any more complicated about it.

Chart of the Day: Generation Gap

| Mon Nov. 8, 2010 3:27 PM EST

Via Jon Chait, the New York Times ran an interesting graphic this weekend showing demographic breakdowns of election results going back to 1982. Here it is for age groups:

Basically, all age groups were relatively evenly split between Democrats and Republicans until 2004, when the youth vote started to blow out for Democrats, and 2010, when older voters went heavily for Republicans. That's not quite what I would have expected, so this is a useful corrective. The other charts are interesting too.

NOTE: The NYT exit poll numbers don't match the numbers at the CNN site, though they're close. I'm not sure why this is. If anyone knows, enlighten us in comments.

Our Ruling Class

| Mon Nov. 8, 2010 2:51 PM EST

Matt Yglesias on the conservative love affair with Ireland during the Bush era:

I wouldn’t try to blame their property crash on low tax rates. But by the same token a frightening number of pundits went “all-in” on the idea that Ireland’s conserva-friendly tax policies were behind a boom that was in fact driven by a real estate bubble. There needs to be some accountability for this, because it appears to quite genuinely be the case that relaxed financial regulation is a can’t-lose strategy for (temporarily) attracting financial inflows, sparking an asset price bubble, and boosting growth. But that doesn’t mean countries should do it. And we need a system of international praise and esteem that’s not so blind to these issues.

Italics mine. Good luck with this. I've never spent too much of my energy on the Dean Baker-ish crusade about how we keep listening to all the people who got everything wrong during the aughts, but that's mostly just a matter of writing temperament, not because I disagree with him. But it's getting harder and harder not to jump on the bandwagon. I mean, we've now got mainstream Republicans suggesting we should (kinda sorta) go back on the gold standard, we've got conservative economists who believe we should raise interest rates because inflation is our biggest worry right now, and we've got a victorious GOP that thinks spending cuts and deregulation are the key to prosperity — all aided and abetted by an economically illiterate pundit class seemingly convinced that accounting identities are just guidelines and the federal government should be run the same way you and I run our family budgets.

I mean, it's almost as if the entire scientific community agreed about the fundamental chemical and thermodynamic reality of GHG-induced global warming but instead we listened to a bunch of cranks who — oh wait. We are listening to them, aren't we?

Never mind. I'll just retreat back into my cave now. Somebody send up a flare when it's safe to come back out.