Kevin Drum

Business Community Gives Putin Green Light in Ukraine

| Fri May 2, 2014 12:24 AM EDT

It appears that doing anything to interfere with Russia's latter-day Anschluss of eastern Ukraine doesn't meet with the approval of the Western business community. It might cut into profits, after all. The Wall Street Journal reports:

Several of the biggest names in German business—including chemical giant BASF, engineering group Siemens AG, Volkswagen AG, Adidas AG, and Deutsche Bank—have made their opposition to broader economic sanctions against Russia clear in recent weeks, both in public and in private....Many of Germany's largest companies have substantial Russian operations, built in some cases over decades, and worry that tough economic sanctions would rob them of a key growth market when their home market—Europe—is stagnant.

.....U.S. companies, which have less at stake in Russia compared with their European competitors, are expressing their concerns about further sanctions more privately with the Obama administration. American companies have stressed in Washington that proposed sanctions on broad sectors of the Russian economy, if pursued unilaterally, would cause Russian state-dominated industries to back out of deals with U.S. firms and open the market to competitors from Europe and elsewhere.

....Italy and Greece also have resisted a more aggressive response because of the potential impact on their economies. Some of Washington's closest military allies, including Japan, Egypt and Israel, also are cautioning the Obama administration against taking steps that could permanently rupture Mr. Putin's ties to the West, according to Asian and Middle East officials.

Vladimir Putin must be laughing his ass off. I'm sure he's pleased to know that he's now got a free hand.

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A New Obamacare Mystery: How Many Uninsured People Signed Up For New Coverage?

| Thu May 1, 2014 6:44 PM EDT

The fine folks at HHS released some new data on Obamacare signups today. Quick stats: 8 million people signed up; 34 percent are under age 35; and 54 percent are female. But here's the head scratcher:

Of the 5.45 million people who selected a Marketplace plan through the [federal exchange]....5.18 million (95 percent) applied for financial assistance and were required to answer a question about their health insurance coverage.  Of these 5.18 million who applied for financial assistance and selected in a plan, 695,011 (13 percent) indicated that they had coverage at the time of application.

So this means that on the federal exchange, about 4.5 million people signed up who were previously uninsured. If we figure a somewhat lower rate for the 2.6 million who signed up via state exchanges, you can add about 2 million to that number.

In other words, in total, the exchanges signed up about 6.5 million people who were previously uninsured. This is far, far higher than previous estimates of about 3 million or so. I'm not sure what to make of this given the amount of survey data that produced the smaller figure. Perhaps it's a difference in what counts as uninsured? Or a difference in how people respond to pollsters vs. how they respond to an official question on an application. Hard to say. The full HHS report is here, and it acknowledges the different estimates but provides no guesses about why they vary so widely.

For now, just take this as a bit of a mystery. In a month or two we'll probably have much firmer data on all this stuff.

Fox News and the Rise of Racial Animus in the Obama Era

| Thu May 1, 2014 1:45 PM EDT

Today, using questions from the General Social Survey, Nate Silver tries to quantify the effect of Barack Obama's election on the racial attitudes of white Republicans and Democrats. On several of the most overtly racist questions ("blacks are lazy," "blacks are unintelligent") there's little evidence of change. But on two of the questions with more political salience, there's evidence of a pretty substantial effect.

The chart on the right illustrates this. The number of white Republicans who believe the government spends too much money on blacks had been trending slowly downward for years. Based on that trend, you'd expect the number today to be a bit above 20 percent.

Instead, it took a sharp upward jump in 2010 and again in 2012, ending up a bit over 30 percent. In other words, among white Republicans, it appears that the election of a black president has increased the belief that blacks get too many government bennies by about 10 percentage points. This belief is now at levels not seen since the anti-busing days of the 70s.

I'm not sure what conclusions to draw from this beyond the obvious ones. As you might suspect from some of my posts over the past few years, I basically blame Fox News and conservative talk radio for this state of affairs. Without Fox fanning the flames of racial animus over the past several years, I suspect we wouldn't see this effect—or at least, not as strongly. That's just a guess on my part, but I think it's a pretty good one.

UPDATE: Several commenters suggest a different explanation for this: white Republicans get more concerned with money spent on blacks under Democratic presidents and less concerned under Republican presidents. This doesn't fit the evidence perfectly, but it fits reasonably well. However, it doesn't explain Democratic attitudes, which you'd expect to be the exact opposite.

So....maybe. Overall though, I'd note that the trend lines are fairly similar for both Republicans and Democrats until about 2006-08. Then you get a significant divergence. The Obama/Fox News effect seems to explain this best.

Also, the subsample size for white Republicans and Democrats is fairly small (perhaps 300 or so), so there's a fair amount of noise in the trend lines.

Consumption Doesn't Matter. Income Does.

| Thu May 1, 2014 1:03 PM EDT

The BEA reports that consumer spending increased sharply in March. Business owners are pleased:

Consumer spending rose in March at the fastest pace in nearly five years, providing fresh evidence that the U.S. economy gained strength with the arrival of spring. Personal consumption—spending on everything from electricity to sliced bread—surged a seasonally adjusted 0.9% from February, the Commerce Department said Thursday. That was its largest gain since August 2009.

....Paint sales are up from a year ago at Koopman Lumber Inc., a Whitinsville, Mass.-based chain of six hardware and lumber stores. "People are starting to spend some money on their houses. They're saying, 'We've put it off long enough,' " co-owner Tony Brookhouse said. "There are definitely signs of improvement."

Maybe. But look: consumers can only spend money they have, and the only way for consumer spending to rise steadily is for personal incomes to rise steadily too. But that's not happening. Here's the chart since the beginning of the recovery:

There's a small uptick in February and March, but it's nothing special. A few months from now, if we're still seeing a sustained increase in personal income, then we should expect a sustained increase in personal consumption too. But without that, this is just a bit of catch-up spending due to low levels in the previous few months.

Don't pay attention to consumption. Pay attention to income. That's what matters. A sustained recovery won't be based on drawing down savings or cash-out refis or running up the credit card. It will be based on steadily rising incomes. So far we haven't seen that.

Iraq Delusion Syndrome Is Alive and Well

| Thu May 1, 2014 10:36 AM EDT

Max Boot writes today that over the past couple of years, Iraq has spiraled ever downward into outright anarchy and civil war:

Contrast that with Afghanistan, which I visited last week. While violence, corruption, drug production and government dysfunction remain very real problems in what is still one of the world's poorest countries, Afghanistan is making real progress. Kabul is bustling and, notwithstanding some high-profile Taliban attacks, far safer than Baghdad....Even more impressive, the security forces managed with virtually no coalition presence on the ground to secure the April 5 presidential election despite Taliban attempts to disrupt it.

....Just a few years ago, Iraq appeared to be in much better shape: President Obama bragged on Dec. 14, 2011, that "we're leaving behind a sovereign, stable and self-reliant Iraq." In hindsight, however, it is obvious that Iraq began to unravel the minute the last U.S. troops left.

....There is an important lesson to be learned here: It's vitally important to keep a substantial commitment of U.S. troops in Afghanistan after this year. Military commanders are asking for at least 10,000 personnel, and if that request isn't granted by the White House (as leaks suggest it may not be), the odds will increase that Afghanistan, like Iraq, will descend into a civil war that undoes everything U.S. troops sacrificed so much to achieve.

I should say at the outset that I don't necessarily oppose a long-term commitment of a small US peacekeeping force to Afghanistan. Fifteen years after the Kosovo war, NATO still has several thousand troops there, about a thousand of which are American. That's how long this stuff takes sometimes.

That said, I'm endlessly flummoxed by the attitude of guys like Boot. After ten years—ten years!—of postwar "peacekeeping" in Iraq, does he still seriously think that keeping a few thousand American advisors in Baghdad for yet another few years would have made a serious difference there? In Kosovo there was a peace to keep. It was fragile, sure, but it was there. In Iraq it wasn't. The ethnic fault lines hadn't changed a whit, and American influence over Nouri al-Maliki had shrunk to virtually nothing. We had spent a decade trying to change the fundamentals of Iraqi politics and we couldn't do it. An endless succession of counterterrorism initiatives didn't do it; hundreds of billions of dollars in civil aid didn't do it; and despite some mythologizing to the contrary, the surge didn't do it either. The truth is that we couldn't even make a dent. What sort of grand delusion would persuade anyone that yet another decade might do the trick?

Maybe things are different in Afghanistan. Tribal conflicts are different from sectarian ones. The Taliban is a different kind of enemy than al-Qaeda. Afghanistan's likely next leader will almost certainly be more pro-American than Hamid Karzai. And strategically, Afghanistan plays a different role than Iraq ever did.

But Iraq? In 2003, maybe it was reasonable to think that the US could not just topple a dictator, but change the culture of a country. We can argue about that forever. But to still believe that in 2014? That's the stuff of dreamland. Why are there still people around who continue to cling to this fantasy?

China Is Still Just a Jumbo Version of Albania

| Thu May 1, 2014 9:50 AM EDT

I don't want to pretend to some kind of faux naivete here, but can someone tell me why there's suddenly a big frenzy about whether China is now the biggest economy in the world? China has 1.3 billion people. Of course they're eventually going to eventually be bigger than the US. If not this year, then next year or the year after. Everyone knows this. Everyone has always known this. It's no surprise, and it's no big deal. They've still got about the per capita GDP of Albania, and it will be decades before they become even a middle-income country.

So who cares if they're fudging the official numbers or the PPP calculations are being done wrong or whatever? Why does anyone even remotely care about this supposed milestone?

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We're Americans, Please Don't Bother Us With Facts

| Thu May 1, 2014 12:09 AM EDT

A British diplomatic report from Ronald Reagan's second year in office was released publicly today:

"The White House are certainly concerned that the president could acquire a national image as a bumbler which, like [former President] Ford's image as a stumbler, could not be eradicated once firmly established in the public mind," the UK embassy told London in March 1982, referring to persistent "mistakes of fact" made by Reagan.

Silly Brits. Americans don't care about mistakes of fact. I wonder whatever gave them the idea that we do?

Quote of the Day: CO2? What CO2?

| Wed Apr. 30, 2014 4:59 PM EDT

From Les Woodcock, a former professor at the University of Manchester’s School of Chemical Engineering and Analytical Science, explaining why he thinks climate change is a crock:

There is no reproducible scientific evidence CO2 has significantly increased in the last 100 years.

There are many things that a climate skeptic could say. Some are more ridiculous than others, however, and on a scale of 1 to 10, this one is an 11. There are no complicated computer models involved in calculating atmospheric CO2. You just measure it. For pre-modern data, you use ice cores. That's it. Two centuries ago, the atmospheric concentration of CO2 was about 280 ppm. Last year it crossed the 400 ppm mark. This is about as controversial as germ theory. Here's the chart:

Now, it's fair to ask why you should care about the fact that some random elderly former professor is badly confused about a simple and uncontroversial measurement. Answer: because there are plenty of people who don't care about evidence one way or another and are willing to glom onto anyone who tells their audience what it wants to hear. "Professor Woodcock is the latest scientist to come out against the theory of man-made global warming," crows "Former NASA Scientist: Global Warming is Nonsense," tweets tea party hero Erick Erickson. "Another Scientist Dissents!" screams Climate Depot.

"I literally cannot imagine a statement that would be more scientifically incorrect and humiliating than the one Professor Woodcock made," says Ryan Cooper, from whom I learned about this. "It's like saying you don't believe in the existence of cheese....It's no wonder that only six percent of scientists are Republican."

Nonetheless, there you have it. In the tea party precincts of the conservative movement, even the simplest version of reality doesn't matter. If cheese denial is how you demonstrate you're part of the tribe, then anyone who denies cheese is a hero. The fact that you happen to be happily munching away on a slice of pizza at the time doesn't faze you at all.

An Awful Lot of People Seem to Have Fibbed About Responding to the Heartbleed Bug

| Wed Apr. 30, 2014 1:19 PM EDT

Via Hayley Tsukayama, check out this question about the Heartbleed bug from Pew Research:

That's pretty impressive, no?

"I think it’s a pretty striking number," said Lee Rainie, the center's director, in an e-mailed statement....Rainie added that the urgency of the coverage likely prompted people to act quickly to address the issue. "We didn’t ask people how they'd heard about Heartbleed, but I'd guess that it was a combination of media coverage plus chatter in users’ networks via social media and e-mail," he said. "And much of what we were seeing was the basic message, 'This one is really serious and you need to respond.'"

I too think this is a pretty striking number. But I don't believe it for a second. If you had security consultants make personal house calls to every internet user in the United States, I don't think 61 percent would change their passwords. I would frankly be surprised if 61 percent of internet users even know how to change their passwords.

Am I being too cynical? Maybe. But what I'm curious about is where this number comes from. Since I doubt that the real number of password changers is even half of the Pew number, why did so many people fib about it when a pollster called them? And what does that say about how people respond to pollsters in general?

Here's the Easiest Way to Fund the Interstate Highway System: Just Restore the Damn Gas Tax

| Wed Apr. 30, 2014 12:40 PM EDT

With a few exceptions, the interstate highway system is blissfully toll-free. That may be about to change:

With pressure mounting to avert a transportation funding crisis this summer, the Obama administration Tuesday opened the door for states to collect tolls on interstate highways to raise revenue for roadway repairs.

....The question of how to pay to repair roadways and transit systems built in the heady era of post-World War II expansion is demanding center stage this spring, with projections that traditional funding can no longer meet the need. That source, the Highway Trust Fund, relies on the 18.4-cent federal gas tax, which has eroded steadily as vehicles have become more energy efficient.

....With the trust fund about to run into the red and the current federal highway bill set to expire Sept. 30, Congress cannot — as its members often note — keep “kicking the can down the road.”

Hold on. It's true that we're using a bit less gasoline than in the past. But that's not why the Highway Trust Fund is in dire shape. It's in dire shape because the federal gas tax has been cut nearly in half since it was last changed two decades ago. In 1993 dollars, it's now about 11 cents per gallon. If it had just kept up with inflation, highway funding would be in fine shape.

Now, there's arguably a good reason to allow tolls. Basically, it makes driving on interstates more of a pain in the ass, which probably means marginally less driving on interstates. And less driving is good for the planet. So if you think that making it less convenient to drive is a good idea, tolls might help.

But you know what else would cut down on driving? Gas taxes restored to 1993 levels. So what's the point of dicking around instead with tolls and corporate tax reform and all that? The answer, of course, is Republicans, who have sworn a blood oath never to raise taxes, even if "raising" actually means "keeping them at the same level." So instead of just bumping up the gax tax by a dime or two and then indexing it to inflation—no muss, no fuss—we're going to play a bunch of idiotic and annoying games merely to keep our roads in decent repair.

Thanks, Republicans. I appreciate it.