Kevin Drum

China Seems to Be Lying About Its Unemployment Rate

| Wed Aug. 19, 2015 12:00 PM EDT

What's the unemployment rate in China? Last month it was 4.1 percent. The month before it was 4.1 percent. Last year it was also 4.1 percent. And in 2013? That's right: 4.1 percent.

A new NBER paper calls this "abnormally low and suspiciously stable," which seems like a fair judgment. So the authors, their suspicions piqued, used a nationally representative household survey to calculate the actual unemployment rate. Unsurprisingly, it turns out to differ substantially from 4.1 percent. The chart above (modified from the paper to show the two series more clearly) shows data through 2009, which is as far as the household series goes. The actual unemployment rate has been above 10 percent ever since 2002, and is likely even higher than that now, given the sputtering economic problems in China.

As of 2009, unemployment was highest among young, non-college educated women (about 17 percent). It's lowest among older college-educated men and women. But college is no longer a job guarantee for the young: the unemployment rate among young, college-educated men is 8 percent. Among women it's about 10 percent.

"Keep an eye on China and don’t be surprised by the unexpected," says Alex Tabarrok. "In China it’s not just the unemployment rate that is more volatile than it appears."

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In Shocking News, Scott Walker's Health Care Plan Screws the Poor

| Wed Aug. 19, 2015 11:08 AM EDT

This is going to be the most anticlimactic blog post ever, but can you guess how Scott Walker's health care plan compares to Obamacare for the poor? And how it compares for the upper middle class and the wealthy?

Damn. You guessed. But just to make it official, here are a couple of charts that show how the subsidies in the two plans compare at different income levels. I used the Kaiser calculator to estimate Obamacare subsidies and Walker's written document to calculate tax credits under his plan. The chart on the left shows a 3-person family with 30-year-old parents. The chart on the right shows the same thing with older parents.

And have no fear: I chose $30,000 as the minimum income level because most families below that level qualify for Medicaid. And you guessed it: Walker's plan slashes Medicaid too. So the poor and the working class get screwed by Walker no matter what their income level is.

Chart of the Day: Here's Why the Recovery Has Been So Weak

| Tue Aug. 18, 2015 8:59 PM EDT

I don't really have any good hook for posting this chart, but it's one of the most important ones you'll ever see. It's from the Wall Street Journal and it shows total government spending (state + local + federal) during the recession and its aftermath:

For about a year following the Obama stimulus, total spending was a bit higher than average for recession spending. But after that, spending fell steadily rather than rising, as it has after every previous recession. The result: a sluggish recovery, persistent long-term unemployment, and anemic wage growth.

Instead of responding to a historically bad recession with a historically strong stimulus, we responded with the weakest stimulus ever. Government spending is now more than 25 percentage points lower than normal. If you want to know why the recovery has been so feeble and unsteady, this is it. Republican presidential candidates, please take note.

Was Ted Cruz a Big Winner or a Big Loser From the GOP Debate?

| Tue Aug. 18, 2015 3:06 PM EDT

We now have a second poll showing who gained and who lost from the first GOP debate. It's from CNN/ORC, and its results are similar to yesterday's Fox News poll with two significant exceptions.

First, Donald Trump gained significantly in the CNN poll instead of holding steady. However, this may be just an artifact of the date of the comparison poll: July 30 for Fox and July 22 for CNN. They both have Trump at about the same absolute level currently.

The other big difference is Ted Cruz. Fox had him up four points after the debate; CNN has him down two points. Since they both had him starting at 6 percent, that's a pretty substantial difference. Aside from the normal statistical vagaries of polls like this, I can't think of a reason for it.

Anyway, it's still early days. This stuff is entertaining, but probably doesn't mean a whole lot.

E-Cigarettes May or May Not Be a Gateway Drug. (But Probably Not.)

| Tue Aug. 18, 2015 2:37 PM EDT

Are e-cigarettes a gateway drug to traditional cigarettes? There's a new study out that suggests they might be:

The study focused on ninth-graders at 10 public schools in Los Angeles who had tried e-cigarettes before the fall of 2013. Researchers surveyed those students in the spring of 2014 and fall of 2014, and discovered that they were about 2½ times as likely as their peers to have smoked traditional cigarettes.

This is a classic case of correlation which may or may not also be causation (something the authors acknowledge). Did more of the e-cigarette kids take up smoking because e-cigarettes gave them a taste for it? Or do the kids who are most likely to take up smoking in the first place simply start with e-cigarettes? There's no way to tell just from this study.

That's not to say it's worthless, though. If the study found no correlation, then you could be pretty sure that e-cigarettes don't lead to cigarette smoking. That would be worth knowing. But since it did find a correlation, we need more research to know if there's causation here.

One way to get a tentative read on this is to look at total cigarette smoking among teens. If it's up, then e-cigarettes might be leading more kids to cigarettes. If it's not up, then e-cigarettes are probably just temporarily replacing cigarettes for kids who were going to take up smoking anyway. So which is it?

As it happens, we know the answer to this: cigarette smoking has plunged among teenagers over the past four years. On the other hand, total cigarette use among teens (cigarettes + e-cigarettes) has gone up. The cigarette plunge makes it unlikely that e-cigarettes are a gateway to traditional cigarettes. But the increase in total cigarette use suggests that e-cigarettes really are creating a new market. It's complicated.

I Read Scott Walker's Health Care Plan So You Don't Have To

| Tue Aug. 18, 2015 1:12 PM EDT

It's health care day for Scott Walker. Today he released "The Day One Patient Freedom Plan," a title that's apparently designed to give the impression that his plan would start on Day One of his presidency. Yuval Levin comments that Walker's proposal "will be familiar to health wonks," and it's true. It's the usual conservative mish-mash of HSAs, high-risk pools, tax credits, interstate insurance sales, tort reform, and block-granting of Medicaid.

Oh, and Walker's plan won't require any tax revenue. This is....a little hard to believe since a quick swag suggests that the gross cost of Walker's tax credits will run about $200 billion per year. I figure the net cost, once you account for the end of Obamacare subsidies and other current outlays, is still in the neighborhood of $100 billion or so.1 That's a lot, so I assume Walker explains pretty carefully how he's going to pull this off without any new taxes.

Indeed he does. Here's the answer: "We would simplify and reform how the federal government helps people access health insurance." Gee, I wonder why no one's thought of that before?

So far, there's nothing very interesting here. Every Republican candidate is going to release a plan very similar to this. But there is one other thing I was curious about. It turns out that protecting people with pre-existing conditions is really popular, and this means that Republicans all feel like they have to support the idea. But how? Apologies for the long excerpt, but I want to make sure you see Walker's whole answer:

No individual should fear being denied coverage, or face huge premium spikes when they get sick and then try to change jobs or insurance plans. My plan would address these concerns. It would make additional reforms to insurance coverage laws to ensure individuals with pre-existing conditions would be protected, not only when moving from employer-based plans to the individual market, but also when switching between plans. This would make insurance coverage more portable, permitting individuals to own their coverage, regardless of how or where they purchase it.

Provided individuals maintain continuous, creditable coverage, no one would see their premiums jump because of a health issue or be shut out of access to affordable health insurance because of a new diagnosis or a pre-existing medical condition. Newborns, as well as young adults leaving their parents’ insurance plans and buying their own, would have these same protections. Unlike the ObamaCare approach, my plan would protect those with pre-existing conditions without using costly mandates. By relying on incentives rather than penalties, individuals would be free to choose.

This is literally a non-answer. We do know a couple of things: (a) if you let your insurance lapse, you're screwed, and (b) Walker will somehow prevent insurance companies from raising your rates if you maintain continuous coverage. He provides no clue just what kind of insurance regulation would accomplish this, and for a good reason: I doubt there is one. Obamacare accomplishes it via community rating, which requires insurance companies to cover all comers at the same price, but Walker surely rejects this approach. What he replaces it with remains a mystery.

One other thing worth noting: Walker's tax credits would, at best, pay only for catastrophic coverage. Maybe not even that. Nor will his plan cover everyone. Nor is it likely to cost nothing. Nor does it have any concrete proposals to reduce the cost of health care. If you think that's OK, then Walker is your guy. If you think everyone should be able to receive affordable routine health care, and you're willing to pay for it honestly, you might want to stick with Obamacare.

1Don't worry about the numbers. They're just illustrative guesses on my part. I'm sure experts will weigh in eventually with better estimates.

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We Are All Fans of Self-Deportation

| Tue Aug. 18, 2015 11:47 AM EDT

Ezra Klein has read Donald Trump's immigration plan and finds it even worse than he expected. I didn't feel that way: it read to me like a pretty standard right-wing take on illegal immigration, with just a few added Trumpisms (Mexico will pay for the wall, we should force companies to hire Americans, etc.). But two things in Klein's piece struck me enough to want to comment on them:

The plan would be a disaster for immigrants if enacted. But even if it's not enacted, the plan is a disaster for the Republican Party, which is somehow going to need to co-opt Trump's appeal to anti-immigration voters, but absolutely cannot afford to be associated, in the minds of Hispanic voters, with this document.

....When Mitt Romney embraced "self-deportation" in 2012, it was considered an awful mistake....But self-deportation is Trump's plan, too. And Trump's insight here is that the best way to drive unauthorized immigrants out of the country isn't to target them. It's to target their children and families.

On the first point, I think this ship sailed a long time ago. Maybe the Trump publicity juggernaut will aggravate things further, but I honestly don't see how the Republican Party could appeal to Hispanics much less than it already does. The anti-immigrant rhetoric from leading Republicans has been relentless for years, and Trump is merely adding one more voice to the chorus. Will Trump's bluster about making Mexico pay for the wall really make things any worse?

The second point is a little trickier. It's true that Mitt Romney blew it in 2012 with the infelicitous phrase "self-deportation." But the uproar that followed elided an important point: every immigration plan involves putting pressure on illegal immigrants in order to motivate them to (a) leave or (b) not come in the first place. There's a sliding scale of pain involved, and liberals tend to want less while conservatives tend to want more. But both sides make use of it.

The easiest way to think of immigration control is like this:

  1. Figure out how many illegal immigrants you're willing to tolerate.
  2. Ratchet up the the cost of illegal immigration and ratchet down the cost of legal immigration.
  3. Eventually, you'll figure out the right combination of costs that gets you to your number.

Nobody talks about immigration like this, but it's the thought process behind every immigration plan. Both Republicans and Democrats support E-Verify, for example, which makes it harder for immigrants who lack legal documents to get jobs. But what is this, other than a way to use economic pressure to persuade illegal immigrants to go back to Mexico? Likewise, both Democrats and Republicans support border security. Republicans may generally want more of it than Democrats, but Democrats are nonetheless willing to use increased security to raise the cost of crossing the border.

In the end, everyone uses this calculus,1 whether consciously or not. The amount of pressure—or cruelty, if you prefer—that you're willing to employ depends on just how many illegal immigrants you're willing to tolerate. But no matter what that number is, if you put any pressure at all on illegal immigrants, you're exploiting the power of self-deportation. Just don't say it out loud, OK?

1The exception, I suppose, are the people who advocate completely open borders. But they're a very tiny minority.

#Feelthebern? Not Really: Hillary Clinton Is Still the Odds-On Favorite.

| Tue Aug. 18, 2015 10:45 AM EDT

Should Hillary Clinton's recent spate of problems (Bernie Sanders, the email server, sagging favorability numbers) be enough to make people nervous about her chances of winning the Democratic nomination? I can answer that in four words:

It's August, folks. Chill.

In the early stages of primaries, people get nervous about candidates all the time and start tossing out bizarre ideas (Hillary will get indicted, maybe Joe Biden should run, etc.). But even strong candidates never win all the votes or cruise to victory without any problems. With the exception of incumbents running unopposed, you should expect that no candidate will get more than 60-70 percent of the vote. The fact that Bernie Sanders is polling at 30 percent or so isn't a sign of Hillary Clinton's weakness. It's a sign of a perfectly normal campaign. Nate Silver goes into more detail:

Being “inevitable” doesn’t mean you’ll sweep through all 50 states with no opposition. In the modern era (since 1972), the non-incumbent candidates who were similarly “inevitable” to Clinton, judging by the number of endorsements they had early on in the race, were Bob Dole in 1996, Al Gore in 2000, and George W. Bush in 2000. You can probably also add George H.W. Bush in 1988 to the “inevitable” list; he had a narrower endorsement lead but was the presumptive Republican nominee by virtue of being the sitting vice president.

Among these candidates, only Gore went undefeated in the primaries (and Bill Bradley came within a few percentage points of beating him in New Hampshire). In 1988, George H.W. Bush finished third in Iowa — behind Dole and Pat Robertson. In 1996, Dole lost New Hampshire to Pat Buchanan. George W. Bush lost badly to John McCain in New Hampshire in 2000.

....In Sanders, Clinton has drawn an opponent who is relatively well suited to New Hampshire and Iowa....Based on current polling averages, Sanders would almost exactly replicate Bradley’s performance in 2000, losing Iowa by double digits, giving Clinton a close call in New Hampshire, then losing badly once the calendar turned to more populous and diverse states. Or Sanders could do better than that, winning New Hampshire and a few other states in New England, the Upper Midwest or Pacific Northwest, perhaps along with one or two surprises elsewhere. But that too would be consistent with the losses that “inevitable” candidates like Clinton have endured in the past.

Silver goes on to say that emailgate doesn't seem to have hurt Hillary much (the slide in her approval ratings was both slow and inevitable) and she was going to get lots of unflattering press coverage no matter what she did. He puts her chances of winning the nomination at an unchanged 85 percent.

Barring some kind of epic meltdown, I'd put it even higher. I just don't see any credible competition out there: Bernie Sanders has a fairly low ceiling and it's too late for Joe Biden to get in. And so far, at least, I don't see much evidence that her email server problems are serious enough to cause any permanent damage.

It's traditional for leading candidates to inspire a movement to stop them. It's so traditional, in fact, that there's even a name for it: AB__. That is, "Anybody But ______ ." If Hillary Clinton inspires a similar movement, she'll be in illustrious company.

Report: 0.03% of Families in Public Housing Make a Lot of Money

| Mon Aug. 17, 2015 5:54 PM EDT

The Washington Post reports today on what's sure to become a shiny new conservative talking point. Here's the inevitable headline:

In a nutshell, the story behind this is pretty simple: HUD checks your income when you apply to live in subsidized housing, but they never check it again. Most people who climb up the income ladder move out anyway because they want to live someplace nicer, but a few don't. And of those few, a very few make really large amounts of money.

How many? Well, out of 1.1 million tenants, about 2.3 percent are over the income limits. Most of them, however, are only modestly over, or have been over the limit for just a short time. Only 0.03 percent are "egregiously" over the limit. Still, 0.03 percent is 0.03 percent, and these are the families the audit report focuses on. Why not kick them out?

HUD tweaked its policy on high-earning tenants in 2004, encouraging the thousands of housing authorities in the system to move families out of public housing if they earn more than the income limit for their area. While HUD gives money to the housing authorities, they’re run by states and local governments.

But the 15 authorities investigators looked at told them they had no plans to evict these families, because if they did, poverty would continue to be concentrated in government-subsidized housing. The goal, they said, was to create diverse, mixed-income communities and allow tenants who are making good money to serve as role models for others.

Okey doke. The programs are actually run by the states. And the states unanimously allow over-income families to stay because they think it has a positive impact on the housing projects.

As usual, then, once you read past the click-bait headline, the actual story turns out to be considerably less inflammatory than it seems. HUD encourages states to kick out over-income families, but doesn't require it. The states prefer to keep them, and for a seemingly good reason. And if you limited yourself to kicking out just the "egregious" cases in the blaring headline, you'd save only 0.03 percent of the budget.

Opinions may differ on this, but any way you look at it, it's just not a big problem. The number of very high earners in public housing is minuscule, and it's a pretty self-policing system since families that make half a million dollars mostly don't want to stay in public housing anyway. More than likely, then, it's probably best to ignore the whole thing and leave the program alone.

That's not likely, though. I wonder who will be the first Republican candidate to make this a standard part of their stump speech?

First Amendment Law is Facing Some Very Big Changes

| Mon Aug. 17, 2015 3:31 PM EDT

Adam Liptak says that Reed v. Town of Gilbert is the sleeper Supreme Court case of the past year. It unanimously struck down an ordinance that discriminated against signs announcing church service times, but only three justices ruled on the basis of existing law. The other six signed an opinion that went further, ruling that many other speech regulations are now subject to "strict scrutiny." How far will this go?

Strict scrutiny requires the government to prove that the challenged law is “narrowly tailored to serve compelling state interests.” You can stare at those words as long as you like, but here is what you need to know: Strict scrutiny, like a Civil War stomach wound, is generally fatal.

“When a court applies strict scrutiny in determining whether a law is consistent with the First Amendment,” said Mr. Abrams, who has represented The New York Times, “only the rarest statute survives the examination.”

Laws based on the content of speech, the Supreme Court has long held, must face such scrutiny. The key move in Justice Thomas’s opinion was the vast expansion of what counts as content-based. The court used to say laws were content-based if they were adopted to suppress speech with which the government disagreed.

Justice Thomas took a different approach. Any law that singles out a topic for regulation, he said, discriminates based on content and is therefore presumptively unconstitutional.

Securities regulation is a topic. Drug labeling is a topic. Consumer protection is a topic.

This is obviously not news to people who follow this stuff carefully, but it was news to me. Apparently the reach of Reed is pretty spectacular: three laws have been struck down by lower courts in just the past two months based on the reasoning in the case. Any law that treats, say, medical records or political robocalls or commercial speech differently from any other kind of speech is in danger—and there are a lot of statutes on the books that do exactly this.

They say that hard cases make bad law. But Reed was an easy case. It failed "the laugh test" said Elena Kagan. And yet, it seems likely to have provided an excuse for an astonishingly broad change in how speech is regulated. So far it's stayed mostly under the radar, but eventually something bigger than panhandling or ballot selfies will get struck down, and suddenly everyone will notice what happened. What then?

Professor [Robert] Post said the majority opinion, read literally, would so destabilize First Amendment law that courts might have to start looking for alternative approaches. Perhaps courts will rethink what counts as speech, he said, or perhaps they will water down the potency of strict scrutiny.

“One or the other will have to give,” he said, “or else the scope of Reed’s application would have to be limited.”

Stay tuned.