Kevin Drum

All Systems Are Go

| Thu Mar. 18, 2010 12:03 PM EDT

One of the roadblocks in the way of the reconciliation rider to the Senate healthcare bill is that, in order to meet reconciliation rules, it has to decrease the budget deficit by at least $1 billion. According to the latest CBO score, that's no problem:

The incremental effect of enacting the reconciliation proposal — assuming that H.R. 3590 had already been enacted — would be the difference between the estimate of the combined effect and the previous estimate for the Senate passed bill, H.R. 3590. That incremental effect is an estimated net reduction in federal deficits of $20 billion over the 2010-2019 period over and above the savings from enacting H.R. 3590 by itself.

Click the link for details. The reconciliation rider would also continue to reduce federal deficits in the decade after 2019, just like the main Senate bill. As far as I know, this is the last hurdle in the way of healthcare reform aside from, you know, actually voting on it. That should happen sometime this weekend.

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Quote of the Day: Do the Right Thing

| Thu Mar. 18, 2010 11:15 AM EDT

From Marjorie Margolies-Mezvinsky, who I've blogged about before, on her vote to pass Bill Clinton's budget in 1993:

While it is easy to say my balanced-budget vote cost me reelection, that assumes the line of history that followed the bill's passage. Had I voted against it, the bill wouldn't have passed, the Republican opposition would have been emboldened, the Clinton presidency would have moved into a tailspin . . . and all of this could have just as easily led to my undoing.

Simply put, you could be Margolies-Mezvinskied whether you vote with or against President Obama. You will be assailed no matter how you vote this week. And this job isn't supposed to be easy. So cast the vote that you won't regret in 18 years.

If anything, defeat of the healthcare bill is likely to lead to bigger House losses this November than otherwise. So good policy is good politics, no matter how distant or hard to believe that seems in the heat of the moment. So let's all do the right thing, OK?

By the way, after being offline for most of yesterday due to a computer upgrade that took (surprise!) longer than I expected, I'm now typing this post on a blazing fast new box loaded with gobs of memory and Windows 7. Does it seem even slicker and more insightful than usual?

You and Your Browser

| Wed Mar. 17, 2010 2:30 PM EDT

Via Tyler Cowen, this comes from a Microsoft Research paper about why ordinary people are probably justified in ignoring most security advice on the internet:

Browser vendors have invested considerable effort in making it harder to ignore certificate errors. In Firefox version 3, when encountering an expired, invalid or self-signed certificate the user sees an interrupt page explaining that the SSL connection failed. If he chooses to add an exception he sees another interrupt page with more warnings and a choice to add an exception or "get me out of here." If he elects (again) to add an exception he must click to get the certificate, view the certificate, and then add the exception. Internet Explorer 8 is somewhat less intrusive, but the procedure also seems designed to suggest that adding exceptions is very risky. Is it? Ironically, one place a user will almost certainly never see a certificate error is on a phishing or malware hosting site. That is, using certificates is almost unknown among the reported phishing sites in PhishTank. The rare cases that employ certificates use valid ones. The same is true of sites that host malicious content. Attackers wisely calculate that it is far better to go without a certificate than risk the warning. In fact, as far as we can determine, there is no evidence of a single user being saved from harm by a certificate error, anywhere, ever.

I've long wondered about those certificate errors I get from time to time, but apparently they're just that: errors. Now I know I can just ignore them and still sleep soundly at night.

Quote of the Day: Rock Bottom

| Wed Mar. 17, 2010 2:01 PM EDT

From Time's Jay Newton-Small, suggesting that Democrats have hit rock bottom and have nowhere to go but up — if they pass healthcare reform, that is:

Oh how quickly things can change. If you pass the bill, next week's coverage is likely to trumpet triumph, the most productive legislative session since LBJ, an historic and seminal victory....As Republicans used to say before the 2004 elections defending Medicare Part D, it's hard to spend hundreds of billions of dollars expanding health care coverage and not have it be a net positive in the polls.

Memories are short, but healthcare reform is forever. And passing historic legislation that improves people's lives in concrete ways is the best way to beat the midterm blues.

Inflationary Demons

| Wed Mar. 17, 2010 1:37 PM EDT

Matt Yglesias notes that Michael Kinsley has a strange column in the Atlantic this month ("My Inflation Nightmare") warning about the possibility of runaway inflation in our future. I read it a few days ago and shrugged. But it stuck with me anyway. Here's Matt:

What’s strange about the column is that I don’t know how I could possibly refute it. Kinsley freely acknowledges that “virtually every leading economist across the political spectrum” disagrees with him, and he doesn’t dispute the details of any of their analyses. He also acknowledges that while it would be possible for him to make investment decisions that reflect his belief in a coming period of inflation, he’s not doing it “because I lack the courage of my convictions.”

....I note that not only does Kinsley’s column explicitly discuss the lack of evidence for Kinsley’s thesis, but it also details the theoretical error Kinsley is making—thinking too moralistically about the economy. He says “on economic matters, I’m a puritan.”....In his view, a greater punishment must be over the horizon for the sake of the moral order. And since recession is, by his lights, not enough the only other economic calamity on the menu is inflation. And so, he deduces, we must be heading for inflation, even though he himself recognizes the reasoning as so specious that he won’t use it as the basis for investment decisions.

I'm going to defend Kinsley a bit. One reason is that although he freely talks about the inner demons that prompted his heresy, he does, in fact, also offer up a concrete reason for his fears: "My specific concern is nothing original: it’s just the national debt....We talk now of trillions, not yesterday’s hundreds of billions." This is not a completely nonsensical concern, even if it would be better expressed as a percent of GDP rather than in raw dollars. What's more, if Kinsley had wanted to write something a little more sophisticated, he could have spent some time on the Fed's likely problems unwinding its trillion dollar balance sheet over the coming years, something that has at least the potential for sparking inflationary pressures if it isn't timed pretty delicately.

But that's not the real reason for defending Kinsley. The real reason is this: I sort of agree with him. Is it because we were both around for the 70s and remember what happened then? Maybe, though Paul Krugman and Brad DeLong were around then too and they're not worried. And intellectually, like Kinsley, I agree with them: inflation just doesn't seem like a big issue right now. But what about a few years from now? It really does look as if our political system is going to find it next to impossible to control our long-term federal deficit, and at the same time the dollar is going to have to come down in value eventually. Both of these things, along with the Fed's operations, pose inflationary potential. And I have a fairly healthy respect for the proposition that if the Fed loses its reputation as an inflationary hawk, it's much harder to get back than you might think.

So here's the question: if all the people you respect say that inflation isn't a big issue; if all the market evidence points toward moderate inflationary expectations; and if your fears of inflation are almost certainly grounded in demons from your youth — if all that's true, but you still feel the fear anyway, what should you do? Nothing? Or should you write about it, being honest along the way about what's driving you?

I'd vote for writing about it, for one simple reason: if smart people are still worried about this even though the experts say there's nothing to worry about, the experts need to do a better job of telling us why we're nuts. Brad DeLong, I invite you to write a Kevin Drum Smackdown Watch about long-term inflationary fears. Pretend you're writing a response to a respected liberal economist, since that's more likely to produce a serious scholarly survey. Tell me why I'm crazy.

Half a Parliament is Worse Than None

| Wed Mar. 17, 2010 12:47 PM EDT

The New York Times reports today on just how deliberate the Republican strategy of obstructionism has been:

Before the health care fight, before the economic stimulus package, before President Obama even took office, Senator Mitch McConnell, the Republican minority leader, had a strategy for his party: use his extensive knowledge of Senate procedure to slow things down, take advantage of the difficulties Democrats would have in governing and deny Democrats any Republican support on big legislation.

....For more than a year, he pleaded and cajoled to keep his caucus in line. He deployed poll data. He warned against the lure of the short-term attention to be gained by going bipartisan, and linked Republican gains in November to showing voters they could hold the line against big government.

Jon Chait comments:

Let me be clear about something: I am not blaming McConnell1....Electoral politics is a zero-sum competition. Most democracies have systems where the opposing parties work in open conflict to each other, and, contra David Brooks, this does not result in Hutu vs. Tutsi slaughter.

Yes, there was a long period in American politics where racial cleavages created a situation where the parties had little internal ideological cohesion, and as a result Washington developed a series of cultural norms discouraging the practice of cohesive parties maximizing their electoral self-interest. Over time, though, such social norms will never hold up. Ultimately, the parties are going to maximize their partisan self-interest as allowed under the rules. If you don't like the result, you need to change the rules.

The next time Democrats find themselves in the minority, there's going to be a lot of establishment pressure not to follow the McConnell model. Be bipartisan. Don't obstruct. That would be terrible advice. I hope that Democrats would remember 2009-2010 well enough to favor a reform of the Senate to disallow holds, the filibuster, and other counter-majoritarian tactics. But if they can't succeed in changing the rules, they should follow McConnell's example, because he has shown the way to do it.

Italics mine. Changing the rules is the key. It's true that most democracies "have systems where the opposing parties work in open conflict to each other," but that's because they also have parliamentary rules that make it possible for a majority party to govern. We don't. Over the past couple of decades we've slowly morphed into a country with a de facto parliamentary legislature but without the parliamentary machinery that makes it work. The irony, as usual, is rich: conservatives, who normally rail against liberal attraction to European models of governance, have apparently decided that one European tradition they like is parliamentary-style party cohesion. But if that's what they want, they need to support parliamentary style rules as well. A strong country can't have one without the other.

1I'd actually put this differently. I don't blame McConnell for obstructing healthcare reform. It's a big bill and it was always going to inspire intense opposition. And minority parties should have some ability to obstruct and delay huge bills like this. However, I do blame him for obstructing everything. It's one thing to treat big legislation as a partisan affair — it is! — but it's another to gum up the works just for the sake of gumming up the works, as the GOP has done on bills and appointments that ended up getting virtually unanimous support on their final vote. Enough's enough.

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Our Fabulous Bipartisan Senate

| Wed Mar. 17, 2010 12:14 PM EDT

Last month a jobs bill came up for a cloture vote in the Senate. Five Republicans voted for it. Today it came up for a final vote. Eleven Republicans voted for it. Chuck Schumer hailed the result: "Today is really a turning point. And there are two words that symbolize it — jobs and bipartisan."

Hmmm. Doesn't sound like a turning point to me. It sounds like lots of Republicans are still willing to posture and obstruct against anything and everything Democrats try to do, even bills that they actually approve of and want to be recorded favoring. The only difference is that this time there were six Republicans in that category instead of 20 or 30. Not exactly a new era in comity.

What's the Next Step After "Insane"?

| Wed Mar. 17, 2010 11:56 AM EDT

I might be getting myself in trouble by blogging about something where I don't know the backstory, but check out the latest from California:

Gov. Arnold Schwarzenegger, taking aim at what remained of a deficit-cutting package drafted by Democrats, said Tuesday he planned to veto $1.1 billion in projected savings realized largely through cuts to public transit. Democratic lawmakers had approved the measure as part of a package they said would have addressed $4 billion of California's estimated $20-billion deficit.

....Republican lawmakers, whom majority Democrats were able largely to bypass in writing their budget plan because it did not raise taxes, cheered the governor's planned vetoes.

....Schwarzenegger said he would reject the lawmakers' gasoline tax plan because it differed from the proposal he first made in January. Schwarzenegger's plan would have lowered gas taxes by 5 cents per gallon. The plan Democrats pushed through the Legislature would keep gas taxes at their current level.

This is insane. In order to tackle a massive deficit, Democrats were willing to cut a billion dollars out of transit funding — a traditional Democratic priority — and Schwarzenegger vetoes it because they didn't also include a tax cut. As a way of tackling a massive deficit. And the California Republican caucus cheers.

I can't even think of anything snarky to say. It's like living in a Lewis Carroll novel, except with real people. Assuming you still consider California Republicans to be real people, that is.

Online Advertising Watch

| Wed Mar. 17, 2010 11:25 AM EDT

After sitting through an SXSW panel about magazines on the iPad, Felix Salmon has a brainstorm about online advertising:

After the panel ended, I got to talking to one attendee about bridal mags, and it struck me that the bridal category could be one of the first to be truly revolutionized by the iPad. After all, bridal mags are quite unashamedly bought for the advertising content, rather than any supposedly independent editorial: the idea is that brides-to-be will flick through them, looking carefully at pretty much every ad, searching for that idea which inspires them to spend thousands of dollars on something for their wedding.

On an iPad, that experience can become much more immersive and interactive: brides could spend days if not weeks flicking through the offerings of all the different advertisers, adding various products and ideas to their virtual scrapbooks, finding local retailers for anything they're interested in, and firing off carefully-curated scrapbooks, in PDF form, to their wedding planners, parents, bridesmaids — even occasionally the fiancé too. I don't know how much inclusion in that kind of an app would be worth to an advertiser, especially one who jumped in and created deep wells of content rather than simply repurposing their print ads. But clearly there's an opportunity here for brands to really connect with readers in a new and very exciting way.

Maybe! But I wonder. If the big draw of these magazines really is advertising, won't some bright soul just start up a bridal advertising aggregation site that skips all that annoying editorial stuff in the first place? It would be nothing but a great browsing experience for ads, and since it could be run by a staff of one, the cost to advertisers would be tiny. If this took off, it could be the death of bridal magazines, not their rebirth.

Unless that editorial content turns out to be more important than we think. Upcoming brides, what say you?

Why is Obama Ignoring the Lehman Scandal?

| Tue Mar. 16, 2010 11:06 PM EDT

Mike Konczal thinks the Lehman Brothers accounting scandal is being wasted:

One thing that I’m finding surprising is that the President and the Treasury Secretary aren’t out there beating the hell out of this story. For financial reformers, this report should be like a “Get 2 Free Financial Reforms” monopoly-style card falling out of the sky. Why isn’t the administration thumping the hell out of this story?

I remember when Anthem Blue Cross Blue Shield decided to raise rates 39% in the middle of a recession and Obama immediately got on the point that this is exactly why we need comprehensive health care reform. I remember thinking at the time “If a giant scandal blows up in the financial sector, I bet he’ll go equally as hard as to why this proves we need comprehensive financial reform.”

Oddly, that isn’t happening. Senator Ted Kaufman is giving a speech today about how this fraud calls for tougher regulation, which is fantastic. Why isn’t the administration?

Mike suggests that part of the answer is that Tim Geithner is compromised by his past presidency of the New York Fed. After all, he can hardly scream blue murder about Lehman's bookkeeping outrages when he was the guy who was supposed to be overseeing their bookkeeping in the first place.

There's probably something to this. Sellout Obama apologist that I am, though, I think there's another, less sinister possibility: the White House wants all its ammunition focused on healthcare right now. They'll spare a few words on other topics here and there, but basically this is not the week for anything to push healthcare reform off the front page. If it passes the House this weekend, however, financial reform probably moves to the top of the list when Obama's overseas trip is over.

At least, I hope so.