Yesterday the Obama administration finally abandoned the CLASS Act, a program to subsidize long-term elderly care that was part of the healthcare reform bill. Conservatives are in full war whoop mode over this, and I suppose I don't blame them. The budget forecasts for CLASS were always dodgy, and conservative concerns about this have now been vindicated.

But they should contain themselves anyway. What happened here is that government worked exactly the way it ought to. The CLASS Act was passed in a fog of rosy estimates and emotional appeals (it was one of Ted Kennedy's longstanding priorities), and the Department of Health and Human Services immediately began the detailed work of writing the implementing regulations to get it up and running. And guess what? They did their work honestly and conscientiously. Even though it was a liberal program promoted by a longtime liberal icon, HHS analysts eventually concluded that its conservative critics were right and the program as passed was flawed. So they killed it. And most of the liberal healthcare wonks that I read seem to agree that, unfortunately, HHS was right.

This is how we all want government to work. And it turns out that Obama agrees. This is apparently how he wants government to work too, and it's a pretty clear demonstration that Obama isn't the kind of hyperpartisan extreme lefty that conservatives like to paint him as. He's a guy who wants government to function well and honestly, and if it doesn't, he's willing to shut down a program that doesn't work even though it upsets his own party and provides campaign fodder to his opponents. When was the last time a Republican president did anything like that?

Inkblot has been monopolizing cat blogging lately, so this week is Domino's turn. Today, she expresses her level of excitement over Inkblot's run for the presidency. She's pretty unimpressed, and this might be having an effect: Inkblot's swagger seems to be going the way of Rick Perry's. He usually makes a mad dash for the food bowl when dinner time rolls around and gets first crack at the kibble through sheer momentum. But this week he's been…a little more hesitant. And Domino has actually eaten first a couple of times. Is he losing his edge? Or just afraid that oppo researchers will tar him as greedy and selfish if they get video of his usual performance?

Hard to say. And Domino doesn't care. We're getting our last warm spell of the season around here, and right now that's all that's on her mind. Enjoy the weekend, everyone.

A public service announcement from the DC-based blogging community:

This is indeed true, but on the other hand, actual usable deposits of rare earths aren't super common either. More here in the Brad Plumer post that Ezra links above.

Far more fascinating, though, is that not one, not two, not three, but four rare earth elements are named in various fashion after the tiny Swedish village of Ytterby. Even famous scientists and Greek gods don't have so many elements named after them. More here. Local weather in Ytterby is here. It looks like it's starting to get chilly there.

When President Obama released his jobs bill a few weeks ago, Moody's analyzed it and concluded that it would boost GDP and help employment. So what do they think about the Republican jobs plan released yesterday? Greg Sargent picks up the phone and asks:

“I don’t have enough detail to evaluate how many jobs this would create,” Gus Faucher, the director of macroeconomics at Moody’s Analytics, told me. “I could say, `My plan is to do nothing, and it will create five million jobs.’ And it could work, particularly if I don’t say over what time period.”

....“Should we look at regulations and make sure they make sense from a cost benefit standpoint? Certainly. Should we reduce the budget deficit over the long run? Certainly,” Faucher said. “But in the short term, demand is weak, businesses aren’t hiring, and consumers aren’t spending. That’s the cause of the current weakness — and Republican Senate proposals aren’t going to address that in the short term.”

It's yet more government via slogans, a favorite of the GOP these days. They release an endless stream of white papers and bulleted PowerPoints, but none of them ever have enough actual detail to be scored by either the CBO or private analysts.

Why? Because they know perfectly well what the score would be if they included all the details: zero. Or maybe worse. As always, it's better to stick to slogans, which sound plausible and will get reported on the evening news regardless of what a bunch of wonky economists think, than to let the wonky economists actually speak up and ruin things.

Why They Filibuster

James Fallows continues to be gloomy about both the state of American democracy and the ability of the American media to describe it:

Main problem: the decision by Mitch McConnell's GOP Senate minority, once they lost their majority status in the 2006 elections, to filibuster nearly every item of public business....De facto, the Constitution has been amended to change the Senate from a majority-rule body to one requiring a 60-vote "supermajority."

....'Enabler' problem: The reluctance of the mainstream media to call this what it is, and instead to talk about "partisanship" and "logjam" and "dysfunction."....We had illustrations in the past few days from the NYT and, in jaw-dropping fashion, yesterday from the WaPo. And earlier this morning I was listening to a political "analysis" show on the radio that was all about this sad modern predicament of Congressional gridlock. The word "filibuster" was not used in that hour, unless it was during the minute I was plunging my head into the toilet tank in despair.

I don't feel like slitting my wrists today, so I'll just make a couple of related notes. First, keep in mind that dysfunction really is the goal here. Republicans filibuster even measures they support, and they do it solely to suck up calendar time. In these cases, the goal isn't to defeat legislation, it's explicitly to make sure that the Senate simply can't conduct very much business.

Second, it might seem odd that Senate Republicans are keeping this up. After all, the House is in GOP hands these days, so they don't really need to filibuster legislation anymore. If they wanted to, they could just shrug, let the Democrats pass whatever they want, and then let it all pile up and die in the House. But they don't. They don't even want to allow Dems a vote on legislation. Why?

Well, partly it's because the Senate is still solely responsible for confirming presidential nominations, and tying up the Senate calendar on procedural votes helps prevent a lot of nominees from being confirmed. But mainly it's because of how the press treats this. If the Senate holds only a cloture vote, and it fails, the press doesn't report it as a vote on the bill itself. It's a "procedural motion" or some such. This means Democrats don't get any public credit for voting Yes on a popular bill and Republicans don't get any public blame for voting No.

So how should the press handle this? In practice, cloture votes are now votes on bills. So maybe the press should simply report them that way. But they won't, because that's not quite accurate. Besides, it would also require headlines like "Bill Fails, 56-44." That would be accurate, but it seems sort of ridiculous and I imagine that copy desks don't like it. So the American public is shielded from just how ridiculous it is. Basically, the pathologies of the American press work entirely in the GOP's favor on this particular topic, and they take full advantage of it.

I'm never quite sure how seriously to take stories like this, but today the LA Times writes about the woes of Wenzhou, a high-flying coastal city in China, which boomed over the past decade and is now beginning to suffer from a bust:

"This whole situation is very serious right now," said businessman Huang Fajing, owner of a cigarette lighter factory who has had to scale back his business for lack of credit. "I think the crisis is just starting."

The troubles stem from inequities in China's banking system, where most loans go to big state-run companies. Small fry depend largely on informal lending pools charging annual interest rates as high as 60%.

Although some of those funds are provided by loan sharks with criminal ties, much of it comes from households and businesspeople looking for better returns than those paid on savings accounts in China's government-controlled banks. An estimated 90% of all households in Wenzhou and 60% of its firms participate in lending pools, according to the country's central bank.

....But pressure started to build late last year when the central government decided to hike interest rates and restrict bank lending over worries about inflation and a growing real estate bubble. That credit squeeze soon rippled through the informal market. Thousands of small Wenzhou companies have closed their doors for lack of funding, according to state media.

Maybe this is a sign of trouble to come, maybe not. It seemed worth passing along. But the truth is that it's really just an excuse to post the last paragraph of this story. Wenzhou is famous throughout China for its ostentatious displays of wealth, and this has prompted outrage over the idea that the central government might bail them out. This produced the following reaction from one of Wenzhou's business owners:

Guan, the importer of wine and scrape metal, said outsiders don't understand. "Those people against a bailout probably don't work hard and just hate rich people," said Guan, who said he owns property in every city in which he does business. "Wenzhou people take initiative. But sometimes, like in a family, children make mistakes. So the government should come in and help their kids to resolve this difficult situation."

Class warfare! This guy could come to New York and join the ranks of Wall Street titans without skipping a beat. Mr. Guan seems to have the perfect combination of arrogant condescension, congenital paranoia, casual arrogance, and an unquestioned sense of entitlement. He even has the kind of resentment of the little people that the Wall Street Journal editorial page specializes in. He'd fit right in.

Andrew Sullivan links to some anti-Mormon nutbaggery over at WorldNetDaily:

"While he attempts to portray Mormonism as just another Christian religion, Mitt Romney counts on his skills to shift our attention away from what he truly believes," says Tricia Erickson, author of "Can Mitt Romney Serve Two Masters? The Mormon Church Versus the Office of the Presidency of the United States of America." "If the American people knew what he truly believed, they would surely not place him in the highest office in the land."

Et cetera. I was listening to Chris Matthews the other day, and he was wondering if the Obama team could successfully tar Mitt Romney as both a flip-flopper and a fire-breathing conservative. I think they probably can. They'll never admit this (and I might be wrong about it), but the flip-flopper message seems most likely to be aimed at evangelicals who are leery of putting a Mormon in the White House and are looking for an excuse — any excuse — to stay home. The flip-flopping charge won't be enough to get them to vote for Obama, but it might be enough to get them to bag the whole thing and just skip the election entirely. Plus it has the virtue of being true.

The fire-breathing conservative charge, conversely, is aimed directly at moderates and independents. They're going to vote for somebody, and if Obama can successfully link Romney to the excesses of the Tea Party before he's free to move to the center for the general election, he'll win some votes there. Obviously Obama wants to make it as hard as possible for Romney to execute his shift to the center when the primaries are over — something that I think he's still in pretty good shape to do — and getting in their licks early is one way to do that.

So: two messages for two different audiences. Can they pull it off? I don't see why not. They don't really conflict all that much, after all. To the extent that this kind of positioning stuff works at all, I don't see why this can't work pretty well.

President Ronald Reagan

In the course of clearing her throat for an attack on Rick Perry Tuesday night, Michele Bachmann tossed out this now-standard bit of conservative boilerplate:

In the 1980s, Ronald Reagan produced an economic miracle…

It's probably hopeless to take on the Reagan economic myth at this late date, but honestly, it's long past time to put it to rest. The truth about the '80s is far more prosaic: In 1979, Jimmy Carter appointed Paul Volcker chairman of the Federal Reserve. Inflation was running at about 12 percent when he took office, and Volcker immediately slammed on the monetary brakes in order to bring it down. Whether he was targeting interest rates or monetary aggregates remains a bit murky, but it hardly matters. In the end, he engineered one minor recession in 1980, and when that didn't do the trick, he tightened Fed policy even more and threw the economy into a second recession—this one extraordinarily deep and painful—which he maintained until 1982. When he let up, the economy recovered. Reagan had very little to do with it.

But that's not all. If you're looking for other reasons that the 1980s were boom years, No. 2 would be oil prices. The American economy is highly sensitive to oil prices, and after peaking at around $100 per barrel during the Iranian revolution (in inflation adjusted terms), oil prices steadily dropped, falling below $30 in 1986 (again, in inflation adjusted terms). This was largely due to (a) reduced demand thanks to the recession; (b) reduced demand thanks to CAFE standards and other conservation/efficiency improvements that followed the oil shocks of the '70s; (c) increased oil supply from Prudhoe Bay, which peaked in the early '80s; and (d) increased oil supply thanks to a Jimmy Carter executive order ending price controls on oil. Again, Ronald Reagan had very little to do with it.

What else? Well there was enormous deficit spending in the early '80s that wasn't offset by Fed action, and that probably stimulated the economy a bit. That was Reagan's doing, though it's not something his fans like to boast about today. And there was the Plaza Accord of 1985, which devalued the dollar and helped spur exports. That was also Reagan's doing, but again, it's not something his admirers say much about today, since modern tea party orthodoxy insists that this amounts to "debasing" the dollar. And finally, there are the 1981 tax cuts, which probably had a positive economic effect, but a fairly modest one.

That's most of the story of the Reagan era. The most important economic drivers of recovery, in rough order of importance, were:

  1. Paul Volcker easing up on interest rates/monetary aggregates in 1982
  2. The steep drop in oil prices after 1981
  3. Reagan's devaluation of the dollar
  4. Reagan's deficit spending
  5. Reagan's tax cuts

Other major Reagan policies were probably a wash. The tax reform act of 1986 was certainly a net positive, but sitting back and allowing the S&L crisis to spin out of control was a big net negative. But those are nits. In the end, although Reagan's tax legacy is his most celebrated accomplishment, it was distinctly secondary to Fed policy, the oil glut, deficit spending, and a weak dollar. Lowering top marginal rates may or may not have been a great thing to do, but it was no miracle. The truth was far more mundane.

David Brooks writes today about the endless fighting and planning problems that have kept the World Trade Center site from being rebuilt for so long:

Born in grief and passion, the whole enterprise was soon plagued by furious discord. Personalities clashed. Practicalities were ignored. Building budgets didn’t mesh with the deadlines. There were arguments about the memorial and the proper definition of the word “patriot.” There was a lot of planning but not much execution. Symbolism eclipsed reality.

During his brief tenure, Gov. David Paterson hired Chris Ward, formerly Mayor Michael Bloomberg’s environmental protection commissioner, to take over the Port Authority and rescue the shambolic ground zero project....Ward set prosaic priorities — what would be built first, which parts of the project could wait. He cut costs by doing things like putting columns in the design of the transportation hall. He changed the name of Freedom Tower to One World Trade Center. He divided the construction deals into manageable chunks.

....[Ward] rescued the ground zero project by disenchanting it, by seeing it as it is, not through shrouds of symbols — by attending closely to all the practical complexity. American politics in general could use that sort of disenchantment.

Brooks uses this as a metaphor for the way we end up in gridlock whenever concrete issues become subsumed in passion and cultural symbolism. But this is a bad example. Has One World Trade Center taken unusually long to build? Not as much as you'd think. The original building was first proposed in 1961. There were fights between New York and New Jersey that weren't resolved until 1962. Agreement with the city of New York wasn't reached until 1966. Demolition began that year, and contracts were let in 1967. Construction began in 1968, and the second tower was completed in 1971. Elapsed time: ten years.

And what about its replacement? The design competition was held in 2003 and the completion date is now estimated to be 2013. Elapsed time: ten years. You can quibble with these numbers a bit if you want. Maybe the WTC was really finished in nine years since that's when the first tower was completed, and maybe OWTC has really taken eleven since planning began in 2002. Either way, though, it's not a big difference.

Am I picking nits with Brooks? Yes, in a way. But there's an important point here about romanticizing the past. New York wasn't a paragon of efficiency in 1960 and it's not a poster child for dysfunction in 2011. Big buildings just take a long time to put up in the modern era.

Likewise for political gridlock. Do we fight a lot over values today? Sure. But we did in the past too. Abortion has been a values fight for as long as it's been on the national stage. Vietnam was a values fight. McCarthyism was a values fight. Much of the New Deal was a values fight. Prohibition was a values fight. Politics has been about values ever since Aristotle wrote that the ultimate purpose of government is to promote justice and the good life — and then went on to define his idea of both. Hell, it's been about values since Moses brought down the Ten Commandments from Mount Sinai.

Like Brooks, I'm pretty disgusted with politics most of the time. But it's not really conflicts over values that are at fault, it's the fact that our institutions have become unable to deal with them. Partly this is because one of our major parties has dived head first into a rabbit hole and doesn't look ready to come out anytime soon. But mainly it's because our political structure has evolved into a weird hybrid that has the tight party discipline of a parliamentary system contained within the institutional framework of a presidential system that was specifically designed to work best without any party machinery at all. That's a recipe for disaster. I'm not sure what the answer is, but we shouldn't kid ourselves into thinking that the problem is simply one of passion about politics. We've always had that.

It's really not worth spending too many pixels on Herman Cain's 9-9-9 plan, but Dave Weigel made an interesting point about it yesterday. Cain's plan has the kind of spiffy branding and sloganeering you might expect from a former fast food CEO, but at its core it's nothing new: it's just another entry in the flat-tax derby that's been rambling along in conservative circles for the past couple of decades.

The problem, of course, is that even by Republican flat-tax standards the 9-9-9 plan is ridiculous. It would raise taxes enormously on the middle class and lower them considerably on the rich. Conservatives aren't against that in principle, but even for them there's a limit. A plan that nearly doubles federal taxes on an average family is just not something they can swallow. And yet, all Cain has really done is taken conservative orthodoxy and kicked it up a notch, something that's perfectly in tune with the Tea Party zeitgeist that's lately taken over the conservative movement. As Weigel says, "The Republican voters who love 9-9-9 believe the same things that the old Forbes [flat tax] devotees believed. They believe that other Americans are paying no net income taxes, and they don’t think it’s fair." So how do you fight that?

Cain’s rivals have to engage in a little bit of deprogramming. They must convince voters who think that the tax code is stacked against them of the truth: That complicated code is wasting some time while saving a lot of money....So how has Cain gotten so far on this idea?

“It’s a rejection of redistributionist tax policy,” says Grover Norquist, the president of Americans for Tax Reform, who is doing his gentle best to point out that 9-9-9’s a bad idea. “No one has done the calculations, so people are reacting viscerally to the idea. A single rate flat tax is a very attractive thing.”

It’s attractive because it tells conservative voters what they already believe: Tax the free-loaders, simplify the forms, and the rest of the problems take care of themselves. To take Cain down, Republicans have to blow up the anti-tax arguments of 30 years.

In a sense, conservatives have finally been hoist by their own petard. Liberals have been making jokes for the past year about the otherworldy "Can You Top This?" game being played by Republican presidential candidates, each one offering up a more buffoonish idea than the next in a vain attempt to prove that they're the purist conservative in the pack. Well, now Herman Cain has trumped them all: his 9-9-9 plan is too goofy even for the modern party to embrace, but it obeys conservative orthodoxy to a tee. So how do you convince all those people you've been selling conservative orthodoxy to that this, finally, is something that goes too far? Isn't that the kind of thing a liberal would say?