Kevin Drum

The Party of No (Jobs)

| Wed Feb. 24, 2010 1:58 AM EST

Some headlines today:

#1: Jittery Shoppers Dim Stores' Hopes "Americans show little sign of regaining the confidence that once made them world-champion shoppers, and that caution has retailers leery about the prospects for the economy in 2010."

#2: Nearly 25% of all mortgages are underwater "First American CoreLogic, the research firm that monitors housing equity, reported Tuesday that 11.3 million homeowners — or 24% of all homes with mortgages — were underwater as of the end of 2009."

#3: Number of US ‘problem’ banks soars "No longer confined to Wall Street, the financial crisis has cascaded over to regional and community banks that are feeling a disproportionate amount of the pain. 'The great recession has very much become a Main Street problem,' said Richard Brown, the FDIC’s chief economist."

#4: Lending Falls at Epic Pace "U.S. banks posted last year their sharpest decline in lending since 1942, suggesting that the industry's continued slide is making it harder for the economy to recover."

And then there's this one, about Republican Scott Brown's vote to support a tax cut that would help employers increase hiring:

#5 GOP's Brown branded turncoat for vote on jobs bill "Literally overnight, the fledgling Republican senator who ended Democrats' filibuster-proof majority by winning a special election in Massachusetts has gone from being the darling of America's conservative activists to being their goat....The conservative Drudge Report colored a photo of Brown on its home page in scarlet. Cries of 'let down,' 'betrayal,' 'sell out,' and 'RINO' — Republican In Name Only — flew around Twitter. By Tuesday afternoon, more than 4,200 people had left comments on Brown's Facebook page, the majority of which were harshly negative."

Ladies and gentlemen, the modern Republican Party. In the midst of the deepest, sharpest economic slowdown since the Great Depression, only five of 41 GOP senators were willing to vote for a modest jobs bill based entirely on tax cuts. One of those five, a conservative hero a mere four weeks ago, is practically excommunicated from the movement for voting in favor of the bill. A bill, to repeat, based entirely on tax cuts that would spur hiring. What's left to say?

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That Elusive Common Ground

| Tue Feb. 23, 2010 6:30 PM EST

What could Barack Obama offer congressional Republicans in return for support of his healthcare bill? How about malpractice reform? Jon Cohn ponders:

The key is finding ways to fix the malpractice system so that it helps both physicians and the patients, rather than one at the expense of the other. And there are several promising possibilities for achieving that. One is to have doctors report medical errors to hospital administrators, who would then notify patients and begin negotiations....[Another] proposal — perhaps the most intriguing — is to tie malpractice to quality incentives, by offering some sort of legal protection to physicians who demonstrate they have abided by accepted clinical guidelines.

....This is where the Republicans could push the discussion forward. Both the House and Senate health reform bills encourage more experimentation. But they don't set aside enough money. If Republicans wanted to do something to change malpractice, they could call for more funding of these programs — and, perhaps, more aggressive guidance about how to handle the results.

Of course, that would mean achieving malpractice reform, a cause they've long championed, in a different manner than the Republicans have traditionally embraced. But that's the definition of compromise: Finding common ground with an adversary in order to achieve a goal you both share. Obama has shown he's willing to do that. Will the Republicans do the same?

Jon is too....decorous....to say this outright, but the answer is no. The reason is that Republicans have a very specific motivation for pursuing tort reform, and it has nothing to do with actually making tort law fairer. Here's me a few years ago, in a review of Stephanie Mencimer's Blocking the Courthouse Door:

In the 1980s and 1990s, conservative activists began pursuing a series of strategies aimed not just at increasing Republican votes and campaign contributions, but also at reducing Democratic votes and campaign contributions — and doing so in a structural way that would permanently erode the Democratic Party’s ability to win elections. The result was an increased interest in gerrymandering, union busting, voter ID laws, and the K Street Project, a party-wide program aimed at persuading lobbying firms to stop hiring Democrats.

And, of course, tort reform. Tort reform was already a natural Republican Party issue thanks to its support in the business community, but it was [Grover] Norquist, in his usual bald style, who pointed out in 1994 that there was more to it than just that: The big losers in tort reform are trial lawyers, and trial lawyers contribute a huge amount of money to the Democratic Party. “The political implications of defunding the trial lawyers would be staggering,” he wrote.

When it comes to medical malpractice, the Republican Party doesn't really care about "reform." They want one thing and one thing only: caps on punitive damages. Why? After all, big punitive awards, almost by definition, are only handed out in the worst, most egregious cases of malpractice. It's the little suits that are most likely to be frivolous.

Here's why: because big damage awards are where trial lawyers make a lot of money, and trial lawyers support Democrats. Capping damages hurts trial lawyers in a way that serious reform most likely wouldn't.

Democrats, of course, generally support trial lawyers, and in return they get a lot of money from them. Still, there are a lot of Democrats who would support serious efforts at making our malpractice system better and more efficient. This would reduce trial lawyer income, but it most likely wouldn't decimate it the way damage caps would. Republicans, conversely, only care about decimating trial lawyer income, which means that none of them are interested in serious reform. It's caps or nothing. This makes finding common ground more than a wee bit difficult.

Are Tea Partiers Nuts?

| Tue Feb. 23, 2010 1:56 PM EST

In David Barstow's terrific New York Times piece about the tea party movement, he included the following line: "It is a sprawling rebellion, but running through it is a narrative of impending tyranny." Jay Rosen has a problem with this:

That sounds like the Tea Party movement I have observed, so the truth of the sentence is not in doubt. But what about the truth of the narrative? David Barstow is a Pulitzer Prize winning investigative reporter for the New York Times. He ought to know whether the United States is on the verge of losing its democracy and succumbing to an authoritarian or despotic form of government.....Seriously: Why is this phrase, impending tyranny, just sitting there, as if Barstow had no way of knowing whether it was crazed and manipulated or verifiable and reasonable? If we credit the observation that a great many Americans drawn to the Tea Party live in fear that the United States is about to turn into a tyranny, with rigged elections, loss of civil liberties, no more free press, a police state... can we also credit the professional attitude that refuses to say whether this fear is reality-based? I don’t see how we can.

....No fair description of the current situation, nothing in what the Washington bureau and investigative staff of the New York Times has picked up from its reporting, would support a characterization like “impending tyranny.” In a word, the Times editors and Barstow know this narrative is nuts, but something stops them from saying so— despite the fact that they must have spent over $100,000 on this one story. And whatever that thing is, it’s not the reluctance to voice an opinion in the news columns, but a reluctance to report a fact in the news columns, the fact that the “narrative of impending tyranny” is ungrounded in any observable reality, even though the sense of grievance within the Tea Party movement is truly felt and politically consequential.

I think this is seriously misguided. Sure, Barstow probably wants to refrain from outright opinion mongering in a new story. But as Rosen says, that's not really the issue here. The real issue is simpler: Barstow wants to treat his readers as adults.

Here's a similar situation that I ran across a few years ago. In the LA Times, Barbara Demick (I think) was able to score a rare, long interview with a high-ranking official of the North Korean government. The resulting story basically provided the DPRK view of things, and as you might expect, that view was pretty divorced from reality. Conservatives were outraged. How could she report this stuff with a straight face? Why was she providing Kim Jong-il's thuggish regime with this kind of cover?

But I found the story fascinating and I thought the conservative critique was as misguided as Rosen's. Demick made it perfectly clear who she was dealing with, and I knew perfectly well that North Korea is a brutal dictatorship whose views can hardly be taken at face value. Everyone bright enough to read the LA Times in the first place knows that. She didn't have to treat us like fourth graders and tell us explicitly.

Ditto for Barstow and his piece on the tea partiers. He's not writing for fourth graders. He's writing for literate adults who know perfectly well that a "narrative of impending tyranny" is nuts. If he wrote a piece about a cult that thinks the world is flat, would he really need to add a sentence telling us that, in fact, this is crazy because there's a mountain of evidence telling us the world is round?

Reporters for the New York Times aren't writing grade school primers. They don't have to tell us at every turn that the Holocaust was evil, that the earth revolves around the sun, that North Korea is a horrible dictatorship, or that the United States is not about to fall into tyranny. Just as I didn't explicitly say in this post that I didn't quote Rosen's entire argument above. You already know this, and you'd think I was treating you like idiots if I insisted on mentioning it in every blog post. Barstow's only crime was not treating his readers like idiots. We should all be fine with that.

Via Conor Friedersdorf, who has actually talked to conservatives who use the "impending tyranny" trope and says that sometimes it's nuts, but other times it's just hyperbole.

Where Did All the Jobs Go?

| Tue Feb. 23, 2010 1:00 PM EST

Why were so few jobs created during the aughts? In net terms no jobs at all were created, but even if you exclude the post-bust years the aughts saw a net increase of only 7 million jobs compared to 22 million in the 90s. What happened?

Well, computerization may have played a role. Globalization too. Or maybe low federal spending on pure R&D. But in the current issue of the Washington Monthly, Barry Lynn and Phillip Longman finger an additional suspect. The problem, they note, wasn't a rise in job destruction, which was actually lower than in the 90s, but a lack of job creation. And the engine of job creation is small businesses.

So why did small businesses stop prospering in the aughts? The answer they propose is a new one: consolidation. Starting in the early 80s, as the Reagan administration decided to quit enforcing antitrust laws, big companies began merging in earnest, and by the early aughts it was common for three or four firms to control upwards of half or more of entire sectors. It happened in retail, it happened in banking, it happened in pet food, it happened nearly everywhere. And not only do big firms innovate less than small firms, they also prevent innovative small firms from ever getting a chance to grow in the first place:

Dominant firms can hurt job growth by using their power to hamper the ability of start-ups and smaller rivals to bring new products to market. Google has been accused of doing this by placing its own services—maps, price comparisons—at the top of its search results while pushing competitors in those services farther down, where they are less likely to be seen—or in some cases off Google entirely. Google, however, is a Boy Scout compared to the bullying behavior of Intel, which over the years has leveraged its 90 percent share of the computer microchip market to impede its only real rival, Advanced Micro Devices, a company renowned for its innovative products. Intel has abused its power so flagrantly, in fact, that it has attracted an antitrust suit from New York State and been slapped with hefty fines or reprimands by antitrust regulators in South Korea, Japan, and the European Union. The EU alone is demanding a record $1.5 billion from the firm.

To understand just how disadvantaged small innovative companies are in markets dominated by behemoths, consider the plight of Retractable Technologies, Inc., of Little Elm, Texas. The company manufactures a type of "safety syringe" invented by its founder, an engineer named Thomas Shaw. The device uses a spring to pull the needle into the body of the syringe once the plunger is fully depressed. This helps to prevent the sort of "needlestick" injuries that every year result in some 6,000 health workers being infected by diseases such as hepatitis and HIV. Since starting the company in 1994, Shaw has carved out a modest market niche, selling his lifesaving product to nursing homes, doctors’ offices, federal prisons, VA hospitals, and international health organizations for distribution in the Third World. But he’s not been able to break into the mainstream U.S. hospital market. The reason, he says, is that a company called Becton Dickinson & Co. controls some 90 percent of syringe sales in America and enjoys enough power over hospital supply purchasing groups to all but block adoption of Shaw’s device. In 1998, Shaw sued, charging restraint of trade, and in 2004 won what looked like a stunning victory: Becton Dickinson agreed to settle for $100 million, and the purchasing groups promised to change their business practices. But according to executives at Retractable Technologies, things have only gotten worse. "We probably have less of our products in hospitals today than we did ten years ago," says Shaw, who just won a patent-infringement case against Becton Dickinson and is pursuing another antitrust suit against the company. "I have spent what should have been the most creative, productive years of my life sitting in depositions. By the time I’m done fighting, my patents will have expired."

A few years back, Bess Weatherman, the managing director of the health care division of the private equity firm Warburg Pincus, spelled out the effect of such monopoly power on investments in new health care technologies. In a Senate hearing, Weatherman testified that "companies subject to, or potentially subject to, anti-competitive practices ... will not be funded by venture capital. As a result, many of their innovations will die, even if they offer a dramatic improvement over an existing solution."

The job growth of the 80s and 90s, Lynn and Longman suggest, was largely powered by companies that were founded in the 70s — companies like Apple, Microsoft, Oracle, and Genentech. By the time the 2000s rolled around, consolidation was largely complete and the pipeline of small, innovative companies was drier than it had been in decades.

They don't pretend that this is the sole explanation for the jobless aughts, or even that they've proven their case. "As we’ve noted," they say, "there are other [theories] having to do with changes in technology and international trade. These other theories are open to debate, but at least they’re being debated. What isn’t getting talked about is the role industry consolidation might be playing in all this. That needs to change."

I agree. One of the pathologies of modern conservatism — a pathology that's shared more often than I'd like by mainstream liberals — is that they're pro-business, not pro-free market. The difference is critical. Pro-business means passing laws that your business pals like, and as economists since Adam Smith have observed, what businessmen mostly like is lack of competition. The operation of a true free market, conversely, depends crucially on competition and plenty of it. And just as crucially, that requires government intervention to prevent a few behemoths from taking over every sector of the economy. Keeping a free market free takes a lot of work.

If Lynn and Longman are right, we need to start doing that work again. It's time for economists to start seriously debating whether our sputtering job machine is due in large part to our love affair with big business.

Harry Reid and the Public Option

| Tue Feb. 23, 2010 12:52 PM EST

Ezra Klein explains why Harry Reid is reluctant to publicly give the public option his full support:

Caucus politics present another dilemma: The public option died due to the opposition of Nelson, Landrieu, Lincoln, Lieberman and a handful of other conservative -- and vulnerable -- Democrats. Reid cut a deal with them, and they signed onto the final product. For many, that was a big political risk. The price was letting them say they killed the public option. Bringing it back to the bill will mean they voted for a bill that ended up including something they'd promised their constituents they'd killed. Cross them on this and you've lost their trust -- and thus their votes -- in the future.

My guess is that this is a much bigger deal than a lot of people think. Centrist Dems may be wrong to feel that the public option is a threat, but nonetheless they feel like they made a deal. For good or ill, no political leader can afford to renege on something like that. Not if he wants to stay leader, anyway.

The Excise Tax Takes Center Stage

| Tue Feb. 23, 2010 12:31 PM EST

Second only to the public option, probably the biggest intra-Democratic healthcare feud is over the excise tax, a tax on high-value healthcare policies that's designed to rein in the "Cadillac plans" favored as tax-free compensation by corporate executives, but that also takes a bite out of the high-end plans negotiated by blue-collar unions over the years in lieu of big raises. President Obama's plan, unveiled yesterday, cuts back the excise tax considerably but doesn't get rid of it completely. So how are liberal Dems likely to react to this? David Corn reports:

At that meeting with columnists a few weeks ago, Pelosi estimated that at most there were 20 Democrats in her caucus who might support an excise tax. The White House appears to be banking on a wholesale conversion of House Dems. But it's unclear whether Obama's alterations to the tax—which also include not counting dental and vision benefits as taxable and easing the tax for firms with higher health-care costs due to the age or gender of their employees—will win over Democrats on the House side. According to White House press secretary Robert Gibbs, the White House did not brief the House Democrats regarding its intentions on the excise tax until after the plan was devised. And during a White House conference call about the overall proposal, economic aide Jason Furman was asked if the administration had attempted to work out an excise tax deal with the House Democrats before releasing the plan. He replied that "everyone would appreciate it" if the Obama proposal led to lower premiums. In other words, no.

If this is true, it's surprising — and a little disturbing. There's no reason the White House has to agree to everything that House Dems want, but it would be nice to think that they at least have an idea of what might be a deal killer and what isn't. My own take is that House Dems got a lot of other things they wanted and that the excise tax has now been so weakened that it's no longer much of a threat. (For one thing, under Obama's plan it won't take effect until 2018. That gives liberals a lot of time to try to kill it entirely.)  Still, I wonder if the folks who have to vote on it agree? And more to the point, I wonder if the White House knows?

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Our Small Bore Senate

| Tue Feb. 23, 2010 12:00 PM EST

Harry Reid won his first battle on the jobs creation front yesterday:

The Senate voted Monday to advance a $15 billion jobs-creation measure, giving Democrats a key victory as they seek to reverse their declining political fortunes by emphasizing legislation to boost the economy. The chamber is now poised to pass the measure later this week.

Five Republicans, including new Sen. Scott Brown (Mass.) joined 57 Democrats in voting to proceed on the jobs bill, after a suspenseful buildup in which members of both parties wondered whether Senate Majority Leader Harry Reid (D-Nev.) could cobble together enough votes to proceed.

This is....just sad. Compared to a "normal" level of unemployment, there are currently something like 10 million more jobless people than we ought to have. Without action, that number will still be around 8 million next year. And we're screwing around with a payroll tax cut that might, with a tailwind, create around 100,000 jobs per year. It's not that this a bad policy choice, it's that the scope of the action is so plainly inadequate compared to the size of the problem.

Why so small? Because Republicans won't agree to a bigger bill, so Harry Reid has decided to push through a bunch of smaller measures instead. His thinking, apparently, is that he's going to dare Republicans to vote against these bills. If they cave, he wins. If they don't, it becomes good campaign fodder for November.

This is pretty unlikely to work, though. Reid managed to lasso a few Republicans for a tax cut, but he probably won't be able to do even that for the rest of his package. They'll filibuster and defeat even these small bore proposals.

Will they pay a price for this? Get serious. Suppose you're a Democrat running against some Republican who voted against Monday's bill. "You'd all have jobs today," intones your attack ad "if only Senator Wingnut hadn't voted against a moratorium on payroll taxes." Will anyone believe it? I don't see it. It's too abstract and people are too jaded about this kind of stuff actually having an effect. Sen. Wingnut will just say the bill was another Washington boondoggle that wouldn't have created a single job, the tea partiers will all cheer, and that will be that. It's just too hard to make the case for obstruction unless you can point to something that's both big and concrete.

The payroll tax bill is better than nothing. But it's also a sad commentary on the ability of Congress to tackle actual problems.

The Torture Tapes

| Tue Feb. 23, 2010 11:00 AM EST

Guess what? According to a CIA memo, Republican senator Pat Roberts was told in 2003 about the agency's plan to destroy interrogation tapes that provided graphic evidence of the widespread use of torture against detainees, and he thought it was a fine idea:

At a closed briefing in 2003, the chairman of the Senate Intelligence Committee raised no objection to a C.I.A. plan to destroy videotapes of brutal interrogations, according to secret documents released Monday.

....According to a memorandum prepared after the Feb. 4, 2003, briefing by the C.I.A.’s director of Congressional affairs, Stanley M. Moskowitz, Scott Muller, then the agency’s general counsel, explained that the interrogations were reported in detailed agency cables and that officials intended to destroy the videotapes as soon as the agency’s inspector general completed a review of them. “Senator Roberts listened carefully and gave his assent,” the C.I.A. memo says.

....The same document says that Senator Bob Graham of Florida, the Democrat who had preceded Mr. Roberts as chairman, had proposed that the committee “undertake its own ‘assessment’ of the enhanced interrogation,” the C.I.A.’s term for coercive methods. Agency officials told Mr. Roberts that they would oppose allowing any Senate staff members to observe interrogations or visit the secret overseas prisons where they were taking place.

“Quickly, the senator interjected that he saw no reason for the committee to pursue such a request and could think of ‘10 reasons right off why it is a terrible idea,’ ” the report says.

Roberts says there's more to the story, but apparently he didn't feel inclined to explain exactly what that "more" might be. Stay tuned for what's sure to be an entertaining explanation one of these days.

Quote of the Day: Climate Change and the Media

| Mon Feb. 22, 2010 5:28 PM EST

From Matt Steinglass, on a Daily Mail headline claiming that a top climate scientist now admits there has been no global warming since 1995:

What's truly infuriating about this episode of journalistic malpractice is that, once again, it illustrates the reasons why the East Anglia scientists adopted an adversarial attitude towards information management with regard to outsiders and the media. They were afraid that any data they allowed to be characterised by non-climate scientists would be vulnerable to propagandistic distortion. And they were right.

The reality is that climate scientists need to be open with their data and methods regardless of what others are going to do with it. But yes, the incident Matt describes is exactly what they're afraid of if they do this: laymen with an axe to grind (and money at stake) are going to inundate them with bogus criticisms. They ignore this stuff at their peril, but if they respond to all of it they'd essentially have to stop doing real work. One part of the answer is for the media to insist on a certain level of rigor before they publish stuff from the skeptics, but obviously that's not going to happen. In lieu of that, maybe we need a new kind of rapid-response think tank devoted solely to climate change: one staffed by both experts and communicators, who can deploy quickly to address climate criticisms in a deep and fairminded way and then promote their findings in TV-friendly ways. Anybody got a few million dollars to spare to start one up?

Big New Ideas

| Mon Feb. 22, 2010 4:45 PM EST

Towards the end of a short essay about the low aspirations of modern think tanks, which he thinks are more interested in being better mouthpieces than in shaking up a stodgy establishment, Matt Bai says:

Perhaps the pace and shallowness of our political culture — the echo chamber of pundits and bloggers in which the shelf life of some new slogan can be measured in weeks or even days — makes it all but impossible to sustain a serious public argument over a period of years. Something like Francis Fukuyama’s 1989 essay on the “end of history,” which influenced a generation of conservative foreign policy, probably wouldn’t resonate today beyond the next news cycle or partisan branding session. Which is a shame, really, because there is an urgent need, on both the left and the right, to modernize rusting ideologies.

Tim Fernholz is unamused:

Bai makes a living as a political writer who takes ideas seriously, but the limit of his engagement with "serious public argument" is clear if he thinks that blogs aren't a venue for serious discussion. He obviously ignores political scientists, he's clearly never taken up with deeply wonky blogs like Credit Slips or read budget expert Stan Collender's work. As for pursuing arguments over years, how long has Ezra Klein been writing about health care? How long has Matt Yglesias been critiquing U.S. foreign policy? How long as Andrew Sullivan explored his own long-standing themes?

Now, I happen to partly agree with this. I thought Bai's book, The Argument, was terrific (and I still do), but here's what I said about his contention that the blogosphere doesn't produce any big new ideas:

Liberal political bloggers generally view the blogosphere as split into two halves: the netroots activists on one side and the "wonkosphere" on the other. They aren't separate groups so much as two halves of a single brain. Both sides want to win, and both sides want to push the Democratic Party moderately to the left, but it's the wonkosphere that likes to gab about policy big think. If the blogosphere is ever likely to produce a big new idea in an ideological sense, this is where it's going to come from.

But you'd never know that, because Bai doesn't waste any time with the wonkosphere, an omission that's unfortunate. It's not that the wonks have necessarily gotten a firm handle on the future [...], but at least they're talking about it. I usually think of the wonkosphere's discussions as "policy lite," but even at that they're frequently more penetrating and more honest than the 300-page white papers from the think tanks. And they make policy interesting and digestible to a huge number of people who wouldn't otherwise hear anything about it at all.

So, yes: Bai needs to get out more. And yet, reading Tim's post I'm left wondering again why we bloggers seem so often to be so thinskinned. Bai's criticism was just the lightest of glancing blows, and he obviously meant it to encompass not just the blogosphere, but also the rise of cable news, the permanent campaign, the dumbing down of think tanks, the MSM's endless horserace journalism, and so forth. What's more, he's right. There are plenty of policy-oriented blogs that do excellent work — often better work than the mainstream media — but they have their downsides too. And one of those downsides, obviously, is that even wonky blogs tend to be reactive, quickly written, and not especially prone to developing deep conversations about genuinely big new ideas. Ezra and Matt do a fine job of explaining and teasing out policy issues as they flit across our radar screens, but I don't remember either one of them ever making a sustained argument for a genuinely novel and transformative idea.

That's not a criticism, either. I mine the same territory, after all. It's just an acknowledgment of what the blogosphere is good at and what it isn't. So even though I think Bai's obsession with policy innovation tends to be both misplaced and slightly incoherent, it's hardly outrageous to suggest that our quick-cut media culture — of which blogs are a part — is making it harder for big new ideas to find a home where they'll promote a transformative, long-term conversation. Agree or disagree, it's an argument worth having without getting defensive about the blogosphere's role in it, for both good and ill.