Kevin Drum

The Cable News Bubble

| Tue Mar. 9, 2010 3:15 PM EST

Terry McDermott takes a look at Fox News and notes the obvious: they don't tend to have a lot of Democratic guests:

This appears to be politically motivated, but that could be just an artifact — the content seems political but the primary aim is much more likely commercial. Cable news is not literally a broadcast business, but a narrowcast. At any given moment, there are a relative handful of people (in peak hours less than five million and in non-prime hours half that, out of the U.S. population of 320 million) watching all of these networks combined. American Idol, in contrast, routinely draws 30 million. Although cable news is a comparatively small market, it is a small market with a much larger mindshare, mainly because the media are self-reflective, creating a kind of virtual echo chamber.

....[Roger] Ailes’s most valuable insight was that sharp opinions do not necessarily chase an audience away. In fact, they seem to have created one. There is no worry of offending a broad audience, because there is no broad audience to start with anymore.

I think McDermott's suggestion that this might not be politically motivated is a little silly, something that he pretty much concedes in the rest of his piece. Still, the main point of this paragraph can hardly be emphasized enough: hardly anyone watches cable news. Even in prime time, Fox has a couple million viewers — that's about 1% of American adults — and the other operations have a million or so. Cable news is a molehill that gets routinely turned into a mountain range because they happen to be talking about the most self-obsessed bunch of gossip hounds in the country: politicians.

But the reality is that almost no one is watching. Take away the echo chamber and Glenn Beck would be about as important as a guy on a soapbox in Central Park. Which is basically what he is.

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A Corporate Toe in the Water

| Tue Mar. 9, 2010 1:53 PM EST

After the Citizens United decision opened the floodgates for corporate spending in political campaigns, supporters of the decision offered up several pushbacks against the doomsayers. One of them was simple: most big corporations don't really want their customers to view them as explicitly political, and this will rein in the amount of money they're willing to spend financing campaigns.

But there's more than one way to skin a cat, and there's more than one way to spend money. Tom Hamburger reports today in the LA Times on the growing clout of the Chamber of Commerce:

The U.S. Chamber of Commerce is building a large-scale grass-roots political operation that has begun to rival those of the major political parties, funded by record-setting amounts of money raised from corporations and wealthy individuals.

....What makes the initiative possible is a swelling tide of money. The chamber spent more than $144 million on lobbying and grass-roots organizing last year, a 60% increase over 2008, and well beyond the spending of individual labor unions or the Democratic or Republican national committees. The chamber is expected to substantially exceed that spending level in 2010.

....The recent Supreme Court ruling that corporations have a free-speech right to spend money to help elect or defeat candidates not only struck down a century of laws limiting such spending, but it also made many business executives feel more comfortable about using corporate money for political purposes.

I think this is a good insight. Obviously a group like the Chamber of Commerce is likely to raise more money when Democrats are in power and corporations are afraid of increased regulation. But corporate contributions depend on a lot of things, and one of them is just historical norms and traditions. Combine a Democratic administration with a ruling like Citizens United, and suddenly a lot of corporate executives are both more motivated to give and more comfortable with the idea of large-scale corporate influence on political campaigns. It's impossible to say how big a factor this is, but it's certainly floating around in the background somewhere.

In any case, this is just a toe in the water. Once big corporations get more comfortable with increased spending on groups like the Chamber, they'll start to get more comfortable with direct spending too. We may or may not see a lot of direct contributions to political campaigns this year, but it's probably just a matter of time. This is just a start.

How the Scam Works

| Tue Mar. 9, 2010 12:50 PM EST

The Financial Times reports today on derivative deals gone bad in little Italian villages. Their poster child is Baschi, population 2,800, but it goes way beyond that:

Between 2001 and 2008, 525 Italian local authorities entered into almost 1,000 interest rate swaps with an aggregate value of €35bn, according to Italy’s audit office and the central bank....Scores of these deals are now turning sour, dragging Italian banks such as BNL and global institutions such as Merrill Lynch, UBS, Deutsche Bank and JPMorgan into court.

This is embarrassing for Italy, as the state is widely considered to have failed to control the deals involving cities as large as Milan to a tiny Order of Capuchin Friars near Genoa. It is also extremely embarrassing for investment banks. Investigations by Italy’s finance police have led to raids, the seizure of assets and bankers being named in criminal cases. One prosecutor in south Italy has asked that Merrill Lynch be banned from doing business with municipalities for two years.

Hey, Merrill Lynch! I remember them. That's the company that entered into a whole bunch of derivative deals with my hometown of Orange County in the early 90s and drove us into bankruptcy. I guess you can take the investment bank out of the hustle, but you can't take the hustle out of the investment bank. Or something.

This comes via Felix Salmon, who notes that "municipalities around the world have been ripped off by fast-talking derivatives salesmen for years, and the whole business really is very sleazy." As it happens, there was a bit of sleaze on both sides, probably, as these small towns were all hoping to get something for nothing and figuring that if a piper needed to eventually be paid, some future mayor would have to pay him. But the whole piece is worth reading. It's a nice look into the incredibly complex deals that these banks put together and sold to plainly unqualified buyers.

Shelby Loses Again

| Tue Mar. 9, 2010 12:25 PM EST

A couple of weeks ago Sen. Richard Shelby (R–Alabama) threw a temper tantrum over the fact that an Air Force contract that would have brought jobs to Alabama was being held up. To register his displeasure he placed a blanket hold over all of Barack Obama's nominees who need Senate confirmation.

Well, he must be plenty pissed now:

Northrop Grumman Corp. said Monday that it was dropping out of the race for a $35-billion Pentagon contract to build 179 aerial refueling tankers, leaving its rival Boeing Co. as the sole bidder for one of the largest military contracts in U.S. history.

....But it also represents a huge blow to California's struggling aerospace industry. Northrop had said the contract award would have created more than 7,500 local jobs, even though the plane would have been assembled in Alabama. Follow-on contracts could involve building 300 to 400 additional tankers valued at more than $100 billion over several decades.

Yep, that was the contract. And now it's gone because, says Northrup, the Pentagon's new specifications "dramatically favors" Boeing's smaller refueling tanker over Northrop's offering. I wonder what Shelby will do for an encore?

Controlling Healthcare Costs

| Tue Mar. 9, 2010 11:46 AM EST

In the Wall Street Journal today, health economist David Cutler takes a look at the cost savings measures in the current healthcare bill and gives it full marks in six areas: forming insurance exchanges, reforming Medicare Advantage, value-based payment for Medicare, creating an independent Medicare advisory board, fighting Medicare fraud, and investing in IT. Not bad! And there's partial credit for three more: prevention programs, a tax on high-value insurance plans, and malpractice reform. He gives no credit for only one thing: creating a public option.

So reform gets full credit on six of the 10 ideas, partial credit on three others, and no credit on one. The area of no credit (a public option) is because Republicans opposed the idea. One area receives only partial credit because of Democratic opposition (malpractice reform) and two other areas reflect general hesitancy to increase taxes (taxing Cadillac plans and taxing drivers of obesity).

Why is reform viewed so negatively? In part, it may reflect the perfect being the enemy of the good. If the only passing grade is 10 out of 10, then reform clearly fails. But given where the Republican Party is on a public option, no reform will get a passing grade. If both parties were willing to raise taxes and Republicans negotiated malpractice reform for their overall support, we could probably get a nine out of 10.

I'll add two things. First, surely the idea of price transparency and larger copays for certain kinds of healthcare ought to be on the list? It's true that conservatives have turned this into something of an idée fixe, making claims for it way out of proportion to what it can accomplish. And there's no doubt that it would have to implemented carefully. Still, I think there's fairly broad agreement that this could have some impact on cost containment, and it's nowhere to be found either in the current bill1 or on Cutler's list. Even if you think it's a bad idea, it deserves at least a mention.

Second, Cutler is, of course, dead wrong about why reform is viewed so negatively. That's because he's an academic and has to be polite in public. The real reason is that the Republican Party has no interest in reining in healthcare costs and no interest in reforming healthcare. Their only interest is in wielding the biggest partisan cudgel they can find. So they call the Medicare advisory board a "death panel" and insist that exchanges and a public option are the road to Stalinism. Say this often enough and loudly enough and eventually plenty of people believe you. And even the ones who don't will eventually become uncertain enough that they decide they might as well oppose whatever the Democrats are doing. After all, healthcare reform doesn't provide much benefit for the vast majority of people, so why take chances?

If Republicans were genuinely interested in controlling healthcare costs, the political dynamic of reform would be entirely different and the bills going through Congress would look entirely different. Better in some ways and worse in others, but the product of genuine negotiation. But Republicans aren't interested in negotiation, just demonization. That's why reform is viewed so negatively.

1UPDATE: Michael Russo of CALPIRG emails to correct me. In fact, in the Manager's Amendment to the Senate bill, Sec. 2718(e) provides that "Each hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act."  Says Russo: "Obviously it’ll take some strong regs to make the rubber hit the road on this so patients really do know what things cost, but as written this is a big step forward, and very helpful to consumer advocates moving forward."

Assuming those strong regs are written and implemented, this is good news.

The Anonymous SAO

| Tue Mar. 9, 2010 2:00 AM EST

Felix Salmon attended an off-the-record briefing at the Treasury Department today:

Treasury had its second big blogger meeting today, where Tim Geithner and other Senior Administration Officials (sorry, ground rules) fielded questions from a group of bloggers* which tilted heavily towards the newsier end of the spectrum. The Center for American Progress was there in force, as were the Atlantic and the Huffington Post.....

*Daniel Indiviglio, Megan McArdle, Matthew Yglesias, Patrick Garofalo, Amanda Terkel, John Aravosis, Faiz Shakir, John Amato, James Kwak, Duncan Black, Sam Stein, Shahien Nasiripour, Ryan Grim, David Kurtz, Tim Fernholz, and me.

Having read a few posts from the bloggers in question, what I want to know is: Did they really learn anything? Did Geithner and the anonymous SAOs say anything interesting that they wouldn't have said on the record? Or was it just a pure spin session? Felix gives a clue at the end of his post:

I came away with the impression that life at Treasury is not much fun, on a day-to-day basis, and that the stresses of trying to set economic policy in the face of strong opposition from both the banking lobby and the Republican party are wearing on the officials there. And I also came away with a photocopy of John Cassidy's piece on Geithner in this week's New Yorker: each of us got given it as some kind of Treasury party favor.

Josh Green has a big Geithner profile too, and now Treasury was inviting us bloggers in, and then there was that Vogue piece — there does seem to be some kind of PR offensive going on. But I'm not nearly enough of a Washington insider to hazard a guess as to who's responsible, or why they might be doing it. But I'm sure it's going to be a topic of conversation at the post-meeting dinner.

I've always felt that these kinds of anonymous sessions do more harm than good to the cause of good journalism, allowing government officials a chance to peddle their spin in person without really being held accountable for what they say. But that's a cheap position for me to take since I'm out in California and never get invited to them anyway. So I'm genuinely curious: now that bloggers are going to these kinds of things, and what with blogging being so much more informal and conversational than regulation journalism, what do they really think? Did the Treasury folks say anything they couldn't have said with their names attached? Was it genuinely interesting, or just a bunch of the same-old-same-old? What's the verdict on this ancient Washington tradition?

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The Presidential Bubble

| Mon Mar. 8, 2010 7:20 PM EST

Time's Karen Tumulty reports on Obama's healthcare speech today:

When I go to political events, I generally like to talk to people who attend them. You learn a lot that way.

Not today. I arrived at the President's health care speech at Arcadia University in Glenside, Pa., about 45 minutes early, hoping I might chat with some of the Pennsylvanians who were here. No such luck. The press was stuck behind two sets of barriers. I tried asking several times (nicely, I promise) to wander a bit and talk to people, but was told I would have to wait until after the event. (Both the crowd and I had been through security screening.)

Okay.

So after the event, I attempted to talk to people as they left. That effort, too, was shut down by the security people.

So all I can report is this: The President gave a speech on health care this morning. People applauded and cheered. What motivated them to be here, and what bearing this issue might have on their individual lives — well, I can't answer that.

I don't know if this is standard behavior or not. Maybe it was just a mistake by some overzealous security folks. But it's worth publicizing. When George Bush did this stuff it drove us nuts. Obama doesn't deserve a pass.

Democrats and National Security

| Mon Mar. 8, 2010 5:06 PM EST

A new poll by Democracy Corps and Third Way warns that Democrats are losing ground to Republicans in the fight over national security. So they tried out a few talking points to see what would make people feel better about the party. How about "proven FBI interrogation techniques worked on the Christmas bomber"? That was OK but not great. "Obama has raised America's standing in the world"? Eh. "Civilian courts do a great job of convicting terrorists faster and better"? Eh again. "Obama's actually doing the same stuff as George Bush"? That had a negative effect.

So what did work? Answer: using predator drones to kick ass on al-Qaeda and the Taliban, which made people a stunning 50 points more confident in the Democrats. Draw your own conclusions.

The Left and Healthcare

| Mon Mar. 8, 2010 3:05 PM EST

Jane Hamsher, as we all surely know, is passionately opposed to the current healthcare bill winding its way through Congress. But Matt Yglesias asks:

How Many Divisions Has Jane Hamsher?

That's what Joseph Stalin supposedly asked about the pope when it came time to divvy up postwar Europe. Likewise, the suggestion here is that Jane Hamsher doesn't really represent a very big or very dangerous faction of the left.

Maybe so. But if you asked Stalin's successor, Mikhail Gorbachev, about the influence of the pope, he'd probably sneer a little less. In absolute terms, Jane may not represent a huge number of people or a vast amount of money, but she certainly seems like the linchpin of a disaffected left that could easily represent the difference between success and failure for a bill that's likely to come down to one or two votes. Speaking for myself, I sure wish she could look past the disappointments — most of which were sadly inevitable — and instead focus all that energy on the big picture of what the Democratic healthcare bill means both for real people right now and for the likelihood of further reform in the future. This is our last crack at this for a good long time.

The Odious Liz Cheney

| Mon Mar. 8, 2010 2:04 PM EST

I haven't gotten around to blogging about this yet, but as you probably know by now Bill Kristol and Liz Cheney have recently been beating the drum about a group of Justice Department lawyers who had previously defended accused terrorists:

Senate Republicans have demanded details of the lawyers' past work and Liz Cheney’s group “Keep America Safe” has questioned their “values." A drumbeat of Republican criticism forced the Justice Department reluctantly to identify seven of them last week. But the harshness of the criticism — Keep America Safe labeled a group of them the “Al Qaeda Seven” — has provoked a backlash from across the legal establishment.

Cheney probably thought this was just another soft target for her endless crusade to convince America that Democrats will get us all killed. But guess what? Big time lawyers don't much like being attacked, they tend to stick together on stuff like this even across ideological lines, and they have lots of money and power that allow them to fight back. Methinks Liz bit off more than she expected. Plus there's this speculation from a lawyer friend of mine:

Some of these [attorneys] are bigwigs at big law firms. Their egos will want their pound of flesh. It will be interesting to see what steps they take. Cheney's shop is not a government entity and not entitled to immunity (the shield that keeps a lot of defamation lawsuits at bay). The people who were attacked — while high profile in their respective professions — may not rise to the sufficiently high level of public figure, where you need evidence of malice directed at the individuals specifically.

Im sure Cheney and Kristol looked at this from all angles, so there may be an ace in the hole somewhere that I'm missing (I advise on defamation in general terms, but I'm not a litigator).

I'm sure we won't be seeing anything soon. If anything does get filed (other than a TRO — which is probably worthless since the ad has been taken down), it won't be for a while. My guess is that they'll wait until they have some measurable damages. And these are probably already mounting.

Having seen things like this pop up before when I was at a big firm, they will likely have to send out firmwide correspondence to all clients advising them of this matter. Most firms would heed the advice of PR people to get in front of this before aggressive conservative-oriented law firms start trying to use it to pry big name clients away. And if that happens, hoo-boy.

Internally, they will need to reassure associates and junior partners that their careers have not been tainted and please don't abandon ship.  They may even need to beef up personal security for their families. All of this would be reasonably foreseeable damages and particularly hard to avoid. Of course, there may be incentives not to bring suit — mostly political, or institutional (firms don't like to get in the habit of suing people in their own names) — but when you're dealing with big-wig egos, there is an unsurprising lack of restraint when they have been personally crossed.

My uninformed guess is that a defamation suit is unlikely. Big law firms probably prefer to generally keep a low profile even when the provocation is considerable. And the legal end of this is pretty uncertain, since it's right at the intersection of public/private considerations and libel/privacy law. Still, you never know. All it takes is one firm to get pissed off enough. And it would be interesting to see a bunch of high-priced litigators arguing this out in open court, wouldn't it?