Kevin Drum

The Public Mood

| Tue Jan. 26, 2010 8:59 PM EST

Our story so far: rich people brought the global economy to a near meltdown in 2008. We were saved from a repeat of the Great Depression only by massive interventions from a big, activist government. Today, a year later, the public is in a seething rebellion against.....the big, activist things that the big, activist government did to save us from collapse.

At least, that's the current narrative. But it does not compute.

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The Audacity of Gimmicks

| Tue Jan. 26, 2010 6:37 PM EST

From the Washington Post today:

With lawmakers eager to pivot to economic legislation, Senate Democratic leaders have drafted an initial version of an $80 billion-plus job-creation bill that will be heavy on tax breaks designed to spur businesses to make new hires....Though that number may change as the process moves forward, it is clear Senate Democrats have no intention of moving a jobs package as large as the $154 billion measure the House passed in December on a narrow, party-line vote. The House measure included money to extend unemployment benefits and COBRA health insurance coverage, items that aren't in the draft Senate bill but may move in the chamber separately.

"There is 'big bill fatigue' in the Senate right now," said a Senate Democratic aide....A primary goal of the Senate bill will be to encourage employers to add to their job rolls. "We are looking at a form of wage tax credits that would provide an incentive to put people back to work more quickly," Dorgan said.

So we're going to try to pass a jobs bill too small to create many jobs,1 and then offset the cost with a spending freeze too small to really affect the deficit. Do I have that right?

1And, apparently, deliberately designed to exclude any policies that actual ordinary people might understand and support.

The Myth of the Independent

| Tue Jan. 26, 2010 1:35 PM EST

John Sides is annoyed at yet another outbreak of "independent" fever: the obsession of political pundits and analysts with the supposedly growing and influential group of nonpartisan independents in the electorate. So today he links to a post on the subject that he wrote a few months ago:

Here is the problem: Most independents are closet partisans. This has been well-known in political science since at least 1992, with the publication of The Myth of the Independent Voter (here).

When asked a follow-up question, the vast majority of independents state that they lean toward a political party. They are the “independent leaners.”....The significance of independent leaners is this: they act like partisans. Here is the percent of partisans and independent leaners voting for the presidential candidate of their party. There is very little difference between independent leaners and weak partisans. Approximately 75% of independent leaners are loyal partisans.

Bottom line: only about 10% of voters are true independents, and that number hasn't changed much over the past three decades. Independents matter, but they don't matter nearly as much as pundit mythology would have you believe.

Email From the Base

| Tue Jan. 26, 2010 1:20 PM EST

Email from a reader my age in the the Midwest:

Trouble with the base comes and goes for a variety of reasons. Even in the troubled periods, there are people (like me) who will work hard. I stumped hard in 1984 — of all years — and actually ran for the state legislature against an incumbent Republican in 1994 (duh).

Last weekend after the [xxx], I gave up my County Central Committee seat (which was hard because no one wanted it) for the first time in fifteen years. And before that I was on the Central Committee from a different precinct and before that in two different [xxx] counties. And that decision was based on my reaction to the health care nonsense. The spending freeze is actually dumber. Now I’m just one guy, but I’m one of the ones traditionally telling Democrats not to give up. In 1984, I was door knocking before the polls closed to get people out for Mondale. If the party loses a bunch of me’s, it is in trouble. If they have to spend time motivating me the party is in bigger trouble.

But by the time you wrote that you had never been more embarrassed to be a Democrat, I had already said similar things, though less eloquently and using terms that my children should not hear.

This is a very big mess. And I feel like I’ve wasted thirty-two years of political work. We are the majority party for crying out loud. In the prophetic words of Bugs Bunny, “What a bunch of maroons!”

No comment. I'm just sharing.

Spending Freeze Kabuki

| Tue Jan. 26, 2010 12:10 PM EST

So what's the point of Obama's spending freeze proposal? Noam Scheiber wrote about this back in December and offered up this precis of budget director Peter Orszag's thinking:

There is a logic to Orszag’s gambit, which runs roughly as follows: It’s almost certain that Congress will pass, and the president will sign, a jobs bill early next year, probably in the neighborhood of $100 billion to $200 billion. Given that, and given the difficulty of doing anything about the long-term deficit next year, the administration needs some signal to U.S. bondholders that it takes the deficit seriously. Just not so seriously that it undercuts the extra stimulus.

The Orszag approach just might accomplish that. Given the amount of domestic discretionary spending in the federal budget — about $700 billion this fiscal year — we’re talking about cuts of, at most, several tens of billions of dollars if Orszag holds the line on spending (and probably less once Congress weighs in). Which means the cuts wouldn’t come close to offsetting the likely stimulus. But they just might buy some credibility in the bond market, which could defer the day when the real deficit cutting has to start. “It’s a little bit of form over substance,” says Michael Granoff, a money manager who served on the advisory council of the Brookings-based Hamilton Project when Orszag ran it. “But, if you show resolve, that you care about this stuff, it gets into the psychology of bond traders.” The laws of psychology may prove easier to finesse than the laws of economics.

I guess anything is possible. But this sure doesn't sound very likely. It's true that market traders haven't proven themselves very bright over the past couple of years, but does anyone really think they're this dim? Proposing a discretionary spending freeze is one of the oldest chestnuts in the book; the amount of money at stake is paltry; and the whole reason it's called "discretionary" in the first place is that Congress is highly unlikely to let it stand over the long term. Bond markets would have to be remarkably credulous to react positively to this announcement.

A Little Night Music

| Tue Jan. 26, 2010 2:42 AM EST

It's getting harder and harder for us progressives to stay chipper these days, isn't it? Today's deflating news for lefties was Obama's spending freeze proposal, and conservative Rich Lowry shows via Twitter that he understands why, even if the White House doesn't: "spending freeze, no matter how notional, is a huge ceding of rhetorical grnd by WH. will give GOP more leverage in makng anti-hcr, stim case." Sigh.

But I don't want to sign off for the night on a grim note. So here are a couple of things to brighten your day a bit. First off, it seems there's trouble brewing in America's fastest growing bunch of wackos:

A Tea Party convention billed as the coming together of the grass-roots groups that began sprouting up around the country a year ago is unraveling as sponsors and participants pull out to protest its expense and express concerns about “profiteering.”

....Erick Erickson, the editor of the influential conservative blog RedState.com, wrote this month that something seemed “scammy” about the convention. And the American Liberty Alliance withdrew as a sponsor after its members expressed concerns about the convention’s finances being channeled through private bank accounts and its organizer being “for profit.”

“When we look at the $500 price tag for the event and the fact that many of the original leaders in the group left over similar issues, it’s hard for us not to assume the worst,” Eric Odom, the executive director of the American Liberty Alliance and an organizer of the tax day rallies last April, wrote on the group’s Web site.

So sad. I know that schadenfreude is sort of an ugly thing, but right now I could use some. So I thought I might as well share. It turns out that when you put together a movement of cranky paranoids, they tend to be as suspicious of each other as they are of everyone else. Who knew?

And for a bit of more innocent fun, here's "Fear the Boom and Bust," a rap video from George Mason University's Mercatus Center featuring a showdown between John Maynard Keynes and F.A. Hayek. It's astonishingly good — though I confess I don't actually understand what it's for. It's not educational, really, since no one who doesn't already understand what Keynes and Hayek are about will really figure it out from watching this. So I guess it's just for pure, nerdy, highbrow entertainment. Works for me! Watch and enjoy.

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Pivot Watch

| Mon Jan. 25, 2010 9:59 PM EST

Here's the latest dance step in Barack Obama's post-Massachusetts "pivot." It's an old-school chestnut:

President Barack Obama intends to propose a three-year freeze on spending that accounts for one-sixth of the federal budget — a move meant to quell rising voter concern over the deficit but whose practical impact will be muted.

....The White House will propose a three-year freeze on discretionary spending unrelated to the military, veterans, homeland security and international affairs, according to senior administration officials. Also untouched are big entitlement programs such as Social Security and Medicare.

The freeze would affect $447 billion in spending, or 17% of the total federal budget, and would likely be overtaken by growth in the untouched areas of discretionary spending. It's designed to save $250 billion over the coming decade, compared to what would have been spent had this area been allowed to rise along with inflation.

Whatever. Just to be clear: $250 billion over the coming decade, even if Obama miraculously makes this work,1 is $250 billion out of a projected deficit of, oh, let's call it $10 trillion in round numbers. In other words, about 2 or 3 percent.

And in return for what? The liberal base now has yet another reason to be disgusted with Obama, so the obvious hope is that independents are going to lap this up. And who knows? Maybe they will. But what I wonder is this: hasn't Obama's pivot happened too quickly to seem like anything other than what it increasingly is: a panicky and transparent attempt to recover from the Massachusetts tsunami? Given that, is anyone going to buy it? Or is it just going to come across as a thinly veiled and poll approved effort to "connect" with voter angst without really doing anything substantive?

Beats me. In the past, I've been pretty astonished by the willingness of voters to take politicians at their word no matter how plainly their words are politically motivated. So maybe it will work. But I have my doubts.

POSTSCRIPT: And just to repeat myself: I'm not sure I've ever seen this level of political panic grip a party so fast over a single election loss. It's just remarkable. Yes, I know Dems were getting nervous before last week's election, and Scott Brown's victory just opened the floodgates, so to speak. But still. I've just never seen anything quite like this. I'm not sure if that's because it's never happened in recent memory or because I just haven't followed politics closely for long enough. Perhaps some political reporter with more experience can school me on this.

1Matt Yglesias lays out pretty clearly here why it probably won't.

The Public Sector

| Mon Jan. 25, 2010 7:18 PM EST

In the middle of a rant about healthcare reform and the compromise over the Cadillac tax, one of Andrew Sullivan's readers says this:

The idea that public employees make less than those in the private sector is a myth that needs to die. Most already have cadillac plans and in most places their salaries are ahead of private workers whose taxes go pay for their income. On top of that they get much better benefits and pensions, so to let them out of a tax that private industry workers will have to pay who work at the same income level is a slap in the face. Our system cannot work if the government employees earn more than the private industry workers earn who are supporting them.

I'm genuinely curious about this. I think my sense of the situation is probably a common one: 30 or 40 years ago, public sectors employees worked under an implicit deal: the pay wasn't too great, but they made up for it with job security, good benefits, and a nice pension plan. This was widely accepted by both workers and taxpayers as a reasonable trade. Today, though, that deal has changed: now public sector workers get paid as much or more than comparable private sector workers and they have job security, good benefits, and spectacular pensions.

But is this actually true? In the upper reaches of management, it obviously isn't. Mid-level and executive level managers often make half as much as comparable private sector managers. (Or less.) And although rich pension deals make headlines, it's not clear how widespread they really are.

More generally, though: do ordinary workers (clerks, school teachers, construction workers, etc.) make as much as their private sector counterparts? Or more? And where could we go to find out? William Voegeli tried to make the case that California public workers were overpaid in City Journal earlier this year, but his piece was notable for its almost complete lack of actual evidence on this score.1 Likewise, there are probably a bunch of left-leaning think tanks that would assure me public sector workers still labor under the jackboot of imminent poverty, but who knows if they're providing the whole story either?

This is a hard question to answer. How do you make sure you're really looking at comparable jobs? How do you value different benefits packages? How do you adjust for things like age, experience level, and regional cost of living differences? Has public sector comp gone up faster than inflation, or merely faster than more stagnant private sector median wages? Has anyone taken a broad, reasonably rigorous look at this? I'd sure be interested if someone has.

1In fairness, he was writing broadly about the quality of state services. Compensation levels were just one part of his argument.

Pass the Damn Bill

| Mon Jan. 25, 2010 5:02 PM EST

Mark Kleiman called Sen. Dianne Feinstein's office today to register his support for passing the Senate healthcare bill along with later fixes during reconciliation and heard some good news:

The polite young man who answered the phone said that he could take a comment about a legislative matter, listened politely to about three polite sentences of Pass the Damned Bill and an expression of displeasure about DiFi’s “slow down” comment, assured me that the Senator had voted for the bill and was eager to see it pass — and then gave me the first ray of sunshine I’ve seen since the catastrophe in Massachusetts.  He said that they’d been getting a lot of Pass the Damned Bill phone calls and wanted to know whether my call was part of an organized effort.

Italics mine. This is terrific. So join in: call your representative and your senators and tell them to pass the bill. Easy instructions here. Do it first thing tomorrow. It doesn't take long.

Bipartisan Healthcare Watch

| Mon Jan. 25, 2010 4:38 PM EST

So if Democrats decide to start over and reach out to Republicans to pass a bipartisan healthcare bill, what would Republicans be willing to support? Here's John McCain:

....overhauling medical malpractice lawsuits, allowing residents of one state to buy health insurance from a company in another state, and granting tax credits for people who purchase health insurance on their own.

And here's Mitch McConnell:

You start with junk lawsuits against doctors and hospitals. Interstate competition among insurance companies. And many of my members would be lookin’ — would — would be willing to look at equalizing the tax code. Right now, if you’re a corporation and you provide insurance — for your employees, you get to deduct it on your corporate tax return. But if you’re an individual on the individual market, you don’t.

That's two Republican leaders saying exactly the same thing, so I think it's safe to say that this is pretty much the GOP party line right now. Nothing about preexisting conditions, nothing about Medicaid, nothing about cost control, nothing about subsidies. Just a tired attack on medical malpractice suits, a gift to the insurance industry, and a tax cut. That's the Republican plan.

Lots of Washington pundits are willing to concede that Republicans were "uncooperative" on healthcare, but most of them also seem to think that maybe if Democrats had tried a little harder they could have talked them into some kind of compromise. This really ought to stop that kind of talk. These suggestions are little more than jokes, not the kind of thing that comes from a party that takes healthcare reform seriously.