Rick Perry's Team Takes Shape

Texas Gov. Rick Perry, based on everything I've read about him, is not very bright. Not merely incurious or overly reliant on his gut, like George Bush, but genuinely just sort of dimwitted.

Andy McCarthy of National Review, based on everything I've read of his, ought to be locked up in a mental ward somewhere. I really, sincerely, don't understand why NR continues to associate itself with him. There's gotta be a line somewhere, after all.

But guess what? Perry and McCarthy have apparently teamed up! If Perry decides to run, this really has the makings of an epic disaster. I can hardly wait.

Wall Street Starts to Hear Footsteps

The New York Times reports that Wall Street folks are really, truly, finally starting to come to grips with the fact that Republican lunatics in Congress might actually refuse to raise the debt ceiling on August 2nd:

Even though many on Wall Street believe that a default remains unlikely, the financial markets are starting to become agitated. Volatility in stocks has soared, and some investors say stock prices are falling because a United States default could severely raise companies’ costs of doing business. In the Treasury market, investors are starting to sell, fearing that the government will not make good on some interest payments that will be due next month. And complex financial instruments that will pay out if the United States defaults have become twice as expensive to buy as they were at the start of the year.

....“The metaphor is a pile of sand,” said Mark Zandi, the chief economist at Moody’s Analytics. “You keep putting one piece of sand on the pile, nothing happens, and then, all of the sudden it just caves.”

Wall Street helped elect 'em, and only now are they finally figuring out what they got themselves into. Who knows? If the GOP wackos really do run the train off the cliff, maybe rich people will finally figure out that paying a few more percentage points in income taxes isn't such a high price to pay for sanity after all.

I wasn't really planning to write again about Michele Bachmann's migraines, but since she's now released this letter from her physician I have to admit that I'm curious to know what the "known trigger factors" are. Probably none of my business, though, unless it's something like "having to make difficult decisions that affect millions of people."

James Fallows sums up a recent — bipartisan! — bill that harnesses no-nothing jingoism to kill off joint research into clean carbon technology with China:

So, the Democrat makes sure the U.S. doesn't do clean energy research with the one partner that matters most. And the Republican makes sure we don't do it anywhere else, except with Israel.

In fairness to Rep. Sherman, his comments on the floor make clear that he was offering his "don't deal with China" amendment as a "moderate" alternative to Harris's "don't deal with anyone (except Israel)." This is the state of bipartisan debate: the alternative to complete, destructive flat-Earthism (the Harris amendment) is targeted, specific, "moderate" flat-Earthism (the Sherman amendment). Rather than choose, the House embraces them both.

Yay Congress! Yet another legislative moment for us all to be proud of.

$1 Trillion vs. $1 Trillion

The "Gang of Six" plan unveiled yesterday offers $1 trillion in new revenue as part of its deficit-reduction package. However, CBPP's Robert Greenstein explains that this is not the same thing as the $1 trillion in new revenue from the previous grand bargain that House Speaker John Boehner walked away from. The grand bargain plan assumed that the Bush tax cuts for the rich would be made permanent (thus reducing revenue by $700 billion) and then added $1 trillion on top of that, for a net total of $300 billion in new revenue. The Gang of Six plan assumes the Bush tax cuts for the rich are allowed to expire and then adds $1 trillion more, for a net total that's genuinely $1 trillion.

In other words, regardless of any legerdemain with CBO scoring, the Gang of Six plan raises taxes way more than the plan Boehner rejected because his conference was dead set against it. And that's in addition to the fact that it's obviously far too complex to be put into legislative language, scored, and moved through Congress in less than two weeks. So explain to me again why everyone was so excited about this?

I suppose one advantage of the G6 plan is that it makes only a few cuts immediately and basically punts everything else into the future, including the tax hikes. And since conservatives, in addition to being anti-tax, are also convinced that spending cuts promised for the future are just a sham, maybe they figure that tax hikes promised for the future are also a sham. So the G6 plan allows them to vote for kicking the can down the road without any intention of ever voting for the future tax hikes.

Or something. Frankly, I'm not really sure what's going on anymore and I'm not sure anyone else is either. For now, I'm going to stick with my guess that we'll blow by the August 2nd deadline, markets will go nuts, and we'll end up with some kind of debt ceiling increase by August 7th. We'll see.

40 Percent Less Government Will Be Fun!

A classroom in a place with a lot less government.

So suppose the debt-ceiling deadline passes. Nothing to worry about, right? There's still enough money for Social Security, Medicare, interest payments, military payrolls, and veterans benefits, isn't there? That's more or less true, but unfortunately, that's all there's money for. Megan McArdle runs down a small sample of the things that will have to be zeroed out:

  • You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
  • The nation's nuclear arsenal is no longer being watched or maintained
  • The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity, etc.
  • The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don't have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
  • All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
  • Our embassies are no longer operating, which will make things difficult for foreign travellers
  • No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
  • Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
  • The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who's going to be teaching your kids without a special property tax assessment.
  • The market for guaranteed student loans plunges into chaos. Hope your kid wasn't going to college this year!
  • The mortgage market evaporates. Hope you didn't need to buy or sell a house!
  • The FDIC and the PBGC suddenly don't have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
  • The TSA shuts down. Yay! But don't worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don't have a vacation planned in August, much less any work travel.
  • Unemployment money is no longer going to the states, which means that pretty soon, it won't be going to the unemployed people.

How about if we just call this the "Republican Budget Plan"? If you'd like it to be permanent, you can call it the "Michele Bachmann Plan."

Bachmann and the Debt Ceiling

This should go without saying — which means, of course, that it has to be said — but any presidential candidate whose position is flat-out opposition to raising the debt ceiling under any circumstances should be immediately asked:

So which 40% of the federal government do you plan to permanently cut starting on August 2nd?

Demagogues like Michele Bachmann are allowed to earn swooning cheers from tea party crowds with cross-of-gold-like proclamations that "I. Will. Not. Vote. To. Increase. The. Debt. Ceiling." — but are then allowed to avoid answering the obvious followup question. Keep in mind: Bachmann's position isn't that she wants a balanced budget in 2020, or 2015, or even next year. She wants one starting in two weeks. That means big cuts in at least one of three areas: Social Security, Medicare, and the Pentagon. If she plans to keep any of the rest of the government around, it means even bigger cuts in those three areas.

For some reason, the press has long been willing to give a pass to conservative crazies because, hey, that's just how they are. (In Bachmann's case, it also helps to have a flying wedge of bouncers to keep pesky reporters at bay.) Still, she has to answer questions eventually. And the first and only question she should be asked, over and over and over again, is: Which 40% of the federal government do you plan to permanently cut starting on August 2nd?

She'll never reply, of course, since her adoring crowds might be slightly less adoring if she was willing to tell them the truth about what her priorities are. But it would still be nice to see professional reporters act like profesisonal reporters and refuse to stop asking until she gives a real answer.

Banks Are the New Banks

From the Wall Street Journal today:

Long envied as one of the savviest gamblers around, Goldman Sachs Group Inc. surprised Wall Street with a steep decline in trading revenue because it stopped rolling the dice...."I don't want to sugar coat it…Maybe we made a bad decision in taking too little risk," David Viniar, Goldman's chief financial officer, told analysts Tuesday. "I don't know."

But before you start feeling too sorry for them, there's also this:

In the second quarter, Goldman's revenue from trading bonds, commodities and currencies plunged 53% to $1.6 billion from $3.37 billion a year earlier. That badly bruised the New York company's bottom line, even though overall profit jumped 78% to $1.09 billion from an anemic year-ago quarter.

And this from the LA Times:

Just a year ago, banking executives argued vehemently against the most sweeping overhaul of financial regulations since the Great Depression, saying the law enacted then would stifle innovation and erode profits. But in the last two weeks, they have been reporting billions of dollars in profits — including a record quarter for Wells Fargo & Co. — with nary a word about how the so-called Dodd-Frank financial reform law was hindering them.

....On Tuesday, Wells Fargo, the nation's third-largest bank, posted record earnings of $3.9 billion for the second quarter. JPMorgan Chase & Co. reported last week that its revenue and profit were higher in the first half of this year than in the first six months last year, before Dodd-Frank was passed. Nor did the law seem to deter Goldman Sachs Group Inc., Bank of America Corp. and Citigroup Inc.

Dodd-Frank hasn't taken full effect yet — nor have new capital requirements — but this is an ominous sign anyway. In the long run, if banks end up as profitable as they were before the law was passed, it almost certainly means that dangerous behavior really hasn't been reined in significantly. In other words, despite the astonishing display of self-pitying doomsaying from Wall Street, nothing much has changed at all. As Felix Salmon said to me at lunch a few weeks ago, when we were talking about which segment of the financial industry was likely to cause trouble in the future (hedge funds? private equity? some brand new hidey hole in the shadow banking system?), "Banks are the new banks." Banks caused the last crisis, and they're all set to cause the next one too.

Here's yet another sign of the encroaching Muslim Kenyan socialist Sharia law hellscape that is Barack Obama's Amerika:

Virtually all health insurance plans could soon be required to offer female patients free coverage of prescription birth control, breast-pump rentals, counseling for domestic violence, and annual wellness exams and HIV tests as a result of recommendations released Tuesday by an independent advisory panel of health experts.

....Jeanne Monahan, director of the Center for Human Dignity at the socially conservative Family Research Council, said that many Americans may object to birth control on religious grounds. “They should not be forced to have to pay into insurance plans that violate their consciences. Their conscience rights should be protected,” she said.

Uh huh. Everyone should have the right to insist that they be covered by an insurance company that doesn't cover anything they disapprove of for other people. That sounds pretty sensible.

In any case, the rest of us look forward to joining the 21st century. This includes, by the way, virtually every single person that Jeanne Monahan thinks she's speaking for: "A Guttmacher study found that 98 percent of sexually active Catholic women and nearly 100 percent of evangelicals have used contraception at some point, compared to 99 percent of women overall." If that number is right, it sure doesn't sound like very many people actually object to birth control on religious grounds, as opposed to pretending they object, does it?

Are You Smarter Than a 12th-Grader?

The latest National Assessment of Educational Progress results in geography were released today. So how did the youth of America do? You know the drill:

Geography Report Card Finds Students Lagging

Roger that. But with the pro forma wailing out of the way, how did our kids really do? Answer: Fourth-graders did better than in the past and 8th- and 12th-graders did about the same. But I gotta tell you: I went through the five sample questions for 12th-graders, and they were pretty damn hard. This was not "identify France on a map" stuff. I ended up getting them all right, but I was half guessing on some of them.

After I went through the samples, I checked out a wider variety of questions from the latest test, and they want you to identify continents by cross section, explain why Amazon deforestation is bad, understand how the Great Lakes were formed, pick out the probable result of poor irrigation practices, explain why Libya and Australia have a population density of six people per square mile, and then my favorite of all: "You are forming a United Nations committee to study the world crisis of desertification and what to do about it. List four different professions from which you will select your experts. Explain why you selected those specific professions and what each expert will be expected to contribute."

(Plus my favorite question from the 4th-grade test: "Identify two ways that helicopters are able to help people in a city." What exactly does this have to do with geography?)

You know what? I'm a pretty smart guy, and I read a lot and I keep up with things better than most people, but this was tough stuff. What's more, I can say with high confidence that I would have been clueless about at least half these topics when I was in high school. For one thing, I never took a geography course in high school. I took math, physics, German, history, English, and one elective. How could I have taken geography even if I'd wanted to? And of those other classes, only history even came close to teaching any of this stuff.

So I'm not really sure what to make of all this. People will read the headlines about these scores and think that kids can't read a map. And maybe they can't. But that's not what's being tested. They're asking some pretty sophisticated questions for a bunch of 17-year-olds, and frankly, I'm sort of surprised they do as well as they do.