Matt Yglesias likes this chart from USA Today that illustrates what has happened to household incomes over the past decade:

In fairness, you really do need to account for rising health insurance premiums before you conclude that average incomes have dropped. I'll spare you the details, but the census data shows that overall median incomes, adjusted for inflation, have dropped $3,719 over the past decade. However, the employer share of healthcare premiums has gone up almost exactly the same amount. Toss that back in, and total household compensation (cash plus health insurance) has been pretty much flat.

Still, that's pretty bad:

This, I think, does a great job of illustrating the fact that the asset price collapse –> recession –> lost decade cycle is really something that started 10 years ago rather than a forward-looking risk. It’s often said that the 2001 recession was "brief" and "mild," but the employment and income situation kept deteriorating for years and neither the employment-population ratio nor wages ever re-obtained their previous peak. The longer we go on not effectively addressing the additional labor market trauma of 2008-2009, the more this all merges into one giant pool of long-run economic dysfunction.

I keep meaning to write more about this, and I promise that someday I will. But there's a real phenomenon here that hasn't gotten enough attention. We often point to 1973 as an inflection point for workers: Before that, median incomes rose right along with economic growth, but starting that year income growth suddenly slowed dramatically. Instead of rising 2 to 3 percent a year, household income rose less than 1 percent per year.

It now looks to me like 2000 was another inflection point. Household incomes went from 1 percent growth to zero growth, and they've been stuck there ever since. Even researchers who are skeptical that income inequality rose dramatically after 1973 mostly accept that it's definitely risen since 2000. The entire past decade has been an economic disaster on multiple fronts, and that's one of the reasons the financial collapse of 2008 has been so terrible. We had a decade's worth of labor market weakness that was partly masked by a housing bubble, and it all came crashing down within a year or two. Instead of a long, slow slide, we got ten years worth of drops compressed into 24 months. For more on this, see Scott Winship here.

And I really will try to write more about this eventually. It's important. Unfortunately, the reasons are still hazy and there are dozens of theories about what's happening. But something sure is.

Jon Cohn points out today that the new Census Bureau report on poverty provides some pretty good evidence that Obamacare is already working. Thanks to the recession, the number of people without healthcare coverage has risen among most age groups. But as the chart on the right shows, among the young it's actually gone down. Why?

Why aren't 18- to 24-year-olds suffering the same fate? What makes them so special?....The circumstantial evidence suggests, very strongly, that the Affordable Care Act is the primary factor.

Remember, one of the first provisions to take effect was a requirement that insurers allow young adults, up to age 26, to stay on their parents’ policies if employer-sponsored insurance is not available. Even though that requirement didn't kick in until the fall, several insurers began offering such coverage earlier, in anticipation of the new rule....These numbers are striking — and seem to suggest that the Affordable Care Act is already helping large numbers of people.

This is what every single Republican presidential candidate and the entire Republican leadership wants to take away. Your mileage may vary, but it's not a vision of America most of us should welcome.

I haven't written about this for a while, but longtime readers may remember a couple of past studies suggesting that there's not much benefit to state programs that make it hard for teenagers to get drivers licenses. Today, a new, much larger study pretty much confirms this:

A nationwide analysis of crash data suggests that the restrictions may have backfired: While the number of fatal crashes among 16- and 17-year-old drivers has fallen, deadly accidents among 18-to-19-year-olds have risen by an almost equal amount. In effect, experts say, the programs that dole out driving privileges in stages, however well-intentioned, have merely shifted the ranks of inexperienced drivers from younger to older teens.

....The researchers found that states with the most restrictive graduated licensing programs — such as those that required supervised driving time as well as having night-driving restrictions and passenger limitations — saw a 26% reduction in the rate of fatal crashes involving 16-year-old drivers compared with states without any restrictions. But the rate of fatal crashes among 18-year-old drivers in those states jumped 12% compared with the states without restrictions.

....A similar trend was seen when comparing drivers in states with strong graduated licensing programs with those in states with weak programs: The rate of fatal crashes among 16-year-old drivers was 16% lower but was 10% higher among 18-year-old drivers.

Overall, since the first program was enacted in 1996, graduated programs were linked to 1,348 fewer fatal crashes involving 16-year-old drivers and 1,086 more fatal crashes involving 18-year-old drivers.

The study can't tell us for sure why this is, but the most likely explanation is that it's not really age that's the factor in all these crashes. It's inexperience. When states tighten up requirements to get a drivers license, a lot of 16-year-olds decide not to bother getting one. They just wait until they're 18 and they can get a license under the standard rules. So when they take to the road they may be a couple of years older, but they're still brand new to driving. The result is lots of crashes.

What's the answer? Rolling back the new rules is vanishingly unlikely, especially since they don't appear to have made things actively worse. But in sort of a parody of conservative caricatures of liberal regulatory overkill — except this time it's coming from the private sector — an officer at the Insurance Institute for Highway Safety suggests that if the new laws have unintentionally made 18-year-olds more dangerous, maybe we just need more law. Tighten up requirements on 18 and 19-year-olds and we'll be all set! Huzzah!

Policy fights are one thing, but Republican strategists have long understood that there's a deeper level to politics, one where the goal isn't merely to fight the opposition's agenda but to actively subvert the infrastructure and funding that allow the opposing party to exist at all. There are several ways Republicans do this. They try to defund the Democratic Party by undermining the interest groups that support it — for example, by passing anti-labor laws that weaken unions or tort reform laws that cripple defense lawyers. They work to change the rules to deprive Democrats of votes — for example, via voter ID laws or crack-and-pack redistricting schemes. And they ferret out political norms that everyone has always followed and then break them to their advantage — for example, with mid-decade redistricting or by institutionalizing the filibuster.

It's all pretty ruthless. So what's next? Well, most states allocate electoral votes on a winner-take-all basis. Barack Obama won Pennsylvania in 2008, and that victory gave him 21 electoral votes. The odds are good he can do it again in 2012. So the GOP's latest masterstroke is to do away with winner-take-all in the Keystone State. Nick Baumann explains:

Under the Republican plan—which has been endorsed by top Republicans in both houses of the state's legislature, as well as the governor, Tom Corbett—Pennsylvania would change from this system to one where each congressional district gets its own electoral vote....Under the Republican plan, if the GOP presidential nominee carries the GOP-leaning districts but Obama carries the state, the GOP nominee would get 12 electoral votes out of Pennsylvania, but Obama would only get eight—six for winning the blue districts, and two (representing the state's two senators) for carrying the state. This would have an effect equivalent to flipping a small winner-take-all state—say, Nevada, which has six electoral votes—from blue to red. And Republicans wouldn't even have to do any extra campaigning or spend any extra advertising dollars to do it.

And it's not just Pennsylvania:

It doesn't necessarily end there. After their epic sweep of state legislative and gubernatorial races in 2010, Republicans also have total political control of Michigan, Ohio, and Wisconsin, three other big states that traditionally go Democratic and went for Obama in 2012. Implementing a Pennsylvania-style system in those three places—in Ohio, for example, Democrats anticipate controlling just 4 or 5 of the state's 16 congressional districts—could offset Obama wins in states where he has expanded the electoral map, like Virginia, North Carolina, Colorado, or New Mexico. "If all these rust belt folks get together and make this happen that could be really dramatic," says Carolyn Fiddler, a spokeswoman for the Democratic Legislative Campaign Committee, which coordinates state political races for the Dems.

Needless to say, there's no legitimate reason for this. "Pennsylvania Ponders Bold Democrat-Screwing Electoral Plan," reads Dave Weigel's Onion-esque headline, and that about sums it up. It's just a cynical ploy to change the electoral map to arbitrarily favor the Republican Party. If Pennsylvania looked likely to swing Republican, they'd change the rule back without blinking.

But here's what really so disheartening about the whole thing. As recently as a couple of decades ago this would have been a bridge too far for most of the party's mandarins: conservative pundits and senior GOP officials would have sounded off against it because it was just too raw a deal even for flinty political pros. But now we live in the era of Lee Atwater and Karl Rove and Tom DeLay and Fox News. There's really no one left who might object to this merely out of a decent respect for institutional integrity and fairmindedness.

At least, that's my guess. Maybe I'm wrong. But I'll be surprised if more than a tiny handful of Republican leaders or conservative pundits speak out against this plan. After all, when Republicans gave this same thing a try in California a few years ago, Fox News eagerly tipped it as a "reform" effort while a National Review writer nonchalantly brushed it off as just another day in the salt mines. "Politics ain’t beanbag," said Matthew Franck smugly. Nor did anyone blink earlier this year when Nebraska considered moving in the opposite direction because it's a Republican state and, in its case, winner-take-all would benefit the GOP next year. No one seriously bothered to condemn either of these efforts, and if Pennyslvania moves forward with theirs, I doubt anyone will bother this time either.

Overpaid in D.C.

So how about those overpaid government workers? We should probably just can the whole unionized lot of them and contract out their jobs to the lean-n-mean private sector. That'd save the taxpayers some serious dough, wouldn't it?

Maybe not. There's a reason that federal contractors are called Beltway Bandits, after all. The Project on Government Oversight took a look at how much private contracting really costs once you look at actual billing rates, and the private sector didn't come out looking too good: 

The result of POGO’s analysis was shocking. In 94 percent (33 of the 35) of the occupational series POGO analyzed, the average annual contractor billing rate was much more than the average annual full compensation for federal employees: on average, contractors may be billing the government approximately 1.83 times what the government pays federal employees to perform similar work. When the average annual contractor billing rates were compared with the average annual full compensation paid to private sector employees in the open market, POGO found that in all occupational classifications studied, the contractor billing rates were, on average, more than twice the costs incurred by private sector employers for the same services.

The most egregious example of an outsourced occupational classification that resulted in excessive costs rather than cost savings is claims assistance and examining—administrative support positions that involve examining, reviewing, developing, adjusting, reconsidering, or recommending authorization of claims by or against the federal government. To provide these services, on average, federal employees are fully compensated at $57,292 per year, private sector employees are fully compensated at $75,637 per year, and the average annual contractor billing rate is $276,598 per year.

$276,000 per year! Nice work if you can get it. Federal labor unions might be tough bargainers, but they're pikers compared to the suits on mahogany row. Those are the guys who really know how to work the system. If you're on the lookout for overpaid chair warmers with cushy jobs, that's your first stop.

Last night Michele Bachmann charged that a campaign contribution from Merck was responsible for Rick Perry's decision to mandate HPV vaccines for girls. Perry said he was offended at the thought that he could be bought for so little, and I figured he was basically right. "It's vanishingly unlikely that Merck's five grand played any real role in Perry's decision," I wrote.

But wait! I didn't have the whole story. It turns out it was more like $30,000

And wait again! Over the past five years, it turns out that Merck gave over $350,000 to the Republican Governors Association, a period in which Perry was heavily involved with the group, and the RGA in turn gave $4 million to Rick Perry.

And wait some more! Merck's lobbyist on the vaccine issue was Mike Toomey, Perry's former chief of staff. Toomey recently co-founded a super PAC that plans to raise over $50 million for Perry's campaign.

So that's that. Now we know what it takes to get in the door and persuade Perry to do something that violates his most deeply held principles and enrages his most zealous supporters. Five grand is indeed far too little. But 30 grand plus 350 grand plus some arm twisting from a pal with deep pockets apparently does the trick. That makes Perry a pretty expensive date. On the other hand, if it were something that didn't violate his most deeply held principles, I imagine his price would go down.
 

Remember all those polls that showed (a) people disliked Obamacare, but (b) liked most of the actual provisions of Obamacare? Greg Sargent points out that we're seeing evidence of the same dynamic today. A couple of recent polls show that people (a) dislike Obama's handling of the economy, but (b) like most his actual proposals for fixing it:

All this suggests disapproval of Obama on the economy may be more a referendum on the actual state of the economy and the overall failure of government to fix it, and less a referendum on Obama’s current suggested policies. It also suggests that as President, Obama will continue to bear the brunt of public disapproval even if Republicans block job-creation ideas that the public thinks would help ease unemployment.

If you want to understand why Obama and his advisers are taking the American Jobs Act to the people, this is why. Despite public skepticism about the Recovery Act, they believe the individual ideas in his new jobs package have public support. Short of getting some of them passed, the only way to break the current dynamic — in which the GOP reaps political dividends from blocking policies Americans say they approve of — is to drive home to Americans who is preventing them from passing.

I don't think there's much question that this is right. People who aren't pure partisans really do vote mostly based on the state of the economy, and they don't seem to care much why the economy is bad. When times are tough, they throw the bums out. It doesn't much matter if the bums have been trying hard.

But is it possible to overcome this dynamic if you barnstorm the country making it clear that your opposition has been working day and night to keep the economy in a ditch? The historical evidence doesn't provide much hope on that score, but then again, I'm not sure an incumbent in recent memory has really tried very hard to make something like this stick. Certainly Obama hasn't given it much of a go yet. But there's still time before next November.

The Census Bureau released its latest report on poverty today, and it unsurprisingly tells us that incomes are down and poverty is up. However, there's much gnashing of teeth in the blogosphere over the fact that Census figures account only for cash income, not for various government transfers and benefits. See Tim Worstall here, for example.

So how much poverty is there after you account for food stamps and Section 8 housing and Medicaid benefits? Good question! And the Census Bureau is going to tell you. But not until next month:

Alternative/Experimental Poverty Measures

Families and individuals also derive economic well-being from noncash benefits, such as food and housing subsidies, and their disposable income is determined by both taxes paid and tax credits received. The official poverty thresholds developed more than 40 years ago do not take into account rising standards of living or such issues as child care expenses, other work related expenses, variations in medical costs across population groups, or geographic differences in the cost of living. Poverty estimates using the new Supplemental Poverty Measure, for which the Census Bureau expects to publish preliminary estimates in October 2011, will address many of these concerns.

It's worth noting that the new measure includes things that reduce poverty (mostly government welfare programs) and things that increase it (high medical inflation and rising child care expenses). So it's not clear how much the measured poverty rate will change on net. I guess we'll know next month. As a sneak peek, though, here's a table showing the official poverty rate compared to a variety of alternative measures from last year's report. (The alternatives come from the National Academy of Sciences, on which the new measure will be based.) Generally speaking, the differences aren't huge, and they all show poverty increasing, at least over the past decade. So I wouldn't expect any gigantic surprises when the official report that accounts for everything finally comes out next month.

From Rick Perry, after Michele Bachmann suggested that a campaign contribution might have affected his decision to mandate HPV vaccines for girls:

If you're saying that I can be bought for $5,000, I'm offended.

Duly noted, sir. So how much does it take?

Jokes aside, what's interesting here isn't Bachmann's allegation per se. It's vanishingly unlikely that Merck's five grand played any real role in Perry's decision. What's interesting is the weird, two-faced nature of the more general crony capitalism charge. On the one hand, you have one version (the HPV mandate was a payoff to Merck) that's ridiculous and unfair, but might actually hurt Perry anyway because the tea party crowd is riled up about the HPV vaccine and therefore open to the idea that there was something fishy about it.

On the other hand, you have the quite plausible and heavily documented fact that Perry has doled out a ton of favors to people who have been campaign contributors over the years. But so far, at least, this version of the crony capitalism charge hasn't hurt him because.....I dunno. I guess tea partiers don't really care about their politicians cozying up with rich industrialists job creators.

But! It's possible that the first version, unfair as it is, could make conservative voters more receptive to the second, more serious version. After all, no one has really tried to seriously tar Perry with the crony capitalism brush yet. It's a little tricky, I think, since every politician takes lots of campaign contributions and does favors in return. So any mud flung at Perry could easily end up boomeranging. But if Perry keeps riding high in the polls, the rest of the field is eventually going to get nervous enough to give this a try. Bachmann opened the door last night, and I'd be surprised if others didn't join her in walking through it pretty soon.

Crunch Time in Europe

What is Europe's problem? Well, Greece, of course. But no! Greece is actually kinda small. It's really Spain! That's serious business. But no no no. It's actually Italy that's in trouble! That's even worse! Contagion is nigh!

So what's next on the hit parade? What's bigger than Italy? Felix Salmon provides the play-by-play:

It’s looking increasingly as though the proximate cause of the next big global crisis is going to be a liquidity crunch at French banks, rather than a European sovereign default....BNP Paribas started July trading at €55 per share; it’s now at €27, and there’s no bottom in sight. And that’s making lenders very nervous, according to Nicolas Lecaussin:

“We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore,” a bank executive for BNP Paribas, who declines to be named, told me last week. “Since we don’t have access to dollars anymore, we’re creating a market in euros. This is a first. . . . we hope it will work, otherwise the downward spiral will be hell.”

....The market has good reason to be worried about the French banks. They own $57 billion in Greek sovereign and private debt — more than all German and British banks combined. And they have well over half a trillion euros in Spanish and Italian debt, most of which is trading at a substantial discount to par, if it trades at all.

As a result, the only way for the French banks to be able to project a credible degree of solvency is for the Eurozone to inject a huge amount of money somewhere. Either it goes into the countries the French banks have lent to, and will then be used to pay back the French banks what they’re owed, or else it just goes into the French banks directly — the TARP solution. But if the EFSF isn’t beefed up and deployed very soon, we could see some extremely big French banks either collapse or get nationalized in very short order. And nobody wants to see where the chain reaction from that would lead.

Hang on tight. The next few weeks could well be make or break time for Europe. And for the rest of us.