So here's an irony. Stephanie Mencimer reports today that the birther movement has found a new target: GOP wunderkind Marco Rubio, who was born in Florida to Cuban parents:

Birther Charles Kerchner has a blog that was once devoted mostly to Obama, but lately, he's been on a campaign to illustrate that Rubio is not a natural born citizen, and thus, ineligible to enter the White House. Kerchner's logic is convoluted—something of a trend among the birther set. He claims that Rubio is actually a Cuban citizen, even though Rubio was born on American soil, in Miami, in 1971. But Rubio's parents were Cubans, who didn't become US citizens until 1975. (Kerchner went so far as to obtain Rubio's parents' naturalization papers from the National Archives to prove his point.)

The birthers may be nuts, but guess what? It turns out that the naturalization papers actually tell an interesting story — just not the one the birthers had in mind. Here's Manuel Roig-Franzia in the Washington Post today:

During his rise to political prominence, Sen. Marco Rubio (R-Fla.) frequently repeated a compelling version of his family’s history that had special resonance in South Florida. He was the son of exiles, he told audiences, Cuban Americans forced off their beloved island after “a thug,” Fidel Castro, took power. But a review of documents — including naturalization papers and other official records — reveals that Rubio’s dramatic account of his family saga embellishes the facts. The documents show that Rubio’s parents came to the United States and were admitted for permanent residence more than 2½ years before Castro’s forces overthrew the Cuban government and took power on New Year’s Day 1959.

Rubio [] mentions his parents in the second sentence of the official biography on his Senate Web site. It says Mario and Oriales Rubio “came to America following Fidel Castro’s takeover.” And the 40-year-old senator with the boyish smile and prom-king good looks has drawn on the power of that claim to entrance audiences captivated by the rhetorical skills of one of the more dynamic stump speakers in modern American politics.

I'm not going to pretend that I'm especially outraged by this, although Rubio's explanation is pretty lame. (“I’m going off the oral history of my family,” he said. “All of these documents and passports are not things that I carried around with me.” Uh huh.) But the irony is that for years conservatives hoped that even if the birthers were wrong about Obama, perhaps his long-form birth certificate really was hiding something that was a little embarrassing. But no. It was all totally normal. Instead, it turned out to be tea party hero Marco Rubio who had something in his vital records that he'd just as soon have kept quiet. It's quite the Frankenstein's monster they've created over in crazyland, isn't it?

Here's an interesting little chart that requires a bit of explanation. For five different categories, it compares the number of households who think they have outstanding loans (solid lines labeled "SCF") vs. the number of loans that lenders think they've given out (dashed lines labeled "Panel"). It provides this comparison for six different age groups. Needless to say, the lender data is highly accurate, so any difference between the two lines means that borrowers are kidding themselves about whether they have any outstanding debt.

For example, the blue lines represent auto loans, and they're pretty close to each other for all age groups. This means that households have a pretty good idea of whether they owe any money on their cars. Ditto for mortgage loans, home equity loans, and student loans.

But then there's credit card debt, represented by the red lines. They're way far apart. In the four working age categories, about 50% of households think they have outstanding credit card debt, but the credit card companies themselves think about 80% of households have outstanding balances. And this shows up in the aggregates, too. Households think they have a total of about $390 billion in credit card debt, while credit card companies think that households owe them about $820 billion.

When I first saw this, I immediately thought I knew the problem. If I were surveyed about credit card debt, I'd report that I didn't have any. That's because I pay off my cards every month. But the card companies are probably totting up the charges I've already made this month and counting it as outstanding debt. Discrepancy solved!

But guess what? The Fed economists who wrote this report aren't idiots! They thought of this too:

Reasons for the greater than 50 percent raw difference in aggregate credit card balances may include that (i) unlike the CCP households, SCF households may not have any member with a credit report, (ii) unlike the CCP households, SCF households may omit credit card convenience uses that they intend to repay within the billing cycle and (iii) SCF households may not report business uses of personal credit cards that nevertheless appear on households’ combined credit reports. We make generous allowances for explanations (i) through (iii), including attributing all credit card charges observed within the most recent payment cycle to convenience uses, and find that a 34 percentage point gap in aggregate credit card debt remains.

So what is the answer? The authors don't have one. Those three explanations are all they have, and even when they control for them there's still a huge gap remaining. The simplest explanation is probably the right one: American consumers just don't have any idea how much credit card debt they have.

Via Counterparties.

Jack David, a former Defense Department official in the George Bush administration, is a member of the Committee on the Present Danger. CPD was originally a hardcore anti-communist group that opposed detente and various arms agreements, but when the Soviet Union fell it needed new enemies to fight. So a few years ago it was reborn with a mission to "stiffen American resolve to confront the challenge presented by terrorism and the ideologies that drive it." Today, David writes about the death of Muammar Qaddafi:

Will the defeat and death of Qaddafi be instructive to other tyrants — say, those in Syria, Iran, or North Korea?....[The most] likely response of the tyrants still in power would be to prevent the oppressed from ever having the chance of rising up against them. And, of course, the tyrants in Syria, Iran, and North Korea must ask themselves whether the oppressed Libyans would have had a chance of toppling Qaddafi without Western support — air cover and intelligence and aid — and whether that support would have been forthcoming had Qaddafi had WMD and the means of delivering it. More likely than not, the tyrants of the world will see Qaddafi’s defeat and elimination as more evidence that he was foolish to give up his nuclear and other WMD programs in the middle of the last decade.

Well, there you go. When George Bush invaded Afghanistan and Iraq, we apparently had no such worries about the possibility that this would merely stiffen the resolve of other tyrants. In fact, as I recall, Iraq was destined to be a showpiece of democracy that would topple Islamist dominoes all over the Middle East. Those were good times. But when Barack Obama takes out Libya? That's rather a different story.

In related news, Rick Perry and Mitt Romney both refused to even mention Obama's name in their statements on Libya. And rising GOP star Marco Rubio made the conservative party line even more explicit: "Let's give credit where credit is due: it's the French and the British that led in this fight, and probably even led on the strike that led to Gadhafi's capture, and, or, you know, to his death." And Obama? Well, he didn't do enough and took too long to do it etc. etc.

Poor Barack Obama. The left isn't very happy about Libya because the left isn't all that thrilled with military interventions in the first place, and anyway, this one was done without congressional authorization. And the right isn't very happy about it happened while Barack Obama is president. The guy can't win.

I understand the left's problem with Obama's national security policy. But the right? What the hell is their problem? Obama has escalated our presence dramatically in Afghanistan; he created a massive drone air force that's all but wiped out al-Qaeda in Pakistan; he killed Osama bin Laden; he approved a multilateral military operation in Libya that ended up killing Muammar Qaddafi; he sent a SEAL team out to kill Somali pirates; he assassinates U.S. citizens in foreign countries who are associated with al-Qaeda; and he's done more to isolate and sanction Iran than George Bush ever did. Crikey. Just how bloodthirsty do they want the guy to be?

Of course, it's also true that Obama has suggested that Israel should halt new construction in West Bank settlements, and he hasn't yet turned Iran into a glassy plain. I suppose the former is enough to make him the second coming of Neville Chamberlain all by itself, and the latter is something to keep pushing for. Hope springs eternal.

But seriously guys. How much more militaristic do you realistically think an American president can be, especially after the military fiascoes of the past decade that you so enthusiastically backed? Get a grip.

What kind of monetary policy should the Fed follow? Scott Sumner has long argued that the Fed should set a target for nominal GDP—that is, GDP before corrections for inflation—and follow it come hell or high water. This has recently gotten some high-profile endorsements, including one recently from a Goldman Sachs team. And Paul Krugman recently gave the NGDP forces a boost on his blog:

And one thing the market monetarists may have been right about is the usefulness of focusing on nominal GDP. As far as I can see, the underlying economics is about expected inflation; but stating the goal in terms of nominal GDP may nonetheless be a good idea, largely as a selling point, since it (a) is easier to make the case that we’ve fallen far below where we should be and (b) doesn’t sound so scary and anti-social.

I think this gets it roughly right. The thing is, it's not clear to me how much real difference there is between targeting NGDP, targeting inflation, targeting real interest rates, dropping money from helicopters, or engaging in quantitative easing. This is what I'd like NGDP advocates to make clear. Instead of telling us what they're targeting, or what their preferred policy is called, tell me three things:

  • What do you want the Fed to say publicly?
  • What open market operations do you want the Fed to engage in?
  • Beyond that, is there anything else the Fed should be doing?

This would cut through a lot of the confusion. The Fed is not infinitely powerful: For both legal and practical reasons, it has only a certain set of activities it can engage in. So tell me what specific activities you think it should engage in. This isn't a panacea, of course. It would cut through a lot of the fog in one sense, but it would almost certainly create a whole bunch of new fog at the same time. Still, I think it would get us a bit closer to focusing on the underlying issues.

For more, see Robert Waldmann, who discusses in wonky detail just what NGDP targeting is and how it might work. See also Brad DeLong here, who has a useful discussion, though at the level of an IS-LM framework rather than the level of Fed mechanics. His conclusion:

To try to target nominal GDP using either only monetary policy or only fiscal policy seems hazardous. To coordinate—monetary and fiscal expansion, money printing-financed purchase of useful things—seems to be the winner.

I'm on board with this. Monetary and fiscal policy both have limitations, and using them in tandem is almost certainly more effective in a recession like the current one. What's more, why not? The downsides of expansionary fiscal policy are pretty small, so we'd be smart to simply throw everything we have at the problem.

Ryan Bonneville writes that there's really nothing Barack Obama can do to placate the right-wing illegal immigration crowd. No matter what he does, it will never be enough. Then this:

I stewed over this for a couple days, not entirely sure what I wanted to say about it, but then I read this post by Kevin Drum this morning, and I realized that there isn’t much of anything I can say. Obama’s base is as feckless as he is, which is why he expresses no compunctions about the policy choices he makes. What do you say to Joe Klein when he claims that the “most basic fact” about illegal immigration is that it’s “down”? That the real reason we don’t need crocodiles patrolling the border has nothing at all to do with the number of people illegally crossing it? Drum isn’t much better when his response is “I don’t really have a big problem with beefing up the border patrol”. Why not, Kevin? He even links to Adam Serwer without bothering to address Serwer’s last paragraph about the human costs of our immigration regime. (And even I know it’s the opposite of irony that Serwer starts that paragraph with the phrase “what you won’t hear” right before we emphatically don’t hear anything about it.)

Well, the reason I don't have a big problem with this is because I think the federal government should do its best to stop illegal immigration. It should do it humanely, it should do it efficiently, it should do it without trampling on civil liberties, and it should do it without mistakenly scooping up lots of citizens and legal immigrants in its net and putting them through hell. These are, obviously, all big caveats and they're all hard things to pull off. When we fall short, we should yell about it. Like here, for example. But they aren't impossible.

If you're in favor of completely open borders, then fine. Make your case. But if you're not, then no matter how liberal you think our immigration laws should be, you do think we should have immigration laws. And if you think we should have immigration laws, then you think they should be enforced.

So that's why I don't have an inherent problem with beefing up border patrols. My position on immigration is fairly simple: I think we should allow more legal immigration, and we should make the process of obtaining citizenship (or at least a green card) less Byzantine than it is now. At the same time, we should make it harder to come into the country illegally. I don't think much of the fence, for both symbolic and practical reasons, but employer penalties and better border patrols are both demonstrably effective. Lower the price of legal immigration and raise the price of illegal immigration: that's the formula. Eventually you'll find a balance of costs that keeps illegal immigration at a low enough level that it's not worth spending more on. Then you're done.

UPDATE: I don't think my position here is all that fuzzy, but a couple of responses have got me wondering. So just for the record, I'm not in favor of ruthless enforcement of every existing immigration law. I'm (a) in favor of different laws than we have now, and (b) in favor of enforcing existing laws in a humane, efficient way that doesn't trample civil liberties etc. My broader point is simply that if you're in favor of any immigration laws, then by definition you must be in favor of enforcing those laws. That's different from suggesting that every existing law — or even your preferred set of laws — has to be enforced in the harshest possible way.

Paul Kane writes in the Washington Post today that both Ron Paul and Rick Perry, who have spoken out against energy subsidies, nonetheless lobbied for federal loan guarantees for a nuclear plant in Texas. Is this hypocrisy? Paul actually had a perfectly good answer: he opposes federal intervention in the energy market, but once funds have been allocated he'll do his best to make sure that his district gets its fair share.

And then there's Perry:

On Wednesday, Perry spokesman Mark Miner said he thinks loan guarantees are not the same as “subsidizing” corporations, because a well-managed company will not default and leave taxpayers liable for repayment. The governor said energy promotion will be a hallmark of his jobs creation plan during the presidential campaign.

Unlike Paul's answer, this one is nonsensical. Of course loan guarantees are a subsidy. What else would they be? And the whole point of a federal guarantee is that it's only necessary if the private sector isn't sure about whether the company will default. If the loan is a sure thing, Wall Street would be happy to finance it all on its own.

I may not agree with Ron Paul on much, but at least he has a functioning brain that knows how to think consistently. But Perry's just dim, and apparently so is his spokesman.

Every year the Social Security Administration releases data on the previous year's wage income. It comes from SSA's Medicare tax database, which processes W-2 forms and includes all wages, salaries, bonuses, independent contractor net income, and other compensation. In 2010, total wages and salaries amounted to $6 trillion.

David Cay Johnston has all the latest numbers and reports on what they tell us:

The median paycheck — half made more, half less — fell again in 2010, down 1.2 percent to $26,364. That works out to $507 a week, the lowest level, after adjusting for inflation, since 1999.

The number of Americans with any work fell again last year, down by more than a half million from 2009 to less than 150.4 million. More significantly, the number of people with any work has fallen by 5.2 million since 2007, when the worst recession since the Great Depression began, with a massive taxpayer bailout of Wall Street following in late 2008.

There's more at the link. The chart below summarizes the grim news.

Ryan Cooper has a fascinating item over at the Washington Monthly about Herman Cain's role in deep-sixing Bill Clinton's healthcare plan. It's worth a read before Cain's 15 minutes are up and we all forget he ever existed.

It's also fascinating because it includes a video clip of Cain debating Clinton at a town hall meeting in 1994. Go watch! Two comments:

  • It's just awesome what a storehouse of knowledge Clinton is. Off the top of his head he knew the average payroll cost of a food service business, he knew how much health insurance cost them, and he knew how much an increase in insurance costs would likely raise the final price of their product. Holy cow! And he reeled all this off without seeming even slightly professorial or highbrow.
  • Cain hasn't changed a bit in the past 20 years. Clinton's math in this clip sure sounds right to me, but Cain's answer was, basically, "You're wrong," followed by a blizzard of dodgy numbers. Sound familiar? He's still saying this anytime someone tells the truth about one of his plans. "You're wrong" appears to be his all-purpose answer to everything.

Apples and Oranges

Joe Klein scores last night's Republican debate and makes a couple of underappreciated points. First:

Romney v. Cain — This was a clean kill for Romney, and an impressive bit of debating. He led the in-over-his-head Cain into a dialogue about apples and oranges, Cain’s chosen metaphor, as if the Hermanator were a third-grader. The Nevada state sales tax was an apple. The 9-9-9 sales tax was an orange. The citizens of Nevada would be paying both. QED and Sayonara.

Yep, this was the slickest bit of technical forensics we've seen yet in the Republican debate marathon. Romney just filleted Cain in that exchange — something that obviously slipped my mind last night when I said that no one really drew blood against Cain. Romney sure did. And I continue to think that Romney didn't do badly in his testy exchange with Perry, either. The fact is that it's next to impossible to score a clean win against someone who just flatly won't shut up. But Romney did OK even so. There was the hand of dominance on Perry's shoulder, there was the bit about Perry being "understandably" testy because he'd had a rough start to his campaign, and there was the fact that, eventually, he did get Perry to shut up — and to make Perry look like a recalcitrant child in the process. (Did you see the look on Perry's face when he stopped talking? He looked only barely in control of himself. Definitely not presidential.)

And Klein also had this comment about the immigration exchanges:

It should also be noted that all this macho posturing about electrified fences, crocodiles etc. avoids the most basic fact about illegal immigration — it is down dramatically. The bad economy means there are fewer jobs to lure illegals. The efforts of the last several Presidents has significantly beefed up Border Patrol, fencing and high-tech surveillance. And the Obama Administration has been very tough on illegals — almost 400,000, a record, have been deported in the past year. [See here for more on this. –ed.]

Yep again. I don't really have a big problem with beefing up the border patrol, but the real answer to illegal immigration (in the short term, anyway) is to lower the cost of legal immigration by boosting quota levels and to raise the cost of illegal immigration by making it unprofitable for employers to hire undocumented workers. That means getting E-verify to work and then tightening up the enforcement and penalties on employers who cheat. It will be interesting to see if the American public actually supports this once they see the results (no more cheap gardeners, no more cheap vegetables, etc.), but the basic idea is hardly impossible to implement.

On the other hand, I call a foul on Jay Newton-Small for this:

For a man in trouble for once upon a time leasing a hunting camp with a racially-charged name, should Rick Perry be calling Herman Cain “brother”? Or offering to bump fists with him? Perry certainly didn’t call any of the other candidates “brother” last night. Just saying....

Oh come on. Andrea Mitchell was going on about this on her show this morning too, and it's ridiculous. "Brother" just sounds like a Southernism to me, and Perry said he'd "bump plans" with Cain, not bump fists. Let's leave this nonsense to the Twitterverse.

Jim Hamilton, an economist at UC San Diego who has done extensive work on the economics of oil spikes, has just published a summary of the current state of oil macroeconomics called "Oil Prices, Exhaustible Resources, and Economic Growth." His conclusion: "The historical record surely dictates that we take seriously the possibility that the world could soon reach a point from which a continuous decline in the annual flow rate of production could not be avoided."

Translation: peak oil might not be far away, and we should take it pretty seriously. And Hamilton's research suggests strongly that when peak oil does arrive, it's not going to be pretty:

Coping with a final peak in world oil production could look pretty similar to what we observed as the economy adapted to the production plateau encountered over 2005-2009. That experience appeared to have much in common with previous historical episodes that resulted from temporary geopolitical conflict, being associated with significant declines in employment and output. If the future decades look like the last 5 years, we are in for a rough time.

Most economists view the economic growth of the last century and a half as being fueled by ongoing technological progress. Without question, that progress has been most impressive. But there may also have been an important component of luck in terms of finding and exploiting a resource that was extremely valuable and useful but ultimately finite and exhaustible. It is not clear how easy it will be to adapt to the end of that era of good fortune.

"Pretty similar" to 2005-09 means a big spike in oil prices that causes a big recession. The chart on the right shows what he means. The green line shows expected economic growth. The dashed line shows the Great Recession. And the red line? That's his estimate of the effect of the huge spike in oil prices in 2007-08. If Hamilton is right, then the oil spike is responsible for about two-thirds of the Great Recession all by itself. The housing and credit bubbles are only responsible for a fairly small piece of it.

But even if Hamilton is wrong about the precise trajectory of the 2008 meltdown, the evidence is now clear that oil spikes have a very significant effect on the economy. And as the production of oil starts to plateau, oil prices are going to spike a lot. In fact, they're likely to spike every time the global economy starts to grow. As I said the last time I reported on Hamilton's work:

If this model is accurate—and if the ceiling on global oil production really is around 90 mbd and can be expanded only slowly—it means that every time the global economy starts to reach even moderate growth rates, demand for oil will quickly bump up against supply constraints, prices will spike, and we'll be thrown back into recession. Rinse and repeat.

Hamilton's language is cautious, but this is basically what he's saying. Oil controls our economic future more than we'd like to believe.

Via Stuart Staniford, who calls Hamilton's paper "thoroughly researched, superbly argued, and very clearly written."