Kevin Drum

Dick Durbin Takes On the Debit Card Mafia

| Fri May 28, 2010 3:03 PM EDT

Sen. Dick Durbin successfully passed an amendment two weeks ago that would limit the outrageously high interchange fees that Visa and MasterCard charge merchants for debit card transactions. This was a big win that reins in some pretty indefensible industry practices, but Visa and MasterCard are (unsurprisingly) fighting back. How? Well, they can hardly expect to gain much sympathy for either themselves or the Wall Street giants whose profits might get trimmed by Durbin's amendment, so instead they're mounting a coordinated campaign that claims it's small credit unions who will suffer the most. This is despite the fact that Durbin's language specifically exempts banks with less than $10 billion in assets and specifically requires merchants to accept all cards in a particular network regardless of which bank issues them. If a small credit union charges a higher fee than Citibank, your local 7-11 would have to take their Visa debit cards anyway.

So small credit unions are pretty well covered. But that hasn't stopped Visa and MasterCard from taking to the parapets anyway. Via Annie Lowrey, though, it looks like Durbin is fighting back. Here's a letter he sent to the CEOs of Visa and MasterCard:

It appears that, in an effort to frighten small banks and credit unions into opposing the amendment, your companies are threatening to make changes to your small bank interchange fee rates and to your network operating rules. These changes, which are not in any way required by the amendment, are unnecessary and would disadvantage small card-issuing institutions.

I ask you each to state unequivocally that you are neither threatening nor planning to take steps that would purposefully disadvantage small institutions, should the amendment become law. Further, I warn you that if your companies coordinate with each other or collude with your largest member banks to make changes to your fees and rules, it would raise serious concerns that you are engaging in an unlawful restraint of trade.

Good for Durbin. I hope he follows through with this.

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Chart of the Day: Median Voters Unite!

Republicans need to move to the center, but they probably haven't figured that out yet.

| Fri May 28, 2010 1:25 PM EDT

Has the Republican Party lost sight of its roots? Does it need to return to a purer version of conservatism in order to return to power? Alan Abramowitz takes a look at the recent evidence in Senate races and concludes just the opposite: the more conservative a Republican candidate is, the worse they perform:

The results in Figure 1 show that there was a fairly strong negative relationship between conservatism and electoral performance. The more conservative the voting record, the worse the performance of the incumbent. Republican senators with moderate voting records like Olympia Snowe, Susan Collins, and John Chafee generally ran well ahead of the Republican presidential candidate in their state while those with very conservative voting records like John Ashcroft, James Inhofe and Jim Bunning frequently ran behind the Republican presidential candidate.

Italics mine. Abramowitz then goes on to rerun the data while controlling for things like the strength of the challenger, the national political climate, and the presence of any major scandals or controversies involving the incumbent. The results are the same: "For every additional one point increase in conservatism, Republican incumbents lost an additional three percentage points in support relative to their party's presidential candidate."

For the time being, none of this matters. Parties that suffer stunning losses — the Democrats in 1980, for example, or Britain's Labor Party in 1979 — frequently decide that they need to double down and return to the true faith. After losing a few more elections they finally move to the center and start winning again. I imagine the same will happen to Republicans. They're sure to win seats in this year's midterm, which will confirm them in their view that hardcore conservatism is what America wants, and they'll have to lose badly again in 2012 to finally convince themselves otherwise. By 2016 they might be ready for prime time again.

GOP Takes Over the Tubes

Republicans are better at social media than Democrats.

| Fri May 28, 2010 12:25 PM EDT

Back in the early aughts, liberals took an early lead in the blogosphere and never looked back. Conservatives were apparently too stodgy, too top-down oriented to make effective use of online technology. But Stephanie Mencimer reports that now the worm has turned:

When it comes to employing Facebook, YouTube, Twitter, and other social-media sites, Republicans are whipping their opponents across the aisle, creating a growing tech gulf that threatens important implications for the 2010 mid-term elections.

Boehner, for instance, has 42,967 Twitter followers. And Pelosi? Well, she can’t have any followers, because she doesn’t tweet. Patrick Bell, the director of new media for House Republican Conference vice chairwoman Cathy McMorris Rodgers, keeps close tabs on what the Dems are up to. He says that as of January 2010, only 34 percent of Democratic House members were on Facebook and only 20 percent had hit Twitter. Meanwhile, since January 2009, the percentage of House Republicans using Facebook has jumped from 37 percent to 79 percent (as of early April). Sixty-four percent of these GOPers are on Twitter, compared with 28 percent in January last year. And 89 percent now have a YouTube channel, compared with 56 percent last year.

....[An] initiative to get more members virtually engaged appears to have succeeded wildly. In April, Rodgers launched a six-week contest organized like a "March Madness" ladder that was designed to nudge members of Congress into the Twittersphere. It seems to have succeeded wildly. This "new media challenge" is about to come to an end this week, as Rep. John Fleming (R-La.) and Rep. Phil Gingrey (R-Ga.) duke it out for championship title as the House member with the most increased social media use. (The winner will be announced after the Memorial Day break — on Twitter, naturally.)

I'm going to take a guess here: online technology is fundamentally more attractive for insurgents than it is for the party in power. Partly this is because the party in power already has lots of other tools available for fundraising and communications. Partly it's because the party in power is more invested in leadership keeping control of its message. Partly it's because the party in power is just flat out busier with the actual work of governing. And partly it's because online chatter is riskier: if you're tweeting all day long you're bound to screw up sometime and say something stupid. That's more dangerous for the party in power than it is for the party out of power.

The political internet, at least in its current incarnation, is fundamentally crowd-based. Anyone can jump in, nobody's in control, and it's an ideal medium for people who are pissed off at the establishment (including their own establishment) and are looking for a way to break through. In other words: people who are out of power. In the early Bush era, this was liberals, and the blogosphere was the cutting edge of online activism. So liberals took over the blogosphere and made it into a liberal duck pond. Today it's conservatives, and social media is the cutting edge of online activism. So it's not surprising that conservatives are doing the same. Nancy Pelosi probably figures she has better things to do.

That's my guess, anyway. For what it's worth, though, I don't expect this state of affairs to last much longer. The internet is very quickly outgrowing its adolescence, and before long it's not going to be any more friendly to insurgents than 30-second radio spots or mass fundraising appeals. Enjoy it while you can.

The Sestak Quid Pro Quo

The job offer from the White House, it turns out, really was contingent on dropping out of the Senate race.

| Fri May 28, 2010 11:27 AM EDT

Peter Baker provides some further information about what kind of job was offered to Joe Sestak last year:

Rahm Emanuel, the White House chief of staff, asked [Bill] Clinton to explore the possibilities last summer, according to the briefed individuals, who insisted on anonymity to discuss the politically charged situation. Mr. Sestak said no and went on to win last week’s Pennsylvania Democratic primary against Senator Arlen Specter.

The White House did not offer Mr. Sestak a full-time paid position because Mr. Emanuel wanted him to stay in the House rather than risk losing his seat. Among the positions explored by the White House was an appointment to the President’s Intelligence Advisory Board, which provides independent oversight and advice the president. But White House officials discovered it would not work because Mr. Sestak could not serve on the board while still serving in Congress.

....The office of Robert F. Bauer, the White House counsel, has concluded that Mr. Emanuel’s proposal did not violate laws prohibiting government employees from promising employment as a reward for political activity because the position being offered was unpaid. The office also found other examples of presidents offering positions to political allies to achieve political aims.

This explains a lot. The job offer really was a quid pro quo because an unpaid appointment would have been an additional position, not a replacement for his current job, and it was contingent on Sestak dropping out of the primary. And since Bill Clinton was involved, this ends up indirectly involving Hillary Clinton too.

This still strikes me as big nothingburger: presidents engage in political horsetrading all the time. At the same time, it's starting to make a little more sense why everyone has been so reticent to talk about it. Regardless, I still think this is a 2-day story once the White House and Sestak produce more details. A week tops. There's just nothing serious here.

Twenty-Somethings on Elena Kagan

They're moving past the culture war stuff. Maybe the rest of us should too.

| Fri May 28, 2010 1:25 AM EDT

Hey, remember Elena Kagan? Dean of Harvard Law, Solicitor General for Barack Obama, nominated to the Supreme Court a few weeks ago? Yeah, that Elena Kagan. The one who's been the subject of endless speculation about her wardrobe, sexual identity, and judicial philosophy. Well, Dahlia Lithwick says that nobody under 30 gives a fig about two-thirds of that:

Young people reading Robin Givhan's article on Kagan's scandalously open knees think they're reading something hilarious from their grandparents' stack of dating magazines from the 1950s. When they hear us yelping about racial diversity at the court, they think about the fact that their classrooms are already incredibly diverse and their Facebook friendships span continents. When they hear us shrieking over women's softball, they shake their Title IX heads and figure we're just idiots for thinking straight women don't play sports. And when they hear us whispering behind our hands about whether someone is gay, most of them tell me they think we're just freaking idiots. Just as they embody Barack Obama's post-racial America, they identify almost completely with Kagan's post-gender America — in which womanhood simply isn't defined by skirts, babies, or boyfriends anymore.

Good job, young people! But we still have that whole judicial philosophy thing to hash out. It would sure be nice if we knew a little more about that.

Why BP is the Anti-Katrina

"Obama's Katrina?" Absolutely not.

| Thu May 27, 2010 5:15 PM EDT

Yuval Levin today:

I think it’s actually right to say that the BP oil spill is something like Obama’s Katrina, but not in the sense in which most critics seem to mean it.

It’s like Katrina in that many people's attitudes regarding the response to it reveal completely unreasonable expectations of government. The fact is, accidents (not to mention storms) happen. We can work to prepare for them, we can have various preventive rules and measures in place. We can build the capacity for response and recovery in advance. But these things happen, and sometimes they happen on a scale that is just too great to be easily addressed. It is totally unreasonable to expect the government to be able to easily address them — and the kind of government that would be capable of that is not the kind of government that we should want.

This conflates two very different things. Katrina was an example of the type of disaster that the federal government is specifically tasked with handling. And for most of the 90s, it was very good at handling them. But when George Bush became president and Joe Allbaugh became director of FEMA, everything changed. Allbaugh neither knew nor cared about disaster preparedness. For ideological reasons, FEMA was downsized and much of its work outsourced. When Allbaugh left after less than two years on the job, he was replaced by the hapless Michael Brown and the agency was downgraded and broken up yet again. By the time Katrina hit, the upper levels of FEMA were populated largely with political appointees with no disaster preparedness experience and the agency was simply not up to the job of dealing with a huge storm anymore.

The Deepwater Horizon explosion is almost the exact opposite. There is no federal expertise in capping oil blowouts. There is no federal agency tasked specifically with repairing broken well pipes. There is no expectation that the federal government should be able to respond instantly to a disaster like this. There never has been. For better or worse, it's simply not something that's ever been considered the responsibility of the federal government.1

In the case of Katrina, you have the kind of disaster that, contra Levin, can be addressed by the federal government. In the case of the BP spill, we're faced with a technological challenge that can't be. They could hardly be more different.

But there is one way in which they're similar. As Levin says, Katrina would have been an immense disaster no matter what. But it was far worse than it had to be because a conservative administration, one that fundamentally disdained the mechanics of government for ideological reasons, decided that FEMA wasn't very important. Likewise, the BP blowout was made more likely because that same administration decided that government regulation of private industry wasn't very important and turned the relevant agency into a joke. If you believe that government is the problem, not the solution, and if you actually run the country that way for eight years, it becomes a self-fulfilling prophecy. But we shouldn't pretend it's inevitable.

1Just to be clear: I'm talking here only about capping the leak itself. As T.R. Donoghue points out, the feds do have an overall plan for responding to and cleaning up spills.

UPDATE: I was only talking about the post-Katrina response by FEMA in this post, but John McQuaid usefully points out that none of the major damage would have happened in the first place if the federal government had done a decent job building the hurricane levee system in New Orleans. If you believe that this is just another example of why you shouldn't trust the government to do anything right, then that's a point in Levin's favor. If you believe that it's another example of why we should make sure government works better, then it's a point in mine.

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Oil Spill Kabuki

If the president takes charge, he's screwed. If he doesn't, he's screwed.

| Thu May 27, 2010 3:15 PM EDT

I feel like I should say something about the big press conference Obama just held. It's not like he does a whole lot of them. But it seemed pretty soporific to me. On the one hand, it's true that when he said he was "angry and frustrated" about the BP oil spill, he sure didn't seem very angry or frustrated. On the other hand, watching the CNN dimwits after the conference solemnly advising us one after one that Obama really needed to be more emotional because that's what the American people want — well, screw that. I have no idea what the American people want, and neither do they.

Honestly, this is just one of those lose-lose situations where Obama's long view of politics will hopefully serve him well. It's pretty plain, after all, that there really isn't much the federal government can do. All the expertise for dealing with stuff like this lies with the big oil companies. And every big oil company is working on it already. The problem isn't a lack of effort on their part or on the part of the government.

But Major Garrett wants to know if Obama really has his "boot on BP's neck," and everyone else seems to be nodding along. I guess it's the kabuki of our times. The president has to be In Charge whether he can actually do anything or not.

Of course, what everyone should be asking is not what the feds are going to do about capping the leak, but what they're going to do to make sure all the oil is cleaned up afterward. That's finally starting to get some attention now that oil is onshore, but the story is much bigger than that. There's 20 million or more gallons of oil sitting in a huge underwater plume off the shore of Louisiana right now, and the big question is what BP is going to do about that. And what we're going to do to make deepwater platforms safer in the future. If the "top kill" effort to stop the spill works, the dramatic part of this story will finally be over. The real part will just be starting.

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New York Has Country's Dumbest Drivers

New Jersey a close second, DC and California come next. Kansas comes out on top.

| Thu May 27, 2010 2:36 PM EDT

The results of the GMAC National Drivers Test are out, and this year the most knowledgable drivers in the country come from.....Kansas! Hooray for Kansas. Oregon, South Dakota, and Minnesota get honorable mentions. The least knowledgable come from New York. Boo New York. New Jersey, DC, and California have nothing to brag about either. Click here to see how your state did.

Thirsting for more? The GMAC test has 20 questions, and nearly 20% of Americans failed by getting a score of less than 14. Older drivers did better than younger ones. Men did better than women. Toughest question: what should you do at a yellow light? 85% of drivers got it wrong.

(Full disclosure: I got it correct, but only by sussing out the "right" answer. My typical behavior is much more in line with the 85%. I think you can guess what I'm talking about here.)

Anyway, more details here. You can take the test here. I got 19 out of 20 correct. If you know what a diamond-shaped sign means, you have a chance of beating my score.

Does Privacy Have a Future?

For the rich, yes, but for the poor, probably not.

| Thu May 27, 2010 1:37 PM EDT

The London Times recently announced that they would be putting their entire paper behind a paywall. Their view is pretty simple: giving away their news for free cuts into subscription revenue but produces almost nothing back in the way of ad revenue because advertisers aren't willing to pay much for the "useless tourists" who drop by new sites occasionally but aren't serious about either the news itself or the advertising. Paying customers, conversely, tend to be demographically more desirable and they spend more quality time looking at both the news and the accompanying ads. So charging for access should be a net benefit. Felix Salmon comments:

The logic here has existed in print publications for years: newspapers with a cover price tend to have higher ad rates than free sheets, because their readership is more affluent and is also more likely to actually read the paper (and see its ads).

....But the fact is that online there are much more useful and granular ways for an advertiser to work out who they're targeting, beyond just saying “we want people who are willing to pay to read this publication”....The fact is that if I sign in to a free site using my Twitter login, I'm actually more valuable to advertisers than if I paid to enter that site. That's because the list of people I follow on Twitter says a huge amount about me, and a smart media-buying organization can target ads at me which are much more narrowly focused than if all they knew about me was that I was paying to read the Times.

We're not quite there yet. But it seems to me that online publications are making a big mistake if they make subscribers go through a dedicated registration and login process, because the demographic information they can get from that will be less useful and less accurate than if they outsource the reader-identification procedure to Twitter or LinkedIn or Facebook. And people will definitely enjoy an automatically personalized reading experience, where they can see what their Facebook friends are reading and what the people they follow on Twitter are reading.

I have an abiding fear that Felix is right. There's an analogy here to the world of supermarkets. In the past, supermarkets charged everyone the same price and made a small profit margin doing it. Then came loyalty cards. And they were popular! So once one supermarket started offering them, everyone else did as well. Eventually they were ubiquitous.

Today, overall supermarket prices are still the same as they've always been, they're just tiered differently: those with cards pay less and those without cards pay more. So on average, consumers haven't benefited. What's more, competition is generally fierce in the supermarket biz, which means that overall profit margins are also the same as they've always been. So supermarkets haven't benefited.

So who has benefited? Well, as near as I can tell, the answer is: marketing firms. Loyalty cards generate mountains of purchasing data that allow third parties to target advertising more effectively. This is great news for marketing companies and their clients. Whether it's great news for the rest of us is a little harder to determine.

But this might be the news model of the future. Basically, you'll be able to get access to the Times two ways: either by paying for a subscription or by registering with your Facebook/Twitter/LinkedIn ID and agreeing to give the Times access to your online life. This is roughly the same trade that we've made in the supermarket biz: pay more and maintain your privacy, or pay less in return for giving it up.

The big difference, of course, is that supermarkets had a perfectly viable business model before loyalty programs started up. Newspapers don't. This might actually be the only way they can save themselves. But it might also be a sign of much broader things to come. In the future, the poor and middle class will essentially have no privacy in their day-to-day life. They will have sold it away, because in practical terms the poor and the middle class simply can't afford to give up a 5-10% discount on everything they buy. Only the better off, who can, will have the option of maintaining their privacy.

Maybe this is OK. I don't like it, but plenty of people seem fine with the idea. But there's a reason that all this information is so valuable, and it's not because marketing firms and consumer goods companies are genuinely interested in your welfare. This is a brave new world we're stumbling into.

The Curious Case of Joe Sestak

Why on earth are Sestak and Obama acting guilty when they did nothing wrong?

| Thu May 27, 2010 12:14 PM EDT

Back in February, Joe Sestak told reporters that the White House had once offered him a federal job as an inducement not to run against Arlen Specter in the Democratic primary race for Pennsylvania's senate seat. Since then Sestak has refused to talk further about the matter and so has the White House. Republicans have tried to make hay out of this, but Stan Brand, a Washington lawyer who specializes in ethics matters, tells David Corn today that it's virtually certain that nothing illegal took place:

Though he dismisses Issa's pursuit of Sestakgate, Brand says that White House actions are keeping the scandal alive: "Gibbs dissembling doesn't help them. Don't be defensive about it. Just say this is what goes on. They're looking guilty over something that isn't illegal." He adds: "That's not the first time that this has happened."

This is surely one of the weirder pseudo-scandals of the year. It's not weird that Republicans would try to get some mileage out of it. That's politics. What's weird is two things: (1) How could Sestak possibly have been stupid enough to mention this in the first place? and (2) Why don't he and the White House just tell us about it?

As to #1, I have no idea. But #2 is murkier. Republicans are trying to pretend that the job offer was made "in return" for Sestak not running against Specter, but that's ridiculous. A job offer is just a job offer. If Sestak accepted, he automatically wouldn't be running for office. It's like saying that I offered a cashier some money in return for not having me arrested when I walk out the door with a Blu-Ray player under my arm. It's implicit in the whole thing.

So the White House either offered Sestak a job or they didn't. If they didn't, they would have said so. So presumably they did. If they and Sestak just fessed up to this, wouldn't the story go away almost instantly? If the White House announced, say, that Sestak had indeed been under consideration for a position in the Navy Department last summer, but Sestak turned them down, then that's the end of it. It's not even good campaign fodder. All Sestak has to do is confess that in the heat of the campaign he got a little carried away and characterized it badly.

What the hell am I missing here? I just see no downside to this.