Pork Makes a Comeback

Republicans, of course, are against earmarks. They're a sign of the corruption of the budgeting process. They drive up federal spending. And they put politics before common sense. Bad, bad, bad.

Unless, um, they're hidden. MoJo's Adam Weinstein reports today on MFET, a $1 billion defense appropriation slush fund approved in the House version of the Republican budget, $650 million of which is being funneled to members' pet projects:

Details on the size or beneficiaries of the projects funded by the MFET are hard to discern from the defense bill's lengthy list of procurements. But armed services committee members on both sides of the aisle have left clues. In the days following the voice vote approving their budget, they pumped out press releases trumpeting the projects they'd scored for their districts. Since the MFET funds came from other cuts in the Pentagon budget, the members could claim their projects would be offset by spending cuts elsewhere. Rep. Allen West (R-Fla.), a tea party freshman who sees himself as a budget hawk, secured $8 million for engines for Army drones, funded by savings from "wasteful DOD offsets." Rep. Chris Gibson (R-N.Y.) bragged that he'd secured a federal study to open a nanotechnology lab on the SUNY-Albany campus in his district, as well as $7 million in funding for additional nanotech research. Rep. Martin Heinrich (D-N.M.), announced $3 million in funding for a nonprofit called the Technology Ventures Corporation, which would "help expand innovation in New Mexico's emerging satellite industry."

Ah, Washington. Not only are these earmarks, despite some laughable attempts to suggest otherwise, but they're stealth earmarks that don't even have to be disclosed. This actually makes them worse than old style pork. It turns out you can take the boy out of the pig sty, but you can never take the pig sty out of the boy.

Deductions For Me, But Not For Thee

Via a link from Ezra Klein, I skimmed through Yuval Levin's big piece about reforming the welfare state in National Affairs this morning. I won't pretend to agree with much of it, starting with the overwrought premise that the country is inevitably going bankrupt and ending with prescriptions that are almost entirely punitive toward the middle class. But all that aside, I was bemused by #1 on Levin's outline of how to fix things:

It would begin with a simple and predictable tax system, with a broad base and low rates, free of most of today's deductions and exclusions. The only three worth keeping in the individual tax code are the tax exemption for retirement savings (which are far preferable to universal cash benefits to retirees), a unified child tax credit (to encourage parenthood and to offset the mistreatment of parents in the tax code), and the charitable-giving deduction (since a reduction in government's role in social welfare must be met with an increase in the role of civil society, which should be encouraged). These three exemptions are directed precisely to the needs of a modern society, and to addressing the three broad failings of the social-democratic welfare state.

This really doesn't work. If you think, say, that the mortgage interest deduction is bad policy and we ought to get rid of it, that's fine. Make your case and push to get it repealed. Ditto for all the other tax expenditures in the tax code.

But what you really can't do is argue that deductions are inherently bad and we should get rid of them all — except for these two or three pet ideas that I really truly think are worth making an exception for. You either think that tax expenditures are distortionary and therefore bad policy in general, or you think that it depends on exactly which ones we're talking about and prefer to look at them on a case-by-case basis. After all, every tax expenditure in the current tax code is there because someone thought it encouraged some kind of worthwhile behavior that was directed to the needs of a modern society. If you insist that your three exceptions are worthy ones, then you have to accept that other people are going to find worthy exceptions too.

Personally, I'm in the "case by case" camp. It's always satisfying to take a hard line and demand that the tax code be pure, but human nature just doesn't seem to work that way. Everyone has behavior they believe should be encouraged or discouraged, and sometimes the tax code is the most efficient way of doing it. I'm happy with efforts to scrape barnacles away periodically, but there's no point in pretending that the hull is going to stay clean forever. And there's especially no point in doing it if you yourself have several pet barnacles of your own.

Voter Fraud at Dunkin' Donuts?

Jon Chait has a good post this morning about a Politico story that simply insists on finding some kind of Democratic counterpart to the gruesome and longstanding efforts of Republicans to make it harder for Democratic-leaning groups to vote. In Politico's defense, their stale attempt at faux evenhandedness only takes up two paragraphs, but the tone of the article throughout suggests that this battle is roughly equivalent on both sides, as if suppressing votes were pretty much the same thing as encouraging votes. You'd think we'd be past that by now, but apparently not.

But that's not what this post is about. It's about this paragraph from the story:

“I don’t know why everybody’s so puzzled by this,” said Florida state Rep. Dennis Baxley, R-Ocala, sponsor of a controversial election-reform law there....Baxley said the lax address requirement opened the door to abuse, like a city council election he heard about in which the “pro-family” candidate was favored to win until his opponent, “a homosexual activist candidate,” bused in homosexuals from other parts of the state who showed up at the polls and claimed residency at an address occupied by a local Dunkin Donuts.

Chait cautiously says he "strongly" suspects that "the whole story is an exaggeration at best, and a pure fantasy at worst." I think I'll go with pure fantasy myself, even though I have no idea where this story comes from or what urban legend is behind it. This means some enterprising right winger has an opportunity to make me look like a knee-jerk liberal shill who's never willing to concede even the possibility that conservatives might be acting in good faith. All you have to do is find the wellspring of this story and demonstrate that there's something to it.

Anyone can play. I did a bit of desultory googling, but that's about all the time I can afford to spend on this right now. But I really am curious, in an academic sort of way. Has anyone ever heard this story before? Where did it come from? Is there even a remote grain of truth anywhere in it?

Big Government's Biggest Friend

Grover Norquist is best known as the right's most fervent enforcer of anti-tax ideology, but that's actually not quite what he is. Norquist, whose most famous quote is the one about shrinking government until it's small enough to drown in a bathtub, is actually opposed to anything that raises government revenue. That's a subtle difference but a real one, because taxes in the classic sense aren't the only way to raise revenue. You can also close tax loopholes, for example. Norquist is against that. Or you could fund Medicare using my idea of running up a bill for Medicare services while you're alive and then having the government settle accounts with your estate after you're dead. This has much to recommend it from a conservative perspective (personal responsibility, skin in the game, long-term budget balancing, etc.), and it's not a tax in the usual sense. It's a deferred charge for services rendered. But Norquist would oppose that too since it raises revenue.

None of this would matter except that Norquist exercises an almost cultish power over Republican members of Congress. And as Matt Yglesias says, this is probably the biggest impediment around to a compromise agreement that would rein in the long-term budget deficit:

Follow the logic here. According to the Norquistian theology, a good small-government conservative can’t agree to close a tax loophole that’s bad public policy in order to entice Democrats into agreeing to spending cuts. You can’t achieve efficiency enhancing reforms to the tax code by using the prospect of enhanced revenue as a sweetener, and you can’t broaden the coalition for spending cuts by using enhanced revenue as a sweetener. So the tax code stays inefficient and the spending level stays high, all so the members of the True Faith can be unsullied in the purity of their complaints about the inefficiency of the tax code and the high level of spending.

That's about it. There are compromises to be had in this arena, where liberals would agree to some spending cuts and conservatives would agree to reducing tax expenditures and tax subsidies. But there's no real compromise to be had for a deal that's pure spending cuts forever and ever, and that's the only deal Republicans will accept. So government won't shrink at all, let alone to bathtub size. And yet, Grover Norquist somehow keeps his reputation as the Beltway's greatest friend of small government. Isn't politics grand?

C'mon, Give Me a Tough One

The normally mild-mannered Felix Salmon wakes up, rubs the sleep out of his eyes, and starts out the week by noting that the rejection of Elizabeth Warren to regulate consumer finance is entirely indefensible while the rejection of Peter Diamond for a seat on the Fed is just plain batshit crazy. Then he asks:

Is it even possible, at this point, for the Obama administration to nominate someone who the Republicans won’t automatically oppose on the grounds that he or she is an Obama nominee? And if it’s not possible, does the whole stalemate just become a shouting match?

Me! Me! Call on me! I can answer those questions! The answers are (a) No and (b) Yes. Any other questions?

Miscellany

Jon Cohn on the almost unfathomable childishness of Richard Shelby's temper tantrum over Nobel prize winning Fed nominee Peter Diamond.

Recently retired Mossad chief Meir Dagan on the current Israeli leadership and its reckless attitude toward peace.

Lori Montgomery of the Washington Post on the GOP's anti-tax jihad and why it's not likely to end anytime soon.

Are the Luddites Finally Right?

Jared Bernstein says that productivity growth is good for the economy and good for employment. At least, it used to be:

People sometimes worry that we’re getting too productive, able to satisfy the demands of our economy with “too few” workers. That’s an age-old worry, and those who want to downplay it cite the fact that, as the graph shows, there is a positive, not a negative, correlation between productivity and job growth overtime....But look at the end of the graph. Productivity accelerates while employment growth decelerates. And that ain’t no blip either…it suggests the possibility of a structural change in this relationship.

This is a useful chart. As I mentioned Sunday morning, I don't think there's a big mystery about why unemployment is high right now: consumers are still deleveraging instead of buying stuff, so consumer demand is low and that means there's no reason for businesses to invest or hire people.That's 70% of the problem, anyway, and we could address that 70% with more aggressive monetary policy and/or more aggressive fiscal policy. Still, it seems plausible that there's a chunk of the problem that might be more structural, and it's not a problem that suddenly popped up a couple of years ago. It's a problem that started a decade ago but was masked by the high fever of a housing bubble. And it means that either our productivity gains since then have been a mirage or else that productivity gains now leak out of the economy and no longer drive employment gains.

I don't know which it is, and it certainly shouldn't stop us from doing what we can to fix the current demand shortfall and get the economy back on track. But it's something to think about for the future. If this breakdown is real, it has some real consequences for the next few decades.

This Weekend's Score: Technology 1, Kevin 0

So here's a weird thing. When I do a Google image search, I get a screen that looks like this:

What's weird is that this isn't what a Google image search looks like. It looks like this:

What's even weirder is that Google switched to this new look nearly a year ago. The reason I didn't know about it until recently is because nothing ever changed on my browser. It just kept returning images the same old way.

Very strange. This all came to my attention because a few days ago Google stopped giving me more than one page of image results. When I click on the second page I just get an error message. So I checked around and eventually discovered that I was stuck on an old version of image search for some reason — at least, I was stuck there on Opera, which is my normal browser. But when I cranked up an image search in either Firefox or IE, I got the new version. At the bottom of this new version, I learned, there's a link called "Switch to basic version," which is apparently what the old results page is now called. But at the bottom of the basic version, there's no link called "Switch to new version." So I'm stuck with a single page of results from the old version and no way to switch to the new version.

And even weirder: after playing around a bit, I discovered that if I left click normally on the second page of image results, I get the error I mentioned above. But if I right click and then click "Open," the second results page comes up fine. So there's some kind of difference now between normal left clicking vs. right clicking and using the context menu. Isn't technology wonderful?

Why is Unemployment Still So High?

In a story about the possibly structural causes of our continuing deep unemployment, Don Lee of the LA Times provides us with this example:

Paul Perez, 28, who lives at his parents' home in Whittier, was unemployed for nearly a year before he landed a part-time job in April. He now unloads trucks and shelves goods at a home improvement store for $10.25 an hour.

He said he's happy to be working, but with a master's degree in religious studies from Cal State Long Beach, Perez aspires to earn more so he can get his own place and begin an independent life.

Hmmm. That's a chin scratcher, isn't it? I wonder why a guy with a master's degree in religious studies from a middling state university would be having trouble finding a job during an economic slowdown? I really don't think you need any esoteric explanations of the recession to figure that out.

On the broader question, I'm not sure what to think. Lee suggests there are three reasons why unemployment remains so stubbornly high, and #3 on his list is a very brief acknowledgement of the ongoing debt deleveraging that continues to ravage consumer spending and "acts as a massive drag on the economy." He also gives a shout out to the deficit mania that prevents the federal government from doing anything constructive about this.

Overall, though, he's trying to tell a story that our current woes are structural, not cyclical. This is tricky. On his list of causes, #1 and #2 are technology improvements and stiffer foreign competition, and I don't think #1 really holds water. As Lee admits, the IT revolution has been underway for decades, and contrary to what he says, I'm not sure there's much evidence that "it appears to have accelerated" recently. As Michael Mandel points out, business investment plummeted in 2008 and it's remained lethargic ever since. It's just not true that unemployment has remained high even though businesses have been on an equipment spending spree. In fact, business investment has been anemic.

But #2 — well, I'm not sure. Michael Mandel also has a lot to say about that, and I haven't really absorbed it yet. He makes the case that measurement problems in the tradable sector are causing us to overestimate productivity gains and that this has profound implications for employment. Oddly, though, considering how provocative his thesis is, it appears to have gotten only scant discussion among economists in the blogosphere. So I'm not quite sure what to think about it. Frankly, the evidence against a primarily structural explanation of the recession still seems pretty strong — I'd guess that the causes of our current unemployment catastrophe are about 70% cyclical and 30% structural — but I'd like to understand Mandel's argument better. I'll keep plugging away at it.

Will Redistricting Save California?

This is a totally inside baseball post for fellow Californians who know more about what's going on in Sacramento than I do. As background for everyone else, California has an enormous hole in its budget and Gov. Jerry Brown wants to plug that hole with a combination of spending cuts and tax extensions. However, you need a two-thirds vote in the legislature to raise taxes, and Democrats are a couple of votes short in both the Senate and the Assembly. Negotiations have been ongoing with the tiny handful of Republicans who are at least willing to talk, but they've gone nowhere.

So, anyway, it all looks hopeless. But maybe not! I was chatting with a friend on Memorial Day who deals with lots of Sacramento lobbyist types, and he said those lobbyists were unanimously reporting that there was no problem. A deal would be made and revenue would be raised. I was astonished. Sure, that might be true, but it sure doesn't look that way right now. What makes these lobbyists so confident?

Answer: redistricting. In a few days a commission will announce California's new legislative districts based on the 2010 census, and some number of legislators are going to find themselves without a home and without a political future. Some of them will be Republicans, and those Republicans will be willing to cut a deal with Brown because they don't have to worry about the wrath of the voters anymore.

Hmmm. Really? It seems to me the same thing could be said about legislators who are being booted out in 2012 due to term limits, but that doesn't seem to have helped the process along. Part of the problem is that only a handful of Republicans are being termed out, and all but three or four of them are ultraconservatives who aren't going to compromise on taxes regardless of their future. I'd be surprised if redistricting ended up impacting more than two or three non-wingnut Republicans either.

But what do I know? So I put it to my California readers who follow state politics closely: are my friend's lobbyists super plugged in and know things the rest of us don't? Or are they just telling their bosses what they want to hear? Is redistricting Jerry Brown's secret hope for a deal with Republicans to extend the tax hikes that were put in place a couple of years ago? Or is this just whistling into the wind?