Kevin Drum

Outfoxed

| Wed Oct. 21, 2009 11:19 AM EDT

Shorter Mickey Kaus: every news organization has its own temperament, but only Fox News has Roger Ailes.

Note to the press etc.: When even Mickey agrees that Fox's brand of mendacity is in a class by itself, maybe it's time to start admitting the obvious.

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Practice: Not As Important As You Thought

| Tue Oct. 20, 2009 9:37 PM EDT

Bloomberg does some sleuthing through tax returns and reports on the income of the stage crew at Carnegie Hall:

Depending on wattage, a star pianist can receive $20,000 a night at the 118-year-old hall, meaning he or she would have to perform at least 27 times to match the income of Dennis O’Connell, who oversees props at the New York concert hall.

O’Connell made $530,044 in salary and benefits during the fiscal year that ended in June 2008. The four other members of the full-time stage crew — two carpenters and two electricians — had an average income of $430,543 during the same period.

Impressive.  Bloomberg's reporter suggests that the stagehands "benefit from a strong union."  No kidding.  But there's also this:

The Carnegie Hall board is led by Sanford I. Weill, former chairman of Citigroup Inc., and includes philanthropist Mercedes Bass, former World Bank president James Wolfensohn and Sallie Krawcheck, president of Bank of America’s wealth-management division.

OK, I see it happening like this.  It's 2005.  The union rep comes into the room and starts off with a joke.  "We're not greedy.  Half a mil a year will get us out of your hair."  Weill, who's busy trying to figure out his piece of Citi's structured finance action for the month, just laughs.  A minute later he's approved the contract and left the room.

Who says a rising tide doesn't lift all boats?

Quote of the Day

| Tue Oct. 20, 2009 3:10 PM EDT

From Andrew Ross Sorkin, on Hank Paulson's plan to meet socially with the Goldman Sachs board of directors in summer 2008 during a trip to Russia:

For fuck's sake! Wilkinson thought. He and Treasury had had enough trouble trying to fend off all the Goldman Sachs conspiracy theories constantly being bandied about in Washington and on Wall Street. A private meeting with its board? In Moscow?

"Wilkinson" is Treasury Department chief of staff Jim Wilkinson.  For the full context, see here.

Move Over, "Worthwhile Canadian Initiative"

| Tue Oct. 20, 2009 2:44 PM EDT

I hope the fine folks at CBPP won't take offense if I point out that this might be the new winner in the "Most Boring Headline Ever" sweepstakes:

Excise Tax on Very High-Cost Health Plans Is a Sound Element of Health Reform

Still, you can't argue with the truth.  It is a sound element of health reform for two big reasons.  First, since it's a tax on health plans, it rises at the same rate as healthcare costs.  This helps ensure that funding for healthcare reform stays budget neutral not just for its first ten years, but over the long haul as well.

Second, providing funding is only half its appeal.  It's also one of those rare policy measures that (a) might actually pass and (b) might actually slow down the growth of healthcare costs:

The proposed excise tax would make a major contribution to slowing the growth of health care costs by discouraging insurers from offering, and firms from purchasing, extremely generous health insurance coverage that can encourage excess health care utilization. That, in turn, would reduce incentives for excessive health care spending.

Congressional Budget Office (CBO) Director Douglas Elmendorf has stated that changing the tax treatment of high-cost health insurance to reduce its attraction is one of “two powerful policy levers” the federal government has available to encourage changes in medical practice and thereby slow the increase in health care costs. (Changing Medicare’s payment rules is the other.) “Nearly all analysts agree,” CBO has reported, “that the current tax treatment of employer-based health insurance — which exempts most payments for such insurance from both income and payroll taxes — dampens incentives for cost control because it is open-ended.”

For more geeky goodness, read the whole thing.  It might be opposed by both labor unions and Republicans, but it's still a good idea.

Financial Autopsies

| Tue Oct. 20, 2009 1:40 PM EDT

Mike Konczal writes today about the Grayson/Clay/Miller amendment, aka the "Financial Autopsy" amendment.  Basically, it would require the new Consumer Financial Protection Agency to take an annual look at the consumer products that have caused the highest rates of bankruptcy and foreclosure and report back on what ought to be done about them.  Here's Mike:

The CDC has a response team for when it finds cancer clusters. I like the idea of the CFPA having a similar response team, that can be called in for expert opinion in the case of foreclosure and bankruptcy clusters. A team of forensic accountants and financial experts who can be called in by members of Congress, or as a result of their own statistical samplings, to give opinions on what is going on on the ground in a member’s district when it comes to the end result of financial innovations. Financial detectives, if you will, who can shift through all the noise one finds with dealing with consumer finances to see if there’s any signal that is the result of changing products and options available to consumers.

And maybe the producers of House could create a spinoff series called Plank that solves financial mysteries.  Ripped right out of the headlines!

Anyway.  My first reaction is the same cynical one that Felix Salmon has: this might actually be mildly effective, so it will never see the light of day.  At least, not in any way that runs the risk of keeping it effective.

My second reaction, however, is that this is exactly the kind of thing I was talking about a while back when I objected to the Fed trying to do stuff like this.  As Mike points out in his post (and as Alan Greenspan acknowledged a few days ago), the Fed is institutionally incapable of this kind of regulation.  The only way it will ever happen is if it comes from an agency in which this is part of its cultural DNA.  An agency like the CFPA.

So how can it survive the usual gauntlet of opposition from bankers who don't want this kind of troublesome attention?  I'm not sure, but divide and conquer seems like the best bet.  There must be some corner of the financial industry (credit unions? community banks?) that mostly prospers from being careful and prudent, and would therefore benefit from having their least scupulous competitors put under an occasional microscope.  Bankers in general are so allergic to regulations of any kind that it's not clear you could get their support even for one that clearly benefits them, but you never know.  It's worth a try.

Poll Flippery

| Tue Oct. 20, 2009 1:02 PM EDT

Ezra Klein writes today about a Washington Post poll asking people if they support the idea of requiring people to get health insurance.  56% say yes, 41% say no.

But wait!  If you tell the opposers that low-income families will get assistance buying health insurance, 34% of them flip to supporting the idea:

In other words, a solid majority supports the individual mandate. And a third of the opponents become supporters if they learn that there will be subsidies for people who can't afford insurance. I'm sure you can fashion attacks that scare people about this provision, but advocates aren't struggling against an underlying philosophical objection to the basic principle.

I have an assignment for an ambitious young PhD candidate with some free time on her hands.  I've seen poll results like this a million times, and when you add some additional detail you always get a certain number of people to flip sides.  I'm pretty sure you could quote a couple of lines from Jabberwocky, ask an "in that case" followup question, and get a fair number of people to change their minds.  So what I'd like to know is: what's the average flip rate?  Obviously this depends on a lot of things, so maybe it's more than just a single number, but I guess I'd like a single number anyway.  Basically, when I see something like this I'd like to have a general idea of whether the flip rate is just the usual flip rate for everything or if it's actually bigger than usual (and therefore more meaningful).  It's sort of like wanting to know if a wage increase is bigger than inflation.  It tells me whether there's really any kind of real-world increase at all.

Of course, maybe someone has already done this research.  If that's the case, maybe some bloggily-inclined political science type would like to enlighten us about it?

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Ending the Flimflam

| Tue Oct. 20, 2009 12:36 PM EDT

Today the Washington Times parrots the latest right-wing talking point on healthcare reform:

Advocates of health care reform are relying on budget manipulations to stick with President Obama's pledge to overhaul the system without adding to the deficit, critics on and off Capitol Hill say.

Both independent budget analysts and Republicans say a Senate vote expected this week on a 10-year, nearly $250 billion Medicare reimbursement bill is the perfect example. They say it was sliced out of the reform plans because it would send the cost of Mr. Obama's top legislative priority over $1 trillion.

I assume this is all over Fox and talkradioland as well.  It's really shameless.  What Obama and congressional Democrats are doing is ending some budget trickery that's been going on for years: the annual barnyard dance in which scheduled reductions in Medicare reimbursements to doctors are put on hold.  We could keep doing this on a "temporary" basis every single year forever, of course, but what's the point?  Why not just ditch the charade and put the money back in the budget where it belongs?  It won't cost any more or less than doing it annually, but it's more honest.  Jon Chait:

So why is Obama getting attacked so bitterly over this? Because he's acknowledging it. It's the same thing that's happened to fiscal policy since he took office. The Bush administration hid the true fiscal picture with a plethora of accounting gimmicks — keeping all war costs out of the budget, pretending the middle-class tax cuts would expire, and on and on. Obama has tried to make the budget reflect reality. Alas, reality is a bummer. (And yes, the long-term deficit is entirely the fault of policies Obama inherited.) So Obama gets attacked for a "shell game" when all he's really doing is admitting the shell game that's been going on for years.

Political opportunism is the main force behind conservative complaints here, and that's fine.  Politics ain't beanbag etc.  But what's really driving conservatives mad is the fact that Obama is tacitly showing them up.  They're supposed to be the fiscal tightwads who watch every dollar and don't play games with the budget, but for the past eight years they've been doing almost nothing but playing games.  Now Obama is doing the responsible thing and ending it, so they're doing the same thing as any kid whose hand gets caught in the cookie jar: yelling and screaming and insisting that it's everybody else who's really at fault.  It's not a pretty sight.

Anyway, as Chait says, this has nothing to do with healthcare reform and there's no reason it should be part of the healthcare bill.  Democrats are right about that.  The only way in which it really is related is that this is basically the bribe being paid to doctors to support Obamacare.  Unfortunately for conservatives, they can't really complain too loudly about that because they've been paying the bribe for years themselves.  Nobody wants to piss off doctors, after all.

Reality and Journalism

| Tue Oct. 20, 2009 11:31 AM EDT

Somebody over at the Economist thinks — or rather hopes — that contrarianism is dead:

The first time I ever encountered an argument that I would now clearly recognise as "contrarian" was in elementary school, during Ronald Reagan's presidential campaign, when I first heard someone argue the supply-side case that lowering taxes would raise government revenues. Another early encounter I recall was my father describing a social scientist interviewed on NPR who'd argued that the main effect of minimum-wage laws was to raise the unemployment level for poor urban youth.

....Here's the thing: as history progresses, things change. And societies try to adapt to those changes. Experts come up with solutions to the problems the societies face. Those solutions often entail discomfiting established interest groups. And the solutions the experts come up with almost always entail some degree of perverse counterreaction, some kinds of problems or inefficiencies or whatever. It can be very interesting to focus on those counterreactions; it can generate fascinating, eye-grabbing journalism.

But in the overwhelming majority of cases, the counterreactions aren't as big as the first-order effects of the solutions. The minimum wage may price a few people out of the labour market, but it mostly raises low-income people's wages. Raising marginal income taxes does slightly lower rich people's incentives to generate income, but it mostly raises government revenue. In other words, the little contrarian thing is almost never anywhere near as important as the big first-order thing it rides on. And as journalism has come increasingly to focus on contrarianism, it has become less and less adept at actually describing the world.

I guess I agree but I'd put things slightly differently.  Contrarianism is genuinely useful, and I'd hate to see it go away.  Conventional wisdom, whether it's mine or someone else's, deserves pushback.

The problem with modern contrarianism is that it's lazy.  Too often, it's the sole focus of a piece, and it's the focus for reasons purely of entertainment or ideology.  Which is too bad, because the kind of journalism that's most useful is the kind that explains both first order things and counterreactions and doesn't pander to readers' desires to pretend that the world is simpler than it really is.  After all, counterreactions may usually be less important than first-order effects, but they're still worth investigating.  Some tax cuts really don't raise as much revenue as you'd think.  Raising the minimum wage really can have perverse effects in specific slices of the economy.  If you're genuinely interested in knowing how the world works, you want to know this.

And that's what seems to be missing in an awful lot of modern journalism: the desire to genuinely try to puzzle out how things work.  Instead, we get writing so dedicated to either ideology or entertainment that it's satisfied to cherry pick contrarian arguments and leave it at that; or else mainstream he-said-she-said journalism that's so determined not to take a stand that it enlightens no one.

But the world is a complicated place.  It just is.  There are first order effects, counterreactions to first order effects, and counterreactions to counterreactions.  And there are whole big chunks of the world that stand entirely aside even from that.  If you want to explain what's really going on, you need to take in all of this, and you need to take all of it seriously on its own merits, and then you need to try to make sense of it all.  You can't just ignore or brush aside everything that would inconveniently make your narrative a little messier or harder to understand.  (I'm looking at you, Malcolm Gladwell.)  You have to respect your readers enough to assume they'll stick around even when the ride gets a little bumpy.

Sadly, less and less journalism aspires to that today.  To my dismay, fewer and fewer books aspire to it either.  It makes the world a shallower, less interesting thing.

"An Unusual Setback"

| Tue Oct. 20, 2009 1:45 AM EDT

This cracks me up:

Big financial firms losing power on Capitol Hill

Large banks are on the verge of losing a key legislative battle over the shape of financial reform, an unusual setback that reflects the continued political backlash over their role in creating the financial crisis.

The particular battle big banks are allegedly losing need not detain us for the moment.  Rather, I have two comments.  First, it's a testament to its essentially imperial status that after nearly destroying the planet the financial industry has any power left to lose.  But the headline writer tells us this legislative loss is "unusual" — as indeed it is.  Check out, for example, who won and who lost on cramdown, plain vanilla, and CFPA exemptions.  Even now, a scant 12 months after triggering the biggest financial meltdown since the Depression, the financial industry almost never fails to get something it wants from the United States Congress.

Second, they haven't lost yet.  The Post informs us that "lobbyists on both sides say they regard the battle as over," but I'll believe that when I see it.  The Senate hasn't yet taken its crack at this legislation, after all, and I will be very much surprised if the finance lobby has decided to cry quietly in its beer and let this particular regulatory indignity pass without sprinkling a few million more dollars on the right committee members in hopes of getting an early Christmas present.  Don't count your chickens before they've hatched.

Talking to Iran

| Mon Oct. 19, 2009 7:58 PM EDT

Time's Massimo Calabresi describes the Obama administration's recent efforts to do a deal with Iran that would nearly eliminate their stockpile of low-enriched uranium:

The backroom talks began in June, when Iranian officials told the International Atomic Energy Agency their country was running out of fuel for an aging research reactor built for the Shah in 1967 by American technicians...."We very quickly saw an opening here," says a senior Administration official involved in the multiparty negotiations that ensued.

....In early July, Obama traveled to Moscow, where his top nonproliferation aide, Gary Samore, floated a proposal to the Russians: If Iran would agree to export a supply of LEU to Moscow, the Russians could enrich it to the level needed to power the research reactor, and then the French, who had been brought into the discussions, could turn it into the specialized plates that are used to produce the isotopes.

....The Americans wanted to make sure the Iranians weren't going to pull a fast one and persuade the Russians to get the material for the research-reactor fuel from a source other than Iran's own stockpile. When President Obama met with Russian President Dmitri Medvedev in New York City at the U.N. General Assembly in late September, he pressed the Russian to "confirm at the level of the President that this whole deal hinged on it being Iran providing the fuel," says the senior Administration official. The official says Medvedev agreed.

Further talks were scheduled for today.  So how are they going?

In recent days the Iranians have repeatedly suggested that they may not ship the fuel out of the country at all, and would demand that the West sell it new fuel for its research reactor in Tehran, which is used largely for medical purposes. That would leave the existing fuel in the country, a situation that the United States, Europe and Israel has said is too dangerous, given Iran’s history of hiding nuclear activity from international inspectors.

I guess we'll know by this time tomorrow whether this is a negotiating ploy or a genuine effort to back out of the deal.  IAEA head Mohamed ElBaradei produced only the anodyne statement that today's session was "quite a constructive meeting," and that's all about all the news there was.  Stay tuned.