Time for Some Logrolling

The Republican caucus in the Senate has written unanimously to Harry Reid to tell him that they will block action on everything — everything, dammit! — until the Bush tax cuts are extended.  "While there are other items that might ultimately be worthy of the Senate's attention," the letter says, "we cannot agree to prioritize any matters above the critical issues of funding the government and preventing a job-killing tax hike."

I confess that I'm unclear on why this situation isn't ripe for a bit of old-fashioned logrolling. Republicans want extension of tax breaks for both the middle class and millionaires. Democrats don't, but they do want passage of DADT repeal and New START.1 So strike an agreement with the GOP leadership to extend the tax cuts for three years in return for support on the other two things. The alternative is gridlock since Dems have never had the votes to extend just the middle-class tax cuts anyway.

What am I missing here? Why would this be such an unthinkable compromise?

1Or maybe some other stuff. Pick your poison. And obviously some smaller items like 1099 repeal and unemployment extensions might end up in the package too. It all depends on how things go. But conceptually, there doesn't seem to be any big impediment to a deal of some kind.

Willful Self Destruction

Tom Friedman imagines what a leaked cable from the Chinese embassy in Washington DC might look like:

There is a willful self-destructiveness in the air here as if America has all the time and money in the world for petty politics. They fight over things like — we are not making this up — how and where an airport security officer can touch them. They are fighting — we are happy to report — over the latest nuclear arms reduction treaty with Russia....And since anything that brings Russia and America closer could end up isolating us, we are grateful to Senator Jon Kyl of Arizona for putting our interests ahead of America’s and blocking Senate ratification of the treaty.

Etc. etc.

I have to admit this evokes a lot of my current mood too. Back at the beginning of the month we spent a week going into a frenzy over recommendations from a deficit reduction commission that everyone knew were DOA. Then it was a week of TSA frenzy. And now it's WikiLeaks frenzy. All while our economy slips into a Japan-style stagnation and nobody seems to care. It staggers the imagination. The strongest country in the world — my country — is allowing its economy to decay before our collective eyes even though we know how to stop it. But we're not going to. We're just going to let it happen. As Friedman says, it's willful self destruction.

We need: a big stimulus now aimed at infrastructure development. A credible plan to close the long-term deficit that acknowledges the need for tax increases to be part of the solution. A serious and sustained effort at reining in healthcare costs and broadening access. A collective decision to cut out the culture war nonsense and figure out how to improve our educational system with no more than modest spending increases. Real financial reform, not the weak tea of Dodd-Frank. Less spending on empire building and much, much more spending on real sustainable energy development and engineering.

But we're not going to do this stuff. As near as I can tell, we're not even going to do one single thing on this list. We're not even going to try. In fact, they're all so far from being realistically achievable that it's sort of foolish to even waste breath writing about them. So instead we spend our time reacting to Sarah Palin's latest tweet and demanding that the CIA assassinate Julian Assange. Gotta talk about something, after all, whether the ship is going down or not. Glug, glug.

POSTSCRIPT: Maybe I'll be in a sunnier mood tomorrow morning. Maybe.

GOP Cynicism Gone Wild

This is ridiculous. Both Democrats and Republicans agree that the new 1099 reporting requirements included in the healthcare reform bill should be repealed. The pain-in-the-ass factor is simply too high to justify forcing everyone to create the mountains of new paperwork it would require. The problem is that the new requirements essentially raise taxes on contractors and small businesses and this raises revenue. So if you want to repeal the requirements, you need to figure out how to make up the revenue, and Democrats and Republicans have been unable to agree on how to do this.

Yesterday, however, Sen. Max Baucus decided the hell with it. The amount of revenue is tiny (less than $2 billion per year), so why not just repeal the 1099 provision, lower everyone's taxes, and forget about paying for it? This is an eminently sensible position, since Republicans want the provision repealed and have repeatedly and unanimously taken the position that tax cuts don't need to be paid for.

So Baucus introduced an amendment to do the deed. And it failed because all but two Republicans voted against it.

Can anyone defend this in any kind of principled way? Republicans are eager to extend the Bush tax cuts on the rich without paying for them, and this will cost over $70 billion per year. Ditto for the estate tax. But the $2 billion 1099 tax? That's a no go. Gotta be paid for. If I didn't know better, I'd say that Republicans don't really want to repeal the 1099 provision at all. They want to keep it around so they have an issue to hammer Democrats with, even if it means voting not to relieve small businesses of a widely cursed new paperwork burden. 

Even for a confirmed cynic, though, this is cynical beyond measure. Anybody got a more Republican-friendly explanation?

WikiLeaks and the Rest of the World

The reliably bellicose Victor Davis Hanson has a bone to pick with the founder of WikiLeaks:

Julian Assange prides himself on being a bomb-thrower, eager to take down Western governments and banks, the U.S. military, etc. Yet, in cowardly fashion, he stays clear of getting involved with dissident leakers from those governments and groups — e.g., China, Iran, North Korea, Hezbollah, Russia, Syria — that (1) do far more damage to the global body politic than the United States, and (2) might well do bodily harm to Mr. Assange should he do to them what he does to Western interests.

I have no doubt that Assange is eager to cause the United States grief, but is there any actual evidence that he's avoided getting involved with China, Russia, Syria, etc.? After all, WikiLeaks has in the past posted leaked documents related to Somalia, Kenya, Scientology, the UN, and Iran. WikiLeaks also hosted some of the Climategate emails, and Assange has warned of coming disclosures about Russia. If WikiLeaks has never posted anything from Hezbollah or North Korea, my guess is that it's because they haven't received any leaks from disaffected North Koreans or Hezbollah militants.

Anyway, this is rapidly becoming a common talking point. Does anyone know if there's any actual truth to it?

Pentagon: DADT Repeal Not a Problem

The military has finally released its long-awaited study on the repeal of Don't Ask Don't Tell, and the results are unsurprising: most service members don't think repeal would be a problem:

The Pentagon has concluded that allowing gay men and women to serve openly in the United States armed forces presents a low risk to the military’s effectiveness, even at a time of war, and that 70 percent of service members believe that the impact of repealing the “don’t ask, don’t tell” law would be either positive, mixed or of no consequence at all.

The full report is here, and an interesting table is below. It turns out that although 30% of respondents think that repealing DADT would affect their unit's ability to train well together (a number that shows up pretty consistently on every question about the effect of repeal), only 10% think it would affect their own readiness and only 20% think it would affect their ability to train well. In other words, there's pretty good reason to think that even the 30% number is overstated. It seems to include a fair number of people who are assuming that DADT repeal would have a negative effect on other people even though it wouldn't have a negative effect on them. My guess is that a lot of this is reaction to a small number of vocal traditionalists, which makes opposition to repeal seem like a bigger deal than it is.

Jeh Johnson, the Pentagon’s chief counsel, agrees, saying that surveys about personnel changes "tend to overestimate negative consequences, and underestimate the U.S. military’s ability to adapt and incorporate within its ranks the diversity that is reflective of American society at large." I suspect he's right. In the end, real opposition is probably more in the range of 10-20% than 30%, and even that will probably produce nothing more serious than occasional grumbling and discomfort for a year or two at most. There's really no further excuse for inaction. It's time for Barack Obama and the Democratic leadership to figure out a way to cut a deal and get repeal passed before Congress recesses.

Does PPACA Contain a Surprise?

One of the reasons that employer-based healthcare is so prevalent in the United States is that it's a good deal: unlike the normal income they recieve, employees don't have to pay taxes on their healthcare benefits. A $5,000 policy costs $5,000. Conversely, if your employer simply paid you a cash wage in lieu of healthcare benefits, you'd have to receive, say, $6,000 in order to buy the same policy. Why? Because you have to pay taxes on the $6,000 and still have $5,000 left over to pay the premium.

This difference in tax treatment is something that wonks on both left and right generally oppose, though in somewhat different ways and as part of somewhat different overall structures. Still, pretty much everyone opposes it. And guess what? Thanks to the healthcare reform bill, it might be going away. The details are complex, but Austin Frakt provides the gist:

PPACA may make it possible for workers to get the same tax break for purchasing health insurance on the individual market (via an exchange or otherwise) as they would if they bought their employer-sponsored plan (if they’re offered one). If this is the case, it removes one huge incentive for maintaining employer-sponsored coverage. With respect to taxation, it levels the playing field between the group and non-group (individual) markets.

There’s still the issue that until 2017 only employees of firms with fewer than 100 workers are eligible for exchange coverage. Beginning in 2017, states can open exchanges to employees of larger firms. Workers of firms of any size could buy coverage on the individual market that is outside the exchange, they just can’t obtain federal subsidies for them. Still, it’s the tax subsidy that makes employer-based coverage so valuable to workers. If it can be applied in the non-group market it would hasten the erosion of employer-based coverage (which is not a bad thing, necessarily).

This all depends on a particular interpretation of provisions in PPACA, but if regulators write the enabling rules properly it might well allow individuals to buy insurance on the exchanges with pretax dollars. This would reduce the cost of insurance substantially for anyone using the exchange. It's worth keeping an eye on.

The WikiLeaks Charade

Republicans have made their stand on WikiLeaks clear: the Obama administration needs to destroy both the organization itself and its founder, Julian Assange. "Why was he not pursued with the same urgency we pursue al Qaeda and Taliban leaders?" demands Sarah Palin. "Is there no way to counter-attack against the attackers?" asks Bill Kristol. The Obama administration's response, writes Jonah Goldberg, has been pitiful, little more than a "tersely worded cease-and-desist letter to Assange, asking him to pretty please stop publishing thousands of state secrets." WikiLeaks should be designated a terrorist group, thunders Rep. Peter King (R–NY).

I don't know how much of this is pure politics and how much is just ignorance, but surely all these people know that WikiLeaks itself isn't the problem. It's the people who supply WikiLeaks with their leaks who are the problem. Even if the U.S. government somehow magically shut down WikiLeaks all over the world and tossed Julian Assange into a Supermax cell, there's nothing they can do to keep someone else from doing the exact same thing. It's just too easy to do. All it takes is access to the internet from some friendly country, and there's simply no way to shut down every possible entry to the internet. Like it or not, that's the era we live in.

In any case, I doubt the United States has any legal recourse against Assange or WikiLeaks. Assange is an Australian national not living in the U.S. and WikiLeaks is a distributed site not dependent on any single country's goodwill. What's more, despite some huffing and puffing to the contrary, I find it extremely unlikely that Assange has actually broken any existing laws. Perhaps new laws could be written, but it's hard for me to conceive of a law prohibiting actions like this that was both (a) effective and (b) not so broad that even Bill Kristol would oppose it. The United States has considerable control over actions by its own citizens on its own territory, but not over noncitizens who reside overseas and work primarily in cyberspace.

But then, I suspect most of the bloviators know this. WikiLeaks is, for most of them, just a good opportunity to bash the Obama administration (as if George Bush would have been able to act any differently) without having to actually offer any concrete solutions. And what makes this especially great for Obama's critics is that there's not really a lot Obama can do about it, aside from bloviating a bit in return.

Bloviating aside, though, we should be focused not on Julian Assange, but on figuring out how to keep anyone from providing this kind of information to him in the first place. That's more boring, but much more effective.

Bipartisanship at Last

There's something odd about this:

The Senate on Tuesday approved the biggest overhaul to the nation's food safety laws since the 1930s, voting 73 to 25 to give vast new authorities to the Food and Drug Administration; place new responsibilities on farmers and food companies to prevent contamination; and — for the first time — set safety standards for imported foods, a growing part of the American diet.

....Despite strong bipartisan support and backing from a diverse coalition of major business and consumer groups, the bill was been buffeted by politics in recent weeks. It drew fire from some tea party activists, who see it as government overreach. On his television program this month, talkshow host Glenn Beck suggested that the measure was a government ruse to raise the price of meat and convert more consumers to vegetarianism.

If there's one thing that Republicans have been plain about, it's their opposition to the Democratic agenda of big government and job-killing regulations. Thus you have the tea party and Glenn Beck hostility to this bill. And yet it passed 73-25. A massive overhaul of the FDA's regulatory authority got not just one or two Republican votes, but 15. In fact, according to the New York Times, this bill was the first one in two years that managed to produce a bit of bipartisan comity: "Some Republican and Democratic Senate staff members — who in previous terms would have seen each other routinely — met for the first time during the food negotiations. The group bonded over snacks: specifically, Starburst candies from a staff member of Senator Mike Enzi, a Wyoming Republican, and jelly beans from a staff member of Senator Richard J. Durbin, an Illinois Democrat."

I don't get it. In normal times, I'd expect that a slew of high-profile food poisoning incidents would produce bipartisan consensus in favor of a food safety bill. But then, I'd expect the same of a huge recession and an epic financial failure, and there was certainly no cooperation on fiscal stimulus or financial reform. So what happened? Is food safety genuinely different? Or did big ag fail to cough up enough dough this year during election season?

Image vs. Reality

Compare and contrast. Here is the FT's Gillian Tett explaining some of the changes she had to make in her book Fool's Gold in order to appeal to both British and American audiences:

The real fun erupted when I wrote the preface. Initially I planned to start the book by admitting that I was not a true expert on high finance: instead I crashed into this world in 2005, after a background spent in journalism-cum-social anthropology — making me a well-intentioned amateur, but without complete knowledge.

My friends in the British publishing world loved that honesty; in the UK, self-deprecation sells, particularly for “well-meaning amateurs” such as the writer Bill Bryson. But my American friends hated it. In New York, I was sternly told, absolutely nobody wants to listen to self-doubt. If you are going to write a book — let alone stand on a political platform or run a company — you must act as if you are an expert, filled with complete conviction. For the US version, the preface was removed entirely.

And here is Washington Post ombudsman Andrew Alexander admitting that reporters at the Post can't do basic arithmetic and pretty much don't seem to care about it:

A review of published corrections for the past three months shows that few days passed without a numbers error...."I think what's going on is that when journalists see a number, they take it at face value and don't question it," [Scott] Maier said. "With numbers, I think journalists tend to abdicate that scrutiny."

....Many newsrooms provide remedial math training, but that's not been done at The Post. It should be considered. And given the increasing usage of numbers in reporting and graphics, The Post should pay heightened attention to math and statistical literacy when evaluating prospective hires.

In America, no one wants to listen to self doubt. Also in America, our reporters don't have a working knowledge of arithmetic, which underlies practically every topic commonly reported on the front page or the evening news. Somehow, I suspect the latter makes the former a lot easier.

WikiLeaks and the Private Sector

Over at Forbes, Andy Greenberg interviews Julian Assange of WikiLeaks, who tells him that they're planning a release early next year of a huge cache of internal documents from a big U.S. bank:

What do you want to be the result of this release?

[Pauses] I’m not sure. It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume.

Usually when you get leaks at this level, it’s about one particular case or one particular violation. For this, there’s only one similar example. It’s like the Enron emails. Why were these so valuable? When Enron collapsed, through court processes, thousands and thousands of emails came out that were internal, and it provided a window into how the whole company was managed. It was all the little decisions that supported the flagrant violations.

This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos that cames out, and that’s tremendously valuable.

This gave me pause when I read it. As I said earlier, I'm on the fence a bit about whether an indiscriminate release of thousands of U.S. embassy cables is useful. After all, governments have a legitimate need for confidential diplomacy. But when I read about WikiLeaks' planned financial expose, I felt no such qualms. A huge release of internal documents from a big bank? Bring it on!

And yet, just like governments, big corporations have both a legitimate need for confidential deliberations as well as many of the same pathologies that secrecy breeds. It's not a perfect analogy, of course, on a variety of levels, but still: it's not all that different either. So why do I feel so differently about it? I'm not quite sure. But it suggests that my thinking about this is not as clear as it should be. I will continue to mull this over.