California's Insanity

Just a quick California note. On Tuesday, following our habit of the past few decades, we approved Proposition 22, which limits the ways the legislature can allocate property tax funds, and Proposition 26, which essentially eliminates the legislature's ability to levy new fees on businesses. Today, we will undoubtedly return to our usual hobby of yelling and screaming that the legislature isn't doing enough to balance the budget and make government work. For the past 30 years, in election after election, we have relentlessly reduced Sacramento's ability to raise money at the same time that we've piled on an endless series of new spending requirements — and as the cherry on top, insisted that this citizen-created circle be squared by a bunch of term-limited amateurs who have no idea how the machinery of the state really works. And then we wonder why things aren't going so well.

We are insane.

(And in case you're wondering, this is why I don't really care much that Proposition 19 failed. Legalized pot might be nice, but we've got way bigger things to worry about here.)

Tea Party High, Tea Party Low

At the moment, it looks like the senate seat in Colorado is going to go Democratic. If it does, the tea party scorecard looks distinctly weak this cycle. In places like Utah, Kentucky, Florida, and Pennsylvania it produced victories that Republicans would have gotten anyway. In Delaware, Nevada, Colorado, and West Virginia, it produced losses where more mainstream candidates probably would have won. And in Alaska it produced a civil war.

In the House, though, the tea party seems to have done fine. So what to think of this? It seems like there are two obvious frames. The first is that insurgent movements like the tea party start out at the local level and move outward over time. So maybe it was too early for them to win statewide seats, but by 2012 they'll be in good shape. The second is that tea partiers can do well in local races where districts are fairly homogeneous and voter distress is easy to stoke, but that kind of angry entreaty just doesn't work at a higher level, which by definition requires a media-centric approach and a more pluralistic appeal.

I wouldn't bet the ranch on it, but I suspect the answer is more the latter than the former. As time passes, the economy improves (touch wood), and the tea party inevitably gets integrated into the machinery of the Republican Party, it's going to have to moderate its message to succeed. Just how much it's going to have to moderate is still an unanswered question.

Two Lessons From the Election

I don't have a whole lot to say about tonight's election results, but I will toss out a couple of quick thoughts:

Live by the model, die by the model. Lots of Democrats, including me, have been pointing out that structural factors alone predicted a 45-seat loss in the House this year. In other words, the bulk of the expected Democratic losses weren't due to healthcare reform or Obama's remoteness or liberal overreach or anything like that. It was baked into the cake all along.

But the model I wrote about, which comes from Douglas Hibbs, only predicted a 45-seat loss, and it looks like Dems are likely to lose at least 60 seats. That means Democrats underperformed the Hibbs model by 15 seats or so, which is a record for them. (See chart below.) They've underperformed by ten seats a couple of times in the postwar era, but never by more than that. So at the same time that it's correct to blame most of their losses on structural factors, it's also correct that this was something of a historically bad result. I think it might be fair to say that the economy is so epically bad that Hibbs's model might not account for it entirely, but that's mostly special pleading. It really does look like there's a fair amount of scope to place a lot of the blame for tonight's Democratic debacle on both tactical and policy missteps.

Live by the tea party, die by the tea party. The tea party movement may have provided a lot of Republican energy tonight, but it pretty obviously cost them a lot too. By my reckoning, Republicans most likely would have won Delaware, Nevada and maybe West Virginia if they'd run more mainstream candidates. (Colorado is still up in the air as I write this.) This is necessarily a little speculative, but it's quite possible that non-tea candidates could have won all those states, and with it 51 seats in the Senate. So the tea party might have produced outsize gains in the House, but at the cost of control of the Senate. Sic transit etc.

Election Coverage

I'm not planning to do a lot of heavy election blogging myself, but MoJo has a dedicated election page with tons of updates and coverage of all the major races. If that's what you crave, click here and then check in throughout the night.

Headline of the Year

A friend passes this along as headline of the year:

BP ups Gulf spill cost to $40 billion, still reports profit

No comment needed.

Magical Thinking

Paul Krugman on the notion that Barack Obama blew it by not focusing more on jobs:

So when you say Obama should have focused more, what policies are you talking about? A bigger stimulus? As far as I can tell, almost no pundits are saying that. So what other concrete policies do they have in mind? I have never gotten an answer.

The notion seems to be that if Obama had spent the past 20 months going around with furrowed brow, saying, “I’m focused on the economy”, this would have (a) somehow created jobs (b) made people feel better about 9.6 percent unemployment.

Krugman, of course, has been vocal about the fact that Obama should have pushed for a bigger stimulus. Others have pointed at the foreclosure mess and suggested that a better-designed HAMP would have helped the economy. But Krugman is right: the actual people who keep claiming that Obama needed to focus more on jobs haven't generally gotten on either of these bandwagons. They just seem to think there's some kind of magic that would have either improved things or, at least, cheered everyone up even though they didn't have actual jobs. But what?

What the Tea Partiers Want

Eugene Robinson is skeptical that tea partiers are really concerned about the stuff they say they're concerned about:

Underlying all the Tea Party's issues and complaints, it appears to me, is the entirely legitimate issue of the relationship between the individual and the federal government. But why would this concern about oppressive, intrusive government become so acute now? Why didn't, say, government surveillance of domestic phone calls and e-mails get the constitutional fundamentalists all worked up?

This is just a mindless talking point. And not even a very good one. Liberals and conservatives have always had a different view about what's oppressive and what's not. And the conservative view has always been that strong police power isn't oppressive. They believe that keeping firm order is a core part of government's job — a necessary precondition for true liberty — and so they've always been in favor of things like widespread surveillance, weak Fourth Amendment rights, active and intrusive antiterrorist policies, and giving police a pass when they get a wee bit rougher with suspects than the law might technically allow. Obviously we liberals have a different point of view, but to pretend that it's hard to square conservative support of Bush-era policies they've always supported with conservative opposition to Obama-era policies they've always opposed is pretty disingenuous.

As for Robinson's broader point — "I can't help believing that the Tea Party's rise was partly due to circumstances beyond his control — that he's different from other presidents, and that the difference is his race" — it's fine as long as there's a pretty strong emphasis on "partly." I don't think there's much question that racial animus has played a role in the tea party movement, but if Obama weren't black it would just be something else. It's not as if we haven't seen this show before, after all.

Fannie/Freddie Give Stern the Boot

I feel like I should let Andy Kroll have first crack at this story, but all's fair in love and blogging. In any case, it looks like Fannie and Freddie have finally decided to give the boot to David J. Stern's infamous foreclosure mill down in Florida:

Fannie Mae and Freddie Mac have terminated their relationships with a top Florida foreclosure law firm and began taking possession of loan files on Monday afternoon from the firm, which processes evictions on behalf of the mortgage-finance giants.

....Freddie Mac took the rare step of removing loan files after an internal review raised "concerns about some of the practices at the Stern firm," a Freddie spokeswoman said. "We have begun taking possessions of all files on Freddie Mac mortgages simply to protect our interest in those loans as well as those of the borrowers," the Freddie spokeswoman said. A Fannie spokeswoman declined to elaborate.

And not a moment too soon. For more on Stern's business practices, Andy's original story is here. I'm sure he'll have more later.

Conservatives and Their Memes

Jon Chait notes that even David Brooks has bought into the idea that Democrats have screwed up the economy by introducing "uncertainty" into its every nook and cranny:

This may be the single most vapid Republican talking point of the last two years. And yet it's been endorsed by moderate conservatives like Brooks and even elite outposts of the conventional wisdom.

[Some sentences making the obvious point that Republicans are probably introducing more uncertainty into the regulatory environment than Democrats.]

You would expect the center-right to buy into the most convincing GOP talking points, and to scoff at the least convincing ones. But here the center-right is parroting talking points that are absurd on their very face. Why? I can't say. My guess is....

OK, that's enough. Click the link if you want to see Jon's guess. But since this is my blog, let's go straight to my guess: Frank Luntz.

Not literally, mind you. I have no idea whether Luntz came up with the uncertainty meme or whether he's been advising Republicans to push it. But just in general, I've long been impressed — genuinely impressed — with the conservative ability to come up with talking points that would never occur to me in a million years. Calling healthcare reform "socialist"? No problem. I expected that. But death panels? Where did that come from? Arguing that financial reform will hamper credit? Sure. But charging that a bill designed to end bailouts is a bailout? Damn! That's clever. Claiming that huge deficits are hurting the economy? Bog normal conservative rhetoric. But "uncertainty" is hurting the economy? Who came up with that?

Seriously: who comes up with this stuff? These are things that would never occur to me, and judging by the unimaginative nature of liberal opposition to conservative ideas, they're the kinds of things that never occur to liberals either. But they take hold anyway, and not just among the Fox News set. If Democrats were pushing some liberal version of the uncertainty meme, there would be whole piles of mushy liberals like me who'd write earnest blog posts about how this isn't really such a great argument and we should instead focus on X, Y, and Z. We'd just be too embarrassed to buy into obvious nonsense like this. But on the right, this stuff ends up filtering down to everyone. The uncertainty meme has, almost literally, no evidence at all to back it up, but that doesn't matter. It sounds good, so why not?

Refinancing After 50

Catey Hill of the Wall Street Journal advises against refinancing your mortgage if you're over 50, since "carrying a mortgage into retirement has traditionally been considered a bad idea." But if you do, get a 15-year mortgage instead of a traditional 30-year mortgage:

For starters, a 15-year term leaves more money in your pocket — you'll pay much less in interest over the life of the loan. If you refinance a mortgage (assume a 5% rate) balance of $100,000 for a 30-year term, you will pay more than double what you'd pay had you opted for a 15-year term (about $93,000 in interest vs. about $42,000). Plus, you can get a historically low rate on a 15-year loan now, too.

I'd go further than this. Say you're 55 and you have ten years left on your current mortgage. If you refinance the outstanding balance at a lower rate on a 15-year note, you don't have to pay it off in 15 years. You can pay it off faster by making the same monthly payments as you did with your old mortgage. If you do this, you'll end up paying off the new loan in, say, seven years with the same payments as before.

Obviously this depends on the exact terms of the loan, and it also depends on your ability to stick to your old payment schedule. If you know you're short on self discipline, this might not be a good idea. But if you're the kind of person who will keep making the payments religiously even though you could get away with paying less, it's a complete win.

UPDATE: As several commenters point out, you have to look at actual numbers to know if this makes sense. It depends a lot on how good a rate you get, what your old rate is, how many years are left on your current loan, etc. But in a lot of cases, I suspect that if you run the numbers you'll find that you can keep making the same monthly payments but pay off your outstanding balance faster. It's worth checking out.