I'll probably never say this again, but I think I'm actually on Darrell Issa's side here. He decided to do things a little differently at today's TARP hearing:

At the start of the hearing, chairman Rep. Darrell Issa announced the committee members would waive their opening statements and instead would have seven days to place them into the record. Rep. Elijah Cummings, the committee’s ranking Democrat, immediately fought back questioning this deviation in traditional procedure, but Issa held his ground. “I recognize that tradition is we hold the members, the witnesses here for sometimes an hour through opening statements. That is a tradition that I intend to break,” Issa said. “That doesn’t mean there won’t be opening statements in the future.”

....Rep. Dennis Kucinich later interrupted and stated, “I’ve been in the Congress for 14 years, and I’ve never — it’s just unprecedented that the ranking member not be permitted to give an opening statement.”

I don't know all the details here. I assume that Issa himself didn't give an opening statement either, and I assume that in the future the rules for statements will be fair to both sides. If not, then Issa's being a dick. But let's face it: long rounds of opening statements are a scourge. They virtually never produce anything of note, and forcing witnesses and everyone else to sit through them is a waste of time. Overall, I expect Issa to run the oversight committee like the partisan attack dog he is, but on this particular issue I salute him.

Felix Salmon would like President Obama to go after the mortgage interest tax deduction. Matt Yglesias comments:

The implication here is that what the country needs from the president is some bold straight talk on taxes, and I think that’s just wrong. Look at what happened when the Bush administration kinda sorta went after the mortgage interest tax deduction—wonky bloggers praised him, Democrats slammed him, Republicans ran for the hills, he abandoned the idea, and everyone forgot the whole thing ever happened. If Obama had proposed a revenue-neutral phase out of the tax deduction, you’d just get the same thing in reverse.

The right way for the White House to engage with this issue is (a) vaguely, and then (b) in private.

Actually, I'd say the right way for the White House to engage with this issue is (c) not at all. I mean, I'm all in favor of phasing out the home mortgage deduction, but it's political suicide and everyone knows it. Whether privately or not, no Republican will ever agree to it, and I don't imagine many Democrats would either. It's the fastest way I can think of to derail tax reform completely.

This is too bad, but the world is what the world is. It might be possible to propose replacing the mortgage tax deduction with a tax credit, which would be a bit more progressive, but it's a little hard trying to figure out what the political coalition for that is either. Working quietly on tax reform instead of making it into a huge public issue is a good idea (though possibly no longer feasible in the era of Fox News), but I think wonks should just give up on the idea of ditching the home mortgage deduction and focus instead on stuff that might actually happen.

Here's yet another poll showing what people think of healthcare reform. It's from Kaiser:

This is a little different from the last poll we saw, but not a lot. Overall, 47% want to keep or expand the law and 43% want to repeal or narrow the law. Additionally, most people disapprove of defunding the law and most of the individual provisions of the law remain popular except for the individual mandate. No surprises there. But take a look at this:

Items 1, 3, and 4 are all beneficial to seniors, yet seniors are less favorable toward them than younger people. Item 2 is harmful to seniors, but seniors are more favorable toward it than younger people. Only item 5 polls about the way you'd expect it to. The differences aren't huge, and it's questionable whether everyone really understood exactly what all these provisions mean, but it's still a bit of an odd result, isn't it?

SOTU Wrapup

I decided not to liveblog the SOTU this year because I was pretty sure it would be an unusually uneventful speech. And I think that's how it turned out. (Transcript here.) In the end, the only thing that surprised me was how uneventful it was. With only a very few exceptions that were passed over pretty quickly (healthcare reform is great, student loan reform is great), there was almost literally nothing in there that couldn't have been in a George W. Bush speech. It was intensely technocratic and bipartisan: we need better education, we need to invest in infrastructure, we need to concentrate on innovation, we need tax reform, we need to get the deficit down, we're going to crush the Taliban, etc. etc. And even if you grant that "invest" is just another word for "spend," he was mostly talking about the kind of spending the Republicans could, in theory, go along with.

As for the responses, what can you say? Paul Ryan probably did about as well as anyone could do with one of those things, but his speech was mushy and vague to the point of parody. Michele Bachmann had a bit more pep to her step, but her attempt to pretend that the economy was great under George Bush was pretty laughable.

All in all, not a memorable night. Which is too bad, in a way, since I think Obama's education/technology/infrastructure message is actually pretty important. It's too bad nobody is really in a mood to hear it right now.

POSTSCRIPT: And a note to John Boehner: dude, we know you're a Republican. Obama is the opposition. We get it. But your preposterously ostentatious boredom during the entire speech really needs to go. You should at least pretend you're not in junior high school anymore.

The Big Freeze

Barack Obama plans to propose a five-year discretionary spending freeze in tonight's State of the Union address. Is this a good idea? A preemptive capitulation to Republican deficit hawks? Or what?

I vote for "or what." Let's all keep in mind that budgets are set one year at a time, and they're mostly set by Congress. The president has a certain amount of agenda-setting power, but that's about it. Members of Congress will do whatever they want, and next year they'll once again do whatever they want. If that means spending more money, they'll spend more money. Obama could announce a hundred-year discretionary spending freeze and it would mean about as much as a five-year freeze. This is more a PR exercise than anything else and should be evaluated on those terms.

Was economic growth in the period 1950-80 really significantly higher than it has been in the period since then? Yesterday I said that growth rates in those two periods were actually about the same, and today Stuart Staniford and Ryan Avent say I'm wrong. They both have a point, so let's revisit this.

Stuart points out that a 100-year logarithmic chart hides small differences. Ryan points to decadal averages for real GDP. So here's a new chart that addresses both of these concerns (GDP and population data from FRED.):

First off, I'm using GDP per capita, not raw GDP, since that's a better measure of actual economic growth. Stuart suggests that GDP per working-age person might be a better measure, and I'm open to that depending on what it is we want to measure. Still, GDP per capita is the usual measure, so that's what I used.

The most obvious conclusion that pops out from the data is that growth has been fairly steady for the past sixty years with the exception of a nice growth spurt in the mid-60s. You can see that in the average growth rates per decade:

  • 1950s: 1.67%
  • 1960s: 3.42%
  • 1970s: 2.49%
  • 1980s: 2.43%
  • 1990s: 2.02%
  • 2000s: 1.27% (through 2007)

For the 30-year period 1950-79, growth averaged 3.18%. For the 28-year period 1980-2007, growth averaged 2.53%.

There are a couple of conclusions here. (1) The 60s were great, the 2000s were lousy. (2) Overall growth in the most recent three decades was indeed lower than in the three decades of the postwar era. (3) But not by a lot.

So I overstated things yesterday, but I'd still say it's the economy of the aughts that's a problem, not the entire post-70s era. The fact is that the post-70s economy as a whole simply wasn't a lot worse than the post-40s economy. The problem during this era wasn't primarily that growth was lackluster, it's that middle class wages consistently lagged growth by upwards of a percentage point per year.

So to revisit yesterday's point: yes, growth is important. You can't have 2% wage growth if the economy is growing 1.27% per year. But it's not enough. We had good growth for three decades after the end of the 60s and it didn't produce steady middle-class income gains. Distribution is important too. 

Every once in a while Reihan Salam writes something so weird that I'm not sure what to make of it. Is it simply ridiculous on its face? Or is it actually a penetrating insight that merely strikes me as ridiculous because I haven't given it enough thought? I dunno. But today, I report, you decide. Here is Reihan talking about the fact that lots of rich Danes live in other countries in order to escape Denmark's high tax rates:

My guess is that it is somewhat less common for income-maximizing U.S. born individuals to spend the bulk of their prime-age years working in countries with a lower tax burden. And my guess is that this is beneficial in its own way, e.g., agglomerations of rich people might improve the quality of high-end consumption, driving the creation of novel experiences, enabling artists and other creative professionals to make a living doing highly specialized work (e.g., trapeze artists, experimental fiction writers, etc.).

I often think of the U.S. as creating cultural public goods for the world. Our agglomerations of the rich are a big part of it. London deserves credit as well on this front. None of this is to suggest that we shouldn't have more distribution. My skepticism towards dramatically increasing the amount of redistribution we engage rests on other arguments. But it is something to think about, and, I'd suggest, something we should be proud of.

Seriously? The insane wealth of socially worthless Wall Street zillionaires helps provide a living for trapeze artists and experimental fiction writers? That doesn't even strike me as "high-end consumption," for starters. Do rich people really go to Cirque du Soleil and read Michael Ondaatje? I suspect that better examples would be gold-plated bathroom fixtures and Damien Hirst artworks. Both of which, frankly, the world could do without pretty easily. Especially the Damien Hirst monstrosities.

Maybe this is just class envy talking, but America's wealthy class doesn't strike me as much like the Medicis of old, at least when it comes to support of great art. For the most part, it also doesn't strike me that support of great art requires dense agglomerations of rich people anyway. Those agglomerations probably help support great museums and great opera houses, but that's about it. And in any case, all that great art would still exist somewhere even if MOMA and the Met monopolized less of it.

But maybe I'm wrong! Maybe stratospheric wealth — as opposed to merely titanic wealth — really does improve high culture for everyone. Anyone want to take a crack at making a more detailed defense of this thesis?

Bonds vs. Bankruptcy

Republicans have lately been floating the idea of a new law that would allow states to declare bankruptcy. The benefit, from their point of view, is that union contracts can be forcibly renegotiated in bankruptcy, which would allow states to roll back public sector pension plans and — not coincidentally — deliver a hammer blow to public sector unions. However, House majority leader Eric Cantor recently came out against the idea, and James Pethokoukis smells a rat. He thinks GOP pols are caving in to Wall Street interests:

Let’s try and connect a few dots....In 2010 election cycle, Wall Street campaign contributions shifted to Republicans from Democrats....Wall Street does not like the idea of states being given the power to file for bankruptcy....Overall, banks own some quarter-trillion bucks worth of state and local debt.

....Also, some Wall Street firms make a lot of money off the public pension system and don’t want to get on the wrong political side of the issue. Take the Blackstone Group, a private equity firm....Blackstone’s view on public employee pensions is clear and unambiguous: We believe a pension is a promise. Working men and women should not have to worry about their retirement security after years of service to their communities....Billionaire Blackstone CEO Steve Schwarzman is a big Republican moneyman...Many Republicans would love to cement their rekindled financial relationship with Wall Street heading into 2012 when they have a good chance of retaking the Senate.

I'd say Pethokoukis has this about right. Corporate and financial interests may hate unions, but they don't hate public sector unions. Why should they? Higher wages for public sector workers don't cause them any grief. Conversely, they do hate the idea that their bonds will ever be paid off at less than 100%, no matter how dire the emergency. They made that crystal clear during the 2008-09 financial crisis, and indeed, their counterparty obligations were paid off at 100% in virtually every case.

Put it all together and you have a pretty united financial/corporate stand against anything that might allow states to default on their obligations. That's a lot more important than a longshot attack on public sector unions they don't care about anyway. This is a bitter pill for Republicans, who'd love to take a shot at one of the Democratic Party's big funding sources, but it's the price you pay when you're a wholly owned subsidiary of corporate America. You do what they say whether you like it or not. And what they're saying is: don't even think about endangering our money. Capiche?

From the LA Times:

Justice Antonin Scalia's appearance at a meeting organized by the House Tea Party caucus and Rep. Michele Bachmann (R-Minn.) on Monday provoked new cries from liberals and some academics that conservative justices are shedding the appearance of impartiality. The session, part of what Bachmann calls a series of constitutional seminars, was closed to the media. Lawmakers said Scalia advised them to read the Federalist Papers and to follow the Constitution as it was written.

University of Texas law professor Lucas A. Powe, a historian of the liberal Warren Court, said Scalia's appearance made the court look partisan. "He is taking political partisanship to levels not seen in over half a century," Powe said.

I'm on Scalia's side here, though probably not for reasons he'd appreciate. I think the notion that the Supreme Court is nonpartisan is so laughable that I'm surprised anyone even defends the idea any longer, and as long as it's going to be nakedly partisan, why shouldn't justices engage in partisan pep rallies? Might as well be honest about the whole thing.

The incidence of actual voter fraud at the polls in America is indistinguishable from zero. Basically, it just doesn't happen. But that hasn't stopped conservative states from eagerly passing voter ID laws anyway, and Texas is in the vanguard. Oddly, though, they've decided there ought to be an exception in the new law they're considering:

In 2009, they were talking about requiring photo ID or two forms of non-photo ID; the 2011 bill does not have that non-photo ID option. It does, however, have an exemption from the photo ID requirement for those who are at least 70 years old at the start of 2012 and who have their voter-registration card when they go to vote.

Hmmm. Why make an exception for old people? The answer, obviously, is that lots of senior citizens don't have driver's licenses, and if they have to go to the trouble of getting a state ID card just to vote, they might decide not to bother. In other words, the photo ID requirement would create an artificial obstacle to voting among a group of perfectly law-abiding citizens.

It's good to see Texas Republicans tacitly admitting that. It's an excellent point, after all. There are other groups this applies to, though: students, poor people, and minorities, for example. But no exemption for them! I wonder why. What could possibly be the difference between senior citizens and these other groups? It's a poser, isn't it?1

1Kay Steiger provides the answer at the link, which is where I stole my snark from in the first place.

POSTSCRIPT: And just for the record, I've long supported a national voter ID card, aka a national identity card. See here and here for more.