Kevin Drum

Obama's Choice

| Thu Mar. 12, 2009 10:47 PM PDT
The New York Times reports that President Obama has a decision to make:

In separate, strongly worded orders, two judges of the federal appeals court in California said that employees of their court were entitled to health benefits for their same-sex partners under the program that insures millions of federal workers. But the federal Office of Personnel Management has instructed insurers not to provide the benefits ordered by the judges, citing a 1996 law, the Defense of Marriage Act.

....Now, Mr. Obama is in a tough spot. If he supports the personnel office on denying benefits to the San Francisco court employees, he risks agitating liberal groups that helped him win election. If he supports the judges and challenges the marriage act, he risks alienating Republicans with whom he is seeking to work on economic, health care and numerous other matters.

Look: this isn't so tough.  Just do the right thing.  How hard is that?

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Testing Our Kids

| Thu Mar. 12, 2009 2:38 PM PDT
In his big education speech on Tuesday, President Obama said this:

Today’s system of fifty different sets of benchmarks for academic success means fourth-grade readers in Mississippi are scoring nearly 70 points lower than students in Wyoming—and getting the same grade.

Bob Somerby wants to know what he's talking about:

According to Obama, fourth-grade readers in Mississippi “are scoring nearly 70 points lower than students in Wyoming—and getting the same grade.” Does anyone know what that actually means? Mississippi kids are scoring “seventy points lower” on what? (Seventy points can represent a very large or very small difference in achievement, depending on the measure in question.) And what “same grade” are both groups of kids getting? This was a very important speech—and this was a central contention within it. And yet, this statement makes no sense at all. (The spectacularly unhelpful White House “fact sheet” makes no attempt to explain it.)

I'll take a guess.  Obama was talking about state testing regimes, and a couple of years ago the Department of Education released a study (here) that tried to convert passing scores on the various state tests to more standardized NAEP scores.  In fourth grade reading, they found that the passing score in Wyoming was equivalent to an NAEP score of 228, while in Mississippi it was equivalent to an NAEP score of 161.  That's a difference of 67 points.

This was a poorly worded passage in Obama's speech, but my guess is that "getting the same grade" was supposed to mean something like "meeting the minimum state requirement."  As Bob says, there are some pretty obvious explanations for all this, but still, the difference between the highest and lowest state standards really is an astonishing 70 points or so (very roughly equivalent to seven grade levels).  That's probably what Obama was getting at.

Vetting Hell

| Thu Mar. 12, 2009 12:09 PM PDT
We have yet another casualty in the vetting wars:

Democratic sources say that H. Rodgin Cohen, a partner in the New York law firm Sullivan & Cromwell LLP, and the leading candidate for Deputy Treasury Secretary, has withdrawn from consideration.

....Democratic sources said that an issue arose in the final stages of the vetting process.

Cohen had risen to the top after the withdrawal last week of expected deputy treasury secretary pick Annette Nazareth. As one source put it, "it's back to the drawing board."

Without knowing what the "issue" was, I guess there's no way to comment on this.  But if it didn't come up until the final stages of the vetting process, I wouldn't be surprised if it's substantively minor but politically dangerous, the kind of thing that grandstanding senators will turn into a cause célèbres even though they know it's fundamentally trivial.  And when they're done, they'll go back to asking why Obama isn't taking the financial crisis more seriously.

Bah.  Get the Senate out of this whole process.  Let 'em confirm cabinet heads and leave it at that.  Do they really need to pretend to care about every deputy and assistant deputy too?

Bottle Wars

| Thu Mar. 12, 2009 11:52 AM PDT
Hanna Rosin — currently nursing her third baby — says she accidentally picked up a magazine one day and discovered that breast feeding isn't quite the miracle cure everyone thinks it is these days.  In fact, the studies on its benefits are mostly pretty indeterminate:

Extended breast-feeding did reduce the risk of a gastrointestinal infection by 40 percent....in real life, it adds up to about four out of 100 babies having one less incident of diarrhea or vomiting.

....What does all the evidence add up to? We have clear indications that breast-feeding helps prevent an extra incident of gastrointestinal illness in some kids—an unpleasant few days of diarrhea or vomiting, but rarely life-threatening in developed countries. We have murky correlations with a whole bunch of long-term conditions. The evidence on IQs is intriguing but not all that compelling, and at best suggests a small advantage, perhaps five points; an individual kid’s IQ score can vary that much from test to test or day to day.

....So overall, yes, breast is probably best. But not so much better that formula deserves the label of “public health menace,” alongside smoking. Given what we know so far, it seems reasonable to put breast-feeding’s health benefits on the plus side of the ledger and other things—modesty, independence, career, sanity—on the minus side, and then tally them up and make a decision. But in this risk-averse age of parenting, that’s not how it’s done.

It's an interesting read.  Her takeaway is that breastfeeding is probably a good thing, but being manic about doing it exclusively isn't really justified.  Letting Dad warm up a bottle of formula in 3 in the morning isn't likely to do any harm, and the extra sleep might make you a better mother in the long run.

Frozen Pork

| Thu Mar. 12, 2009 11:07 AM PDT
Jonathan Stein and David Corn have perused the recently passed omnibus spending bill in search of the dreaded earmark, and guess what?  Alaska got a lot of them!  So what does that firebreathing scourge of earmarks, Sarah Palin, have to say about that?

Asked by Mother Jones about the Alaska earmarks, Bill McAllister, Palin's communications director, pointed to Sen. Lisa Murkowski (R-Alaska) and Rep. Don Young (R-Alaska) as responsible for these provisions. But in an email, he noted that a "few of [the Alaska earmarks] were requested directly" by Palin. But how many? And which ones? McAllister declined to say.

Earmark opposition is so 2008, darlings.  How long do you think it will be before Palin flip-flops yet again and decides she supports the Bridge to Nowhere after all?

Chart of the Day - 3.12.2009

| Thu Mar. 12, 2009 10:33 AM PDT
Should healthcare reform include a public option?  That is, even if most people continue to get their healthcare via private insurers, should they have the option of signing up with a public plan if they want to?

The argument in favor is fairly simple: it keeps private insurers honest.  If the free market really does produce efficiencies and lower costs, then private plans ought to be able to provide medical services for less than the bloated government bureaucracy that runs Medicare.  If it turns out they can't, then they'll go out of business.

The argument against, such as it is, is that a public option will....what?  Force doctors to accept lower payment by fiat, I guess.  Or compete unfairly in some way.  I'm not sure.  My own guess is that a public option would be a boon for private insurers.  They really don't want to treat the sickest, costliest patients, after all, and even if they're required to insure all comers they'll still do everything they can to avoid taking them on.  That's a whole lot easier if turning the hardest cases away merely means they sign up for Medicare rather than being left to die in the street.

Anyway, it turns out the American public agrees.  In a recent survey, 71% said they favored "access to affordable, quality health care for all Americans even if it means a major role for the federal government."  This held up even under a barrage of hostile questions.  Ezra Klein summarizes:

The poll was conducted by Lake Research Partners and it tests reactions to the public insurance option seven ways to Sunday. It asks whether the public insurance option "will have an unfair competitive advantage over private insurance because the government will set rules that favor the public plan" and suggests that "a new public health insurance plan will reimburse doctors and hospitals at much lower rates, causing many doctors and hospitals to shift higher costs onto people who buy private health insurance." It dangles that "a public health insurance plan will be another big, government bureaucracy that will increase costs to taxpayers" and warns that it might "force people into lower quality care including long waiting times and rationing of care."

It doesn't matter. In case after case after case, the public insurance option retains majority support.

The bad guys haven't started up their PR blitz yet, of course, so this could all change.  But it's an encouraging sign.

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Does Dinner Matter?

| Thu Mar. 12, 2009 9:58 AM PDT
Matt Yglesias is unhappy with Matt Bai's dismissive attitude toward political scientists.  Bai says sniffily, "My dinnertime conversation with three Iowans may not add up to a reliable portrait of the national consensus, but it’s often more illuminating than the dissertations of academics whose idea of seeing America is a trip to the local Bed, Bath & Beyond."  Matt responds:

The events of the day play out against a larger structural backdrop. And it’s just not possible to try to understand them a-theoretically. What journalists unschooled in political science tend to do is to substitute prejudice for understanding. So you notice that in Maryland and Virginia there are a lot of well-to-do Democrats and start writing stories which presuppose that poor people are generally Republicans and rich people are generally Democrats. An alternative approach would be to read Andrew Gelman’s book and you’d see that this is an idiosyncratic feature of a small portion of the country and that, overall, high income is a strong predictor of Republican voting.

To some extent, this is just the usual battle between the hacks and the wonks, between researchers and reporters, or (from my past life) between sales and marketing.  The obvious and boring answer to all this is that both are important: you need to talk to real people and you need to understand the larger trends and forces that shape their attitudes.  But willy nilly, most of us tilt toward one side or the other.

In the case of journalists, one reason they tilt toward the a-theoretical side is that they're in the business of generating human interest.  Not only is that what their readers want to read (including me, even though I'm firmly on wonk/researcher/marketing side of things), but it's the only way to produce daily stories that are meaningful.

Here's an example that I've struggled with a bit: Why did Barack Obama win last year's election?  My answer — and I genuinely think this is right — is that he won because two fundamentals were overwhelmingly in his favor: (a) a Republican had been in the White House for eight years and (b) the economy was failing.  Put those two factors together and Obama was a shoo-in to win by about 6-8 points in the popular vote.  And guess what?  He won the popular vote by a little more than 6 points.

But there's a corollary here that's hard to ignore.  If you believe this, then it means that Sarah Palin didn't matter.  Jeremiah Wright didn't matter.  McCain's meltdown over the economy didn't matter.  Obama's phenomenal fundraising and state organization didn't matter.  None of that stuff mattered.  McCain just had too big a hurdle to clear.  As long as Obama avoided some kind of epic gaffe, he was going to win.  All the ink spilled on strategy and tactics and debates and campaign finance and dinners with Iowans was just so much hooey.  None of it mattered.

But that's a tough nut to swallow, isn't it?  I'm pretty deeply into this stuff, and even I can't really swallow it.  What's more, it makes for really lousy journalism.  So instead we get the stories.  They may or may not represent reality, but at least they're interesting.

Fixing the Economy

| Thu Mar. 12, 2009 9:15 AM PDT
Megan McArdle is unhappy with how Obama is running the country:

Having defended Obama's candidacy largely on his economic team, I'm having serious buyer's remorse.  Geithner, who is rapidly starting to look like the weakest link, is rattling around by himself in Treasury.  Meanwhile, the administration is clearly prioritized a stimulus package that will not work without fixing the banks over, um, fixing the banking system. Unlike most fiscal conservatives, I'm not mad at him for trying to increase the size of the government; that's, after all, what he got elected promising to do.  But he also promised to be non-partisan and accountable, and the size and composition stimulus package looks like just one more attempt to ram through his ideological agenda without much scrutiny, with the heaviest focus on programs that will be especially hard to cut.

I picked this at random because it's representative of a groundswell of similar complaints.  And I suppose I should be happy with this groundswell since I think it's pretty important that we fix the banks and fix the banking systems.  Still, what exactly do people expect?

Did Obama prioritize the stimulus first?  Of course he did.  It's something that could be passed fairly quickly, and the faster it was passed the faster the money could work its way into the economy.  Fixing the banks is just the opposite.  Even the most optimistic observers don't think the banking system can be repaired any time soon.

There are two aspects to this.  First, what should we do about weak individual banks?  Second, how should the financial regulatory system be reformed?  Neither of them is something that's amenable to a quick fix.

On the first, Geithner announced a plan a few weeks ago, and Wall Street immediately began whining about how vague it was.  At the time, I sort of agreed, but since then I've begun to wonder just what people expected.  That Geithner would walk up to the podium and announce he was seizing Citigroup?  Some magical plan to turn toxic waste into gold?  A trillion dollars to shower on the bankers of America?

But look: there's just no quick solution here.  At least, not one that's practical.  He can't take over banks without some pretty good justification, and the stress tests he announced are the minimum necessary for that justification.  His plan to value toxic waste probably won't work, but that's because probably nothing would work.  And while lots of free money for bankers would be popular with bankers, it ain't gonna happen.

So, yeah, in public he appears to be dithering.  And the rock jawed titans of Wall Street are doing the same thing they always do when things aren't quite going their way: they weep and moan and panic.  It's quite a spectacle.  But honestly, this is something that's going to take months to address at a minimum.  That's just the way it is.  Going into a panic because we're well into his seventh week and Obama hasn't cured the economy is silly.

As for regulatory reform, well, I'd like to hear more about it too.  But that's something that will be the work of years.  And it won't have much immediate effect on the current financial crisis anyway.

So, yeah, Geithner could stand to be a little more reassuring in public, and it would be nice if he could fill empty Treasury positions a little faster, and I'm holding out hope that his stress tests will lead to some dramatic action by mid-Spring.  But all legends to the contrary, FDR didn't fix the world in a hundred days, and the fact that the internet has made everybody even more impatient than usual doesn't mean Obama can fix it that fast either.  I think it's time to chill a bit.

Just a Little Off the Top

| Wed Mar. 11, 2009 3:45 PM PDT
Yesterday Citigroup announced that it had been profitable in January and February and the stock market rejoiced.  Citigroup shares jumped 50%.  But how about their bonds, probably a better measure of what the market really thinks of Citi's chances of surviving?  Answer: not so good.

U.S. bank debt has lost 7.8 percent and yields have jumped to record levels compared with benchmark rates in the past month....The concern among debt holders is reflected in Citigroup’s $789 million outstanding in 7.25 percent subordinated notes due in October 2010, which fell 7 cents today to 70 cents on the dollar and have lost 23.7 cents in the past three weeks.

Italics mine.  70 cents on the dollar, eh?  Basically, this means that Vikram Pandit's cheery memos notwithstanding, the market already figures that either (a) Citi will eventually be forced into some kind of debt-for-equity swap that will slash the value of their claims, or (b) the government will nationalize Citigroup and then decide not to pay off bondholders at par.  This is bad for current bondholders, but Felix Salmon thinks low bond prices will eventually attract the bottom feeders:

Increasingly they're going to start representing significant potential gains for people who are buying at today's levels and hoping to be paid off at par — paid off, that is, essentially by taxpayers. Since those people can be broadly characterized as hedge-fund managers, one can foresee a lot of Congressional pushback if a large number of hedgies start pulling in tens of millions of dollars just by playing the moral hazard trade. Or, to put it another way, it's a lot easier to impose a haircut when a haircut is priced in than when it isn't.

Right.  If hedge funds start buying up Citi's bonds at 70 cents on the dollar, hoping that eventually the bank will be nationalized and its obligations guaranteed by the U.S. government, they've probably got another thing coming.  It's one thing to pay off bondholders who invested years ago in good faith, but quite another to pay off speculators hoping to cash in on a taxpayer bailout.

Still, it's tricky.  After all, how do you tell the speculators apart from the other creditors?  You can't.  So either everyone gets a haircut or no one does.  And if everyone does, nobody quite knows what will happen.  Bottom line: buying Citi bonds at current prices might be a good deal, but only if you have nerves of steel.  Their future is murky indeed.

Ross Douthat

| Wed Mar. 11, 2009 2:46 PM PDT

Marc Ambinder reports that the New York Times has hired his Atlantic colleague Ross Douthat as an op-ed columnist.  This is basically to take Bill Kristol's place as their #2 conservative columnist (alongside David Brooks) and it seems like a pretty good choice to me for a couple of reasons.  First, Ross has a fluid, intelligent writing style that's well suited to the 800-word op-ed format.  Second, he fits the post-Bush zeitgeist: he is, at core, a conservative Barack Obama.

What I mean is this: like Obama, he's always careful to acknowledge the arguments of his adversaries and to take them seriously.  Like Obama, he does this overtly and deliberately.  And like Obama, this is mostly for rhetorical effect: both of them use this technique to mask the fact that they rarely change their minds.  They might listen respectfully, but after they're done they go on doing whatever they intended to do in the first place.

This isn't a criticism (I don't change my mind very often either, after all).  In fact, it makes him a more than normally worthy dissenter to the Age of Obama.  His column should make for interesting reading.