Mojo - November 2009

The Economy's Future—and Obama's

| Fri Nov. 6, 2009 10:20 AM PST

Photo by flickr user Tony the Misfit used under a Creative Commons license.Photo by flickr user Tony the Misfit used under a Creative Commons license.When it comes to electoral predictions, I'm kind of old-fashioned: I think that most elections are determined by the economic situation, and that if the economy is bad, people tend to want to throw the bums out. Whoever the bums are at a given moment isn't particularly relevant. Big news today is that the official unemployment rate is now over 10 percent. Paul Krugman worries that President Obama's agenda was far too modest (i.e., the stimulus was too small) and that "the fateful decision, early this year, to go for economic half-measures may haunt Democrats for years to come." Reuters' Felix Salmon recently received a note from Mohamed El-Erian, the CEO of PIMCO, an enormous investment company, making a related point:

The problem is that very few people in DC are thinking of this as a structural challenge. Until they do, there is little basis for the sketch of a potential solution.

The issue, Felix explains, is that unemployment will probably remain high "for the foreseeable future," and unemployed people don't spend lots of money, so consumer spending will remain depressed. There aren't any easy solutions to that problem. Felix says he thinks that Washington is aware of the problems—"most of them have been diagnosed sharply at one point or another by Larry Summers"—but "we’re at the limits of what monetary policy is able to achieve and the nation cannot afford to repeat the monster hit to the US [fiscal situation] which we’ve seen over the past couple of years."

What does this mean for President Obama and the Democrats? It means that they had better figure out what they need to do to fix the economy. If the economy is still in bad shape at the midterm elections, the Democrats will lose a bunch of seats. But if it's still in bad shape in 2012, the consequences could be far more dramatic.

The American political system has historically only seen big changes in times of great crisis. A still-depressed economy in 2012 would definitely qualify. If that happens, you're likely to see extremists come to the fore in both parties, suggesting far more radical solutions to the country's problems. A Barack Obama presiding over 10 percent unemployment in 2012 is a Barack Obama who will be primaried from the left. And with the Republican party already hurtling full speed towards the right, you could see a Ron Paul-type candidate who espouses truly wacky economics challenging seriously for the GOP nod.

It's important that liberals remember that FDR wasn't elected in 1932 because he was liberal. He was elected because the economy was a disaster and people wanted to throw the bums out (see photo above). If the economy is still in the dumps in 2012, no one will care about Obama's or the Democrats' excuses or the process obstacles that kept liberals from achieving their goals. Economic chaos causes unrest, and unrest is disastrous for incumbents. So liberals better hope that the administration understands the danger it's in.

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Low Standards

| Fri Nov. 6, 2009 9:36 AM PST

Photo by flickr user dionhinchcliffe used under a Creative Commons license.Photo by flickr user dionhinchcliffe used under a Creative Commons license.Kevin is sarcastically celebrating the Senate's passage of unemployment insurance extension (which was packaged with the homebuyer tax credit that pretty much every expert thinks is a bad idea):

And Democrats only had to break three separate filibusters in the Senate to get this passed! The first filibuster was broken by a vote of 87-13, the second by a vote of 85-2, and the third by a vote of 97-1. The fourth and final vote, the one to actually pass the bill, was 98-0. Elapsed time: five weeks for a bill that everyone ended up voting for.

Why? Because even though Republicans were allowed to tack on a tax cut to the bill as the price of getting it passed, they decided to filibuster anyway unless they were also allowed to include an anti-ACORN amendment. Seriously. A bit of ACORN blustering to satisfy the Palin-Beck crowd is the reason they held up a bill designed to help people who are out of work in the deepest recession since World War II. Details here and here. That's called taking governing seriously, my friends.

Even Kevin's (admittedly meager) expectations for Congressional behavior are probably unrealistic. Of course movement conservatives (i.e., the vast majority of the congressional GOP) don't take governance seriously—their central belief is that government can't actually do anything right. Why worry about governance if it won't make a difference anyway? Better to just focus on crass politics and try to get back in power so you can keep Democrats from wasting money on things that you don't think will work. One of the big reasons American government doesn't work very well is that most of one party has an ideological commitment to the idea that government doesn't work very well.

That said, if we're going to set the bar low, let's set it really low. While Democrats can't seem to pass health care reform or financial reform or climate change legislation, they can at least stop Republicans from implementing conservatives' very worst ideas. We may not have any meaningful progressive reform, but at least we haven't made the health insurance industry more like the credit card industry, like the GOP wants. Just yesterday, the Senate killed two particularly bad ideas: Lindsey Graham's proposal to prevent 9/11 suspects from ever being tried in federal courts and David Vitter's plan to waste money and ruin the census by adding a question about respondents' immigration status 18 months after the survey was finalized. It could always be worse.

Congressional Oversight Panel: Guarantees Carry "Enormous Risk"

| Fri Nov. 6, 2009 9:34 AM PST

Government-backed guarantees of financial assets carry "enormous risks" and created perverse incentives for businesses, but taxpayers will probably turn a profit from them, according to a report [PDF] released Friday by Elizabeth Warren's Congressional Oversight Panel (COP), which is charged with monitoring the bank bailouts. "At its high point, the federal government was guaranteeing or insuring $4.3 trillion in face value of financial assets" in the guarantee programs of the Federal Reserve, the FDIC, and the Treasury, according to a COP press release. That number means that guarantees were the "single largest element of the government's response to the financial crisis." 

By standing behind high-risk assets held by "potentially insolvent institutions," the panel said, the government was taking a huge risk. And the guarantees unquestionably distorted market behavior:

These guarantee programs also created significant moral hazard. Guarantees create price distortions and can lead market participants to engage in riskier behavior than they otherwise would. In addition to the explicit guarantees analyzed in the Panel's report, the government's broader economic stabilization effort may have signaled an implicit guarantee to the marketplace: the American taxpayer stands ready to provide a financial backstop for certain markets and large market players to avert possible economic collapse. To the degree that investors, lenders and borrowers believe that such an implicit guarantee remains in effect, moral hazard will continue to distort the market.

You can see this problem most clearly in the return of highly leveraged risk-taking and massive bonuses to Wall Street just months after the entire global economy nearly collapsed. Kevin Drum will have more on this in the next issue of the print magazine.

Corn To Weekly Standard: I Accept

| Fri Nov. 6, 2009 9:24 AM PST

Please, you can stop with those congratulatory emails, telephone calls, Facebook messages, tests, and Twitter DMs. I already realize that I have won the much-coveted award: the Weekly Standard's "Twitter of the Day." On a daily basis, the staff of that conservative magazine reviews tens of millions of Twitter messages—"tweets," for those in the know—in order to identify that one very special less-than-140-character message deserving of their notice. We salute them for this hard work. After all, it does entail much sacrifice. Were they not poring over all the world's Twitter feeds, they could be reporting on Dick Cheney's hourly observations regarding national security. Thankfully, Cheney has not yet begun to tweet—he's dithering on Twittering—for were he doing so, the rest of us would not stand a chance to win this particular prize.

What won the judges' fancy was this tweet of mine:

And hundreds of millions don't. RT @GOPLeader: AP: ‘Thousands rally’ to protest Pelosi #healthcare http://bit.ly/1JUFJP #Housecall #killbill

I was responding to a message that had been sent out minutes earlier by Republican House minority leader John Boehner, who was celebrating the arrival at the Capitol of thousands—yes, thousands!—of conservative citizens who were willing to yell and scream and hold signs of hate to beat back the emerging health care reform legislation.

The award citation, written by Michael Goldfarb (who last received attention in these digital pages for confusing disagreement with treason), was direct and simple in its reasoning:

Good point, Corn. Just like the hundreds of millions who didn't march on Washington for civil rights or to end the war in Vietnam. Or the hundreds of millions who didn't take to the streets to protest the Iraq war. Or the hundreds of millions who didn't vote for Barack Obama. The silent majority strikes again!

Who knew that Goldfarb could perform such an exquisite imitation of Stephen Colbert? His portrayal of a right-wing fan of twisted logic, who is unable to discern the purposeful excess of my winning Twitter message, was spot-on. (Hooray for you, sir.) Of course, just such a person would suggest that the presence of a few thousand angry conservatives trumps the massive electoral majority assembled by President Obama in last year's election. And just such a person would also ignore the inconvenient fact that both houses of Congress are controlled by sizable Democratic majorities that were placed there by millions throughout the land. And just such a person would most certainly claim, all evidence to the contrary, that the thousands who were bused by conservative outfits to this mid-day gathering represent the true majority of this great country.

Given Goldfarb's bravura performance—inspired by my few meager words—I can only humbly say one thing: I accept.

You can follow David Corn's postings and media appearances via Twitter—as Michael Goldfarb knows.

Climate Bill: Friend or FOE?

| Fri Nov. 6, 2009 8:30 AM PST

Most of the big environmental groups are cheering the advancement of climate legislation out of the Environment and Public Works Committee on Thursday, but the farther-left environmental groups are still not happy with the bill.

Laudatory responses came almost immediately from Sierra Club, National Wildlife Federation, Environmental Defense Fund, and the Natural Resources Defense Council, to name a few. But Friends of the Earth—which along with Greenpeace was the only major green group to oppose the House climate legislation—blasted the bill as "a woefully disproportionate response to the tremendous economic, security and public health threats posed by global warming."

"It is extremely disconcerting to hear scientists speak about the level of action needed to prevent radical and dangerous climate destabilization, and then to see how far short even one of the most environmentally friendly committees in Congress has fallen," said Friends of the Earth President Erich Pica in a statement.

While some portions of the bill have been improved over the House bill, Friends of the Earth identified a number of concerns: "a poorly regulated carbon trading scheme," an allocation system that "showers polluting corporations with billions of dollars" without requiring stringent carbon reductions, and "massive carbon offset loophole."

"These flaws are unacceptable, and they are the result of a defective political system in which polluting corporations, Wall Street traders, and their lobbyists continue to exert far too much influence," Pica's statement said. And Pica said the negotiating effort by John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) appeared "to be moving forward with an attempt to produce an even weaker bill—one friendlier to the oil, coal and nuclear industries."

 

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Need To Read: November 6, 2009

Fri Nov. 6, 2009 4:25 AM PST

Today's must reads:

Get more stuff like this: Follow me on twitter! David Corn, Mother Jones' DC bureau chief, also tweets, as does MoJo blogger Kate Sheppard. So do my colleagues Daniel Schulman and Rachel Morris and our editors-in-chief, Clara Jeffery and Monika Bauerlein. Follow them, too! (The magazine's main account is @motherjones.)

Soldier Shootout at Fort Hood Leaves 12 Dead

| Thu Nov. 5, 2009 3:14 PM PST

At least one US soldier (two other suspects are in custody) went on a shooting rampage at Fort Hood, Texas today, killing 12 and injuring 31. The slain shooter has been identified as Major Malik Nadal Hasan. What that name means, if anything, we don't know yet, so let's not immediately jump to 9/11-type conclusions.

Longer and more frequent deployments, for a shrinking and less-qualified fighting force, means our increasingly stressed soldiers are under more pressure than ever. The Army has already seen PTSD spread among its ranks, its suicide rate skyrocket, and domestic violence (and this is a different type of domestic violence) has also plagued Army bases under the strain of dual wars.

President Obama called the Fort Hood shootings a "horrific outburst of violence." He added: "It is difficult enough to lose" soldiers overseas, but "horrifying that they should lose their lives at an Army base in the U.S."

The Anti-Chamber

| Thu Nov. 5, 2009 2:10 PM PST

The Chamber of Commerce may be taking an ever-so-slightly less obstructionist approach to climate issues lately. But now it has some new competition in the lobbying realm: American Businesses for Clean Energy, a coalition that has formed to push for climate legislation.

The group, which debuted on Wednesday, has 23 members, ranging from retailers like The Gap to major utility PNM Resources of New Mexico, one of the companies that quit the Chamber over its climate stance.

"There's a real hunger on behalf of businesses to have their voices heard, and for Congress to realize they are really clamoring for legislation," says Jenn Kramer, a spokesperson for New Jersey utility PSEG, another member of the new coalition. "Absent a price on carbon there's a real paralysis in the energy industry in terms of making investment decisions."

The group isn't pushing for specific targets, timetables, or funding for various energy sources. Their stated goal is simply to encourage Congress to enact "clean energy and climate legislation that will significantly reduce greenhouse gas emissions."

The new coalition isn't the only pro-climate business group out there. The U.S. Climate Action Partnership, launched in January 2007, is a business-environmental coalition that includes 26 major companies, and crafted a blueprint for climate legislation in January that became the framework for both the House and Senate bills. Two USCAP members—FPL, a Florida utility, and PNM—are also part of the new coalition.

And in March, the sustainable business group Ceres launched Business for Innovative Climate and Energy Policy (or BICEP, for short) to advocate for climate legislation. That group is more oriented to companies that provide consumer products, like Levi Strauss & Co., Nike, and Starbucks.

The Day John Boehner (and the GOP) Went Nuts

| Thu Nov. 5, 2009 12:53 PM PST

At today's small Tea Party rally on Capitol Hill, as a few thousand right wing activists railed against the emerging health care reform legislation, Republican House minority leader John Boehner came before the angry crowd (and its signs declaring the president a "red" and a "traitor") and declared that the health care bill is the "greatest threat to freedom that I have seen."

The greatest? Greater than Hitler's Nazism? Greater than Soviet communism?

With this remark, Boehner steered his GOP congressional caucus—and many members of it spoke at this Republican-supported rally—into the center of the wing-nut wing of his party. Two days after a moderate GOPer and a faux moderate GOPer won their respective gubernatorial races in New Jersey and Virginia—and a true-blue conservative Republican lost a congressional race in relatively conservative upstate New York—Boehner is doubling down with the Glenn Beck-following, Obama-hating extremists of the conservative movement. No wonder that the strategists at Democratic Party HQ have been saying, Thank you, Michele Bachmann. She's turned the No. 1 Republican in the House into a Tea Party stooge.

You can follow David Corn's postings and media appearances via Twitter. More coverage of the Tea Party rally from Mother Jones' Stephanie Mencimer is coming soon.