One of the more unapologetically idiotic notions being advanced by certain conservative commentators is the idea that the poor performance of the stock markets represents a negative reaction to Barack Obama's stimulus package.
For one thing, the trading markets aren't gauges of overall economic health. They are gauges of future anticipated profits for the large corporations that make up their components. In the long run, certainly, these two things should be correlated. But they needn't be perfectly so: an oil price shock, for instance, is possibly good for the profitability of Exxon, while being damaging to the economy at large. Likewise, the announcement of a plan to take over and turnaround Citigroup, perhaps a necessary evil for economic recovery, would certainly not be good for Citigroup's shareholders, who would probably get wiped out in the process.
That's not the the basis of my critique, however. Rather, it's that this line of argumentation often cites "evidence" that flies in the face of Finance 101.
Robust markets like major stock indices are fairly good at incorporating information. They don't literally have to see an event occur in order to "price in" its effects. On Wednesday, for example, Barack Obama signed the stimulus package into law. Once this occurred, the prospects for the passage of the stimulus rose to 100%. But what had been the probability of the stimulus bill passing the very second before Obama put pen to paper? Probably about 99.999999%, accounting for the small probability of a hostile takeover by space aliens in the intervening moments. The performance of the market in reaction to such events tells us no more about how it feels about them than it does to the rising of the sun.
To the extent that we can learn anything about the market's preference for the stimulus, we'd instead need to look at those moments where the passage of a stimulus package became more or less certain, or its magnitude became significantly larger or smaller than previously anticipated. In the article I linked to above, professors Bittlingmayer and Hazlett claim to have isolated a couple of such moments:
More pointedly, key political victories for the Team Obama spending plan have not been viewed as buying opportunities on Wall Street. A string of negative market reactions began with the December 18 announcement of a stimulus bill of $700 billion (Dow down 2.5%), continued with the January 7 announcement that the actual plan would be “on the high side” (-2.7%) and continued with last week’s 61-36 Senate vote supporting the Administration’s fiscal plan. The White House victory and the new bank bail-out plan announced the following day by Treasury Secretary Geithner were met with a 5% wipe-out in the DJI, and a decline in Treasury bond yields, indicating a “flight to quality.”
Bittlingmayer and Hazlett's memories turn out to be rather selective. Take the December 18th date they describe in their article, when the markets fell by 2.5 percent. On this date, according to the Wall Street Journal Obama had outlined the broad parameters of stimulus package "worth between $675 billion to $775 billion" to Capitol Hill. Was this a surprise to the markets? Not according to contemporaneous accounts of the market's activity that day, which do not so much as mention the stimulus. Moreover, at this time, there were as many complaints that the stimulus was too small as that it was too large. As the Journal then reported:
"The biggest fear is that people will do too little," said one Democratic leadership aide, "like a start-up that fails because it didn't do enough."
Obama aides hope to keep the package below the trillion-dollar mark, a psychological threshold that could carry political consequences, as they fear being accused of adding too much to the country's long-term budget deficit.
One could advance an argument, which would be no less unconvincing than Bittlingmayer and Hazlett's, that the market was behaving badly that day because it wanted more stimulus rather than less.
How about January 7th, the next occasion cited by Bittlingmayer and Hazlett? Bittlingmayer and Hazlett's phrasing to the contrary, there was no major "announcement" about the stimulus bill that day. Instead, there were some off-handed remarks made by Obama at a morning briefing on the economy, which were described by MarketWatch as such:
President-elect Barack Obama said Wednesday that his proposals to jump-start the economy must also build a stronger nation in the long run. Obama said the size of the stimulus package hasn't yet been settled in discussions with lawmakers, but it would likely be on the "high side" of his team's estimates and lower than some economists have been recommending. The latest guesses are that it will be about $775 billion over two years.
That sort of carefully-parsed response is hardly the sort of "shock" that is likely to have altered Wall Street's expectations about the stimulus. Indeed, Wall Street had many better things to be worried about that day between a plethora of dour economic news.
And how about November 24th, when Obama rolled out his economic advisory team and prompted the Wall Street Journal headline "Obama Signals Big Stimulus Plan"? Bittlingmayer and Hazlett forget to mention this date. And little wonder why: the Dow had closed up by almost 400 points.
The fact is, there have been very few surprises in the entire debate over the stimulus package, the passage of which was more or less inevitable from the moment Obama took office, and the eventual size of which -- just under $800 billion -- was in line with the expectations that the markets had held for weeks and weeks. The nearest exception was probably on January 29th, when the initial version of the stimulus passed through the House without a single Republican vote, something which looked as thought it might theoretically imperil the prospects of the bill passing in the Senate. If the market was anti-stimulus, it should have loved this news; instead it dumped about 230 points.
Disclosure of conflict of interest: I own some mutual funds. I'd like to see 'em go up. I'm not an anti-Wall Street guy. I'm just anti-stupid.
Cable news and Rush Limbaugh are an Obama Administration foil. Today, the White House continued to signal that the dumb things that get said by administration critics on right-wing radio and cable news networks will be used by the White House as fodder for "look how irrational our critics are."
Robert Gibbs relished the opportunity to lay some wood to the cable barkers today, specifically that CNBC reporter Rick Santelli "doesn't know what he's talking about." Yesterday, as discussed here and elsewhere, CNBC's Santelli ranted that Obama's home forclosures plan unveiled Wednesday in Phoenix would not help deserving homeowners and instead help those who bore responsibility for the foreclosure crisis.
Today, it was Gibbs' turn, and he took a big whack back. First, he implied Santelli was out of touch; "I'm not entirely sure where Mr. Santelli lives, or in what house he lives, but the American people...."
Naming Santelli directly in his first answer five times, Gibbs found a way to return to his foil later for a direct shot:
"I also think it's tremendously important that for people who rant on cable television to be responsible and understand what it is they're talking about. I feel assured that Mr. Santelli doesn't know what he's talking about."
Pointing out that home values drop significantly just by virtue of being in the same neighborhood as a foreclosed house, Gibbs suggested to Santelli that it would be helpful to actually read the plan, even inviting him to the White House for a cup of coffee while he read it:
"I would encourage him to read the President's plan and understand that it will help millions of people, many of whom he knows. I'd be more than happy to have him come here and read it. I'd be happy to buy him a cup of coffee -- decaf."
The significance in all of this is not so much the particulars of any individual fight, but the willingness on the part of the White House to confront its critics directly, but picking and choosing the specific targets with forethought. The theme that has emerged, from the Rush Limbaugh dustup over "I want (Obama) to fail" on the stimulus plan, to Santelli's CNBC rant, that the White House is rational and is empathetic to what is really going on in America -- the phrase "Main Street" is uttered hundreds of times by Obama and his aides -- and the critics are set up as some combination of ignorant, out of touch, non-suffering elitists who want craven political gain and not to do what's right in a crisis.
When Obama first responded to Limbaugh, the reaction on cable news (I'm thinking of Chris Matthews in particular) was one of, "What's Obama doing? Doesn't he realize this just gives Limbaugh what he wants, elevates him to Obama's equal? Isn't that a bizarre miscalculation?" The way it's always been done is, don't give oxygen to your critics.
Well, the White House is clearly comfortable going after individuals as props, as foils, for its own arguments. It's aligned with the brand of Obama as problem-solver-in-chief, calling out specific instances and individuals to say, hey look, see what I mean about a petty political culture? By keeping examples fresh, the White House is betting that Americans will side with it, and marginalize the "people who rant on cable television."
In essence, tone implies substance. If you're "ranting," you have an agenda, you're contributing to an unhelpful public policy climate. You might attract wide attention, as the Santelli incident did (Gibbs confessed he'd been watching it over the previous 24 hours on cable). By contrast, the highly popular Obama is seen as calm, thoughtful, nuanced and deliberate. Whereas Bill Clinton probably wouldn't have been able to pull this personality contrast off (he was seen as more ebullient and combative in his personality), it works effectively for a popular Obama.
In other news from the White House today, Gibbs sent a clear signal about Roland Burris that requires a brief mention:
"I think it might be important for Senator Burris to take some time this weekend to either correct what has been said and certainly think of what lays in his future."
Gibbs insisted that wasn't a resignation call, but... it was a resignation call, with a timeline.
Let's translate. "This weekend" = we better not see your ass at Tuesday's joint session.
"[T]hink of what lays in his future," because late-night bargoers hear it all the time:
Dear Roland, you don't have to go home, but you can't stay here.
Having been born in St. Lawrence Hospital in Lansing, Michigan, I have to agree with David Sirota that Lansing mayor Virg Bernero got the better part of CNBC's Rick Santelli (not to mention Fox News's Gregg Jarrett) in this compare-and-contrast of alpha male rage:
Lansing happens to be represented by a Republican Congressman, MI-08's Mike Rogers, and if Bernero decides he wants to run for Congress, you have to love his odds. There's something to the notion that somebody born out of the working class is going to know how to talk to the working class, and Bernero exudes as much authenticity as any politician I've seen in a long while.
But as for Sirota ... Chicago's my hometown now, and I've got to defend my guys here too:
On one side, you have what Thomas Frank has called "Market Populism" - the portrayal of Wall Street's agenda as an impassioned mass-based populist movement. Check out this clip from CNBC, where the network's correspondent, Rick Santelli, is literally on the floor of the Chicago Mercantile Exchange surrounded by multimillionaire traders railing on the Obama administration for trying to help struggling homeowners, and berating people who are getting foreclosed on as "losers." Santelli is praised as a supposed "revolutionary" and the mob of financial elites around him is whooping and hollering, pretending to be a populist mob of regular Joes.
There are a lot of different species of trader. Some of them are doing pretty well for themselves. Some of the guys sitting upstairs are doing really well for themselves. But the guys in the pit wearing the ugly orange vests? It all depends on what you're trading and who you're trading it for. A run-of-the-mill block trader in Chicago makes about $45,000, and that's in exchange for extremely high stress and very little job security. A decent-sized minority of them are without college degrees. Can I think of worse jobs? Absolutely. But they are hardly the "financial elite", and they're certainly not "multimillionaires". Criticize the CNBC culture all you want -- there's much to criticize there. But lay off the guys who are trying to earn a paycheck, trading a lot of somebody else's money.
In fact, it isn't for Louisiana at all, which has phased out the system for federal races. But the practice was recently adopted by Washington State. And if a State Senator from San Luis Obispo gets his way, it might be implemented in California, which will vote on a ballot measure on the jungle primary in 2010.
So what, you're probably asking, is a jungle primary? And what does all of this have to do with Joe Lieberman?
A jungle primary -- political scientists prefer the term "nonpartisan blanket primary" -- is one in which all candidates from all parties appear together on the same primary ballot. The top two finishers, regardless of party, then advance to a run-off election, which is held at the usual date in November. (In some iterations, although not California's, this second step can be circumvented if one candidate receives an outright majority of the vote on her first try).
One of the obvious, if often ofterlooked reasons that our government tends to be so partisan is because of the primary system. The optimum ideological position to hold in order to win one's primary is quite a bit different from the theoretically optimal one for the general election -- quite a bit left of the median voter if you're a Democrat, and quite a bit to the right if you're a Republican.
We can give life to this result, if we like, by means of a simple simulation. Suppose that the voters in a state are arranged from 1 to 100, with 1 representing the most liberal voter and 100 the most conservative one. The distribution of voters, we will assume, is spread evenly throughout this spectrum. We will also assume that the state is somewhat asymmetrical in its partisan orientation -- as is California toward the Democrats. Voters 1 through 60 are Democrats, and 61 through 100 are Republicans.
Suppose that two candidates are nominated from each party, with each party holding a closed primary. The candidates are selected randomly from within some point in their party's ideological space. We then assign each voter to find her best ideological match. If there's a liberal Democrat at space 10 and a conservative one at space 50, we assume that the voter at space 20 will pick the candidate at 10, who is slightly closer to her ideological preferences. Then, we pit the winner of each primary off of one another, with the entire state undergoing the same exercise.
If we simulate this process thousands of times, and assign the winning candidate from each simulation to her space on the ideological spectrum, we get a result that looks like this:
That is, we get sort of a camel hump distribution, with one hump peaking just slightly to the right of the median Democratic voter, and the other just slightly to the left of the median Republican. There's almost no hope for candidates on the ideological extremes -- they'll have a lot of trouble winning the general election, unless the other party nominates a candidate who is even more extreme. But ironically, life is also not so good for candidates in the middle. A centrist Democrat will usually be defeated by a more liberal one in her primary, likewise, a centrist Republican is vulnerable to being primaried by a conservative.
This happens to give a nice little bonus, by the way, to whichever party happens to occupy the majority of the electorate. This is because the median voter in the majority party's ideological space will be closer to the center of her state's electorate than the median voter amongst the minority party. Therefore, the majority party will tend to nominate a candidate who is more acceptable to the state as a whole; in our simulation, for instance, a party with roughly a 60/40 advantage in voter affiliation will wind up winning the general election almost 75 percent of the time. If the minority party is not careful, in fact, it may go into a death spiral, nominating ever-more extreme candidates thanks to the primary process and alienating the voters in the middle that it is supposed to be appealing to.
But now suppose instead that the state holds a jungle primary. Four candidates are picked at random throughout the ideological space (from 1 to 100), without regard to party; each voter then picks the one alternative closest to her. The top two candidates advance to the run-off, and the voters pick again. The distribution of winners using that process looks more like this:
This is not quite a bell curve -- it's more like a bell curve with a buzzcut -- but the salient feature is that it's now all about the candidates in the middle of the political spectrum, the very candidates who were having trouble winning their partisan primaries before. If every state had a jungle primary, we'd have a Senate full of Susan Collinses -- and Joe Liebermans. (Or think of all the weird candidates that tend to come out of Louisiana -- very conservative Democrats like Mary Landrieu and very moderate Republicans like Joseph Cao).
This jungle primary also turns out not to be quite as favorable of an outcome to the majority party; a Democratic candidate won about 70 percent of the simulations using the jungle primary versus 75 percent under the traditional system. Moreover, the Democrats who did win tended on average to be more conservative (although the Republican winners were likewise more moderate). It's not a surprise, then, that the legislator who was pushing this proposal in California was Abel Maldonado, a Republican.
The jungle primary system does theoretically benefit the voter: a random voter in a random election will, on the average, wind up with a candidate slightly closer to her ideological preferences under the jungle system than she would have under partisan primaries.
But the measure, I'd guess, will not pass in 2010. The California Democratic Party has ample reason to oppose it. And some Republican higher-ups might come out in opposition too, since the jungle system tends to reduce the importance of parties, period. Partisans like parties: there's something they can actually agree upon. And here's something else: nobody wants to live in the land of a thousand Liebermans.
A widely-discussed New York Times piece this morning, citing advisers and Administration officials, suggested that Kansas Governor Kathleen Sebelius had emerged as the leading candidate for Health and Human Services Secretary, the post for which initial nominee Tom Daschle withdrew two weeks ago.
Advisers described her as “the leading candidate,” although they said other names were still in discussion and emphasized that no final decision had been made.
Despite other concordant reports citing White House officials on condition of anonymity, including from Juliana Goldman (Bloomberg) and Caren Bohan (Reuters), there is some small pushback going on right now.
A White House spokesman told FiveThirtyEight that no decision has been made, but that Sebelius is under consideration.
A CBS News' headline today reads: "Reports On Sebelius As HHS Secretary Are Premature, Source Tells CBS News." What remains unclear is whether, stung by a series of false starts on Cabinet nominations in recent weeks, the White House is taking extra care to dot all the "i"s and cross all the "t"s before making an announcement, or whether other rumored nominees Gov. Phil Bredesen (D-TN), former Gov. John Kitzhaber (D-OR), or Obama's transition chief of staff John Podesta are truly still in the running. TPM's Matt Cooper is hearing that it's the former, noting that "outside groups following this closely tell me that Sebelius is undergoing final vetting and the White House wants to be extra, extra careful not to have this one blow up."
Republican Senators and the NRSC would seem to have every incentive in not having to run against Sebelius in Kansas in 2010. Thus, it's hard to imagine any kind of tough fight with an HHS nomination. Perhaps that's one of her biggest appeals from the White House's perspective, a smooth confirmation after a recent series of Cabinet misfires.
The White House will be hosting the National Governors Association Sunday night, and both Sebelius and Bredesen will be present. Having an announcement prior to Obama's Tuesday night address to a joint session of Congress (a pseudo-State-of-the-Union address) would seem the optically obvious path.
Reports, including this from the Wall Street Journal, suggest that, if selected, Sebelius would only become HHS Secretary, and would not head the White House Office of Health Reform.
In the Democratic-oriented blogosphere, who seem to have gotten the non-starter reaction on their collective favored candidate, former Vermont Governor and DNC Chairman Howard Dean, the most clear opposition from Obama's own party has focused on Bredesen. From DailyKos to Huffington Post to AMERICAblog to The American Prospect to The New Republic, the opposition to Bredesen centers on mistrusting his role as HMO entrepreneur and effective health care reformer at a time when massive reform is needed.
The opposition to Sebelius from Democrats is more strategy-oriented, if one assumes Sebelius would want to run for Sam Brownback's Senate seat in 2010. As Nate updated earlier today, if Sebelius is off the board, so is the prospect of Democrats picking up a valuable seat in the Kansas race. While major health care reform is expected to be a large policy agenda prior to the 2010 midterms, nobody thinks that critical votes in the 112th Congress won't be needed. Democrats are going to need every ally possible in a Senate that no longer seems to need a simple majority but a 60-vote majority to pass legislation. If Sebelius indeed gets the nod, it's clear that Republicans would have major reason to celebrate a guaranteed hold along with the opportunity to consolidate resources in defending fewer seats. Losing the Daschle nomination may have cost Democrats a Senate seat pickup.
We'll wait until the first of the month to do a more comprehensive update, but a couple of obvious changes in the meantime:
With Kathleen Sebelius' likely move to HHS, Kansas moves completely off the radar screen.
The Democrats clearly aren't being helped by Roland Burris' antics in Illinois, so that race moves up a little -- and by the way, I think people are underestimating the probability that this eventually moves in the direction of expulsion. Nevertheless, this is a bit of a mixed bag as far as the Senate seat in 2010 goes, since it now seems highly implausible that Burris will eventually win his party's nomination, clearing the way for a candidate like Alexi Giannoulias or Jan Schakowsky who might have broader electoral appeal. It won't be pretty between here and there, but Illinois is a state in which the Democrats have a lot of rope with which to hang themselves.
Chris Dodd's approval ratings have been so consistently poor that Connecticut makes its first appearance in the Top 15, even though it's less than clear whether the GOP will be able to nominate a viable alternative.
And Iowa moves down slightly, simply because every month that Chuck Grassley does not retire is a small bit of good news for the GOP.
The Administration seems prepared to spend about $50 billion out of TARP funds (with additional funding coming from Fannie and Freddie) on the anti-foreclosure plan. That may be all well and good. I don't have any specific objection to the proposal -- in fact, it seems rather clever, to the extent I understand it. I'll confess, as someone who made a conscientious decision to rent rather than buy, to some modest and selfish annoyance at rewarding folks who didn't make as good of a guess about the future of home prices. And I'd probably feel even more annoyed if I had an otherwise-eligible mortgage that didn't happen to originate with Fannie Mae or Freddie Mac. But there are rather arbitrary sets of winners and losers in most everything the government is doing these days: equity holders in whichever BankCorp just happens to get TARP funds, for instance, or skilled workers in whatever industries happen to have been targeted by the stimulus package. That sort of thing is simply unavoidable when the government has to spend this much money this quickly. The folks targeted by this program, at least, seem liable to be just the sort of folks who have had to do the most belt-tightening, and so the program may have some secondary or tertiary stimulative effects.
What's interesting, though, is that having $50 million less in the till would seem to make some of the more 'creative' approaches toward leveraging TARP funds to recapitalize the banks that much more difficult to accomplish. And it's certainly not going to be easy to get any further such appropriations through the Congress. Does this then imply that Obama and Geithner are tipping their hand in terms of steering toward some sort of nationalization plan on the banks?
The chart that follows details the quarterly change in alcohol purchased for home consumption, adjusted for inflation and dating all the way back to 1959. We can compare this against the quarterly change in real GDP:
As you can see, there has generally not been much of a relationship between alcohol purchases and changes in GDP -- the correlation is essentially zero. Nor have alcohol purchases historically been any kind of lagging or leading indicator.
But something was very, very different in the fourth quarter of 2008. Sales of alcohol for off-premises consumption were down by 9.3 percent from the previous quarter, according to the Commerce Department. This is absolutely unprecedented: the largest previous drop had been just 3.7 percent, between the third and fourth quarters of 1991.
Beer accounts for almost all of the decrease, with revenues off by almost 14 percent. Wine and spirits were much more stable, with sales volumes declining by 1.6 percent and 0.9 percent respectively.
Now, there are several plausible explanations for this. Alcohol sales -- but particularly beer -- had been on something of a hot streak prior to the 4Q, so perhaps there was some reversion to the mean. Perhaps people are substituting Michelob and Coors for more expensive microbrews like Alpha King and Dogfish Head. (This is unpatriotic, by the way, since all the macrobrews are now owned by foreign-based multinational conglomerates. Stimulate your country -- and your tastebuds!).
Perhaps retailers are discounting their prices, or brewers are passing along cost savings to their consumers (there had been a hops shortage for much of 2007-08). All of these are probably factors to some extent or another.
Nevertheless, it's absolutely startling to see a major consumer staple experience a sales decline like this.
It's not just beer, either. Sales of jewelry and watches were off by 7.2 percent in the fourth quarter, the third-largest drop ever recorded. Casino gambling receipts are down about 8.5 percent from a year ago, far and away the largest decrease ever over four consecutive quarters.
What's doing well? The movies. The movies, also historically a recession-proof industry but not a counter-cyclical one, are doing terrifically well. Motion picture theaters increased their revenues by 10.9 percent in the fourth quarter, according to the Commerce Department. But the movies are not typically seen as extravagant. You don't feel guilty after purchasing a movie ticket; you feel kind of wholesome.
I can't escape the feeling that there's something rather Weberian about it all: a manifestation of Calvinist guilt over both the present failures of the economy and its prior excesses. A deliberate effort to deny oneself pleasure.
As some of you may have seen, I have a feature in this week's New York Magazine in which I use a database of the last thirty years of Oscar history to predict the recipient's of this Sunday's Academy Awards.
This is fundamentally not all that difficult to do, since the winners of other awards such as the BAFTAs and the Golden Globes are quite strongly predictive of success in the Oscars. When the other major awards are split between two or more contenders, we can look at other sorts of tiebreakers: The Academy really does not take kindly to comedies or action films, for instance. And there is such a thing as "sympathy points": if an actress or actor has been nominated for an award several times without winning (such as Kate Winslet for Best Actress), she becomes more likely to collect the hardware. (From a technical standpoint, the challenge is really just to build a reasonably reliable model without overfitting).
Spoilers follow below the fold. One of these, by the way, I'm almost certain that I'm going to get wrong, although I have a pretty good excuse. For the supporting detail, please see the original copy.
Best Supporting Actor: Heath Ledger, The Dark Knight (86% chance of victory) Best Supporting Actress: Taraji P. Henson, The Curious Case of Benjamin Button (51% chance of victory) Best Actor: Mickey Rourke, The Wrestler (71% chance of victory) Best Actress: Kate Winslet, The Reader (68% chance of victory) Best Director: Danny Boyle, Slumdog Millionaire (99.7% chance of victory) Best Picture:Slumdog Millionaire (99.0% chance of victory)
1. The banks as a whole are significantly undercapitalized. The endgame is finding a way to inject private capital back into the banks, which is concomitant with restoring investor confidence in them.
2. There are no "good" answers in the sense that there are no answers that keep the taxpayer off the hook. To quote Alex Tabarrok: "There is no upside. Taxpayers are going to have to pay through the nose but the critical point is that the taxpayers must pay the depositors whom they have guaranteed not the banks."
3. Hence, the objective involves figuring out how to get from here to there while (a) minimizing aggregate government/taxpayer expenditures; (b) minimizing time; (c) minimizing moral hazard; (d) minimizing contagion/panic into healthy companies or economic sectors; (e) maximizing fairness. Some of these objectives are overlapping, redundant, or otherwise positively correlated; others are inversely so.
4. The equation becomes more complicated by leaps and bounds if you add in (f): minimizing political fallout.
5. However, with Geithner having backed off some of the plans that would have entailed greater political risks while at the same time the Republican tolerance for "nationalization" is increasing, the politics are looking substantially less complicated than they did a week ago.
6. Not all banks are in the same boat. Most everyone thinks that Citibank is toast. Most everyone thinks that Wells-Fargo is solvent. (Although even there, concerns exist about its real estate portfolio in California). There is a lot of room between these two goalposts.
7. The Fed probably has some idea about which banks are in which boats, but it probably also needs to have better than some idea before it can plan effectively. Hence, the "stress test".
8. What is commonly being referred to as "nationalization" might be better described as bankruptcy, reorganization, or receivership. The idea (at least the one being floated most commonly by economists) is certainly not for the government to run the banks on an ongoing basis, but to turn them around with deliberate haste and re-privatize them. It's not as though you're supposed to have a JPMorganBernankeCo.gov ATM card sitting in your wallet come 2013.
9. Nationalization/reorganization is as much the default if we can't think of another acceptable plan as it is a plan unto itself.
10. This does not mean, however, that there couldn't be benefits to making a quick, proactive decision to reorganize the insolvent banks. If we're going to reorganize, it would be better to do so sooner rather than later -- and without doing things that waste everyone's time and (more importantly) money in the meantime.
11. The biggest risk of reorganizing unhealthy banks is that it could discourage (although there is debate about this) private capital flow into healthy banks. This could ultimately mean that healthy banks head down the path of reorganization as well, expanding the scope of the problem to the taxpayer.
12. Hence, nationalization is not a "perfect" solution, regardless of any political or ideological barriers. There is still some attraction to identifying hybrid/"creative" solutions that are neither full-blown bailouts nor full-blown nationalization. Some smart people have an inkling about how this might be accomplished, but nobody is really sure.
13. For reasons related to #11, by merely talking about nationalization, Obama/Geithner will tend to make it an inevitability. So if it sounds like they're making up bullshit excuses to avoid talking about it, it's because they are; it is not something they can talk about with full candor until it's something they've pretty much decided upon.
14. Ergo, when and if a decision is made that there is no better alternative to nationalization/reorganization, the wheels will probably move very quickly.
Bill McGurn, an editorialist for the Wall Street Journal and former speechwriter for George W. Bush, opines in today's Journal that Republicans were prepared to vote for the stimulus -- if only the Administration had given a little.
For another, a stimulus package with strong bipartisan support was well within his reach. Even at full strength, the Republicans didn't have the votes to obstruct the stimulus if they had wanted to. And with a little imagination, a White House in search of bipartisan support might have easily picked off Republicans by exploiting differences within the party.
Michigan Rep. Thaddeus McCotter suggests, for example, infrastructure as one area popular with some of his fellow Republicans. Had Democrats added, say, a few more infrastructure projects, perhaps a half-dozen Republicans in the Senate and as many as 30 or 40 in the House might have signed on. But the White House went the other way.
So with relatively small changes to the stimulus ("for example, a few more infrastructure projects") McGurn says Rep. Thad McCotter told him, "as many as 30 or 40 in the House might have signed on".
The problem with McGurn's logic is that the administration did wind up giving a little bit. And no Republicans came along for the ride.
First, take the original stimulus bill as passed by the House. This bill contained $275 billion in tax cuts and $544 in government spending. No Republicans voted for it. Fair enough.
As a point of comparison, we can look at the Camp/Cantor Amendment, which would have gutted the bill of all spending provisions but for an extension of unemployment benefits while increasing the tax cut provisions. The bill under the Camp Amendment, as best as I can tell, would have contained $47 billion in spending (the cost of the unemployment benefits) and $363 billion in tax cuts. Out of 178 Republicans in the House, 168 voted for the Camp Amendment.
We can plot these two versions of the bill on a graph:
So what would have happened if a compromise had been reached somewhere between the two poles -- somewhere along the line I have drawn? Presumably, some fraction of the Republicans who voted for the Camp Amendment would have voted for it?
It turns out that we have a way to find out. That is because the House had a second chance to vote on the stimulus, this time in the form of the Conference Report negotiated with the Senate. The Conference Report contained less spending -- $506 billion instead of $544 billion -- and more tax cutting -- $281 billion instead of $275 billion -- than the original bill. In both cases, it moved away from the original bill -- which zero Republicans voted for -- and in the direction of the Camp Amendment -- which 168 voted for. More specifically, the Conference Report moved about 7 percent of the way away from the original House version of the bill and toward the Camp Amendment:
So if the Conference Report moved 7 percent of the way toward the Camp Amendment, a good first guess might have been that 7 percent of the 168 Republicans who voted for the Camp Amendment would have voted for the Conference Report. That would have meant about 12 Republican Representatives. But how many Republicans actually voted for the Conference Report? Zero. Zip. Nada.
Obviously this is a superficial analysis. But if Republicans were looking for a small compromise of the nature that McCotter suggested, they got one -- and none of the 30 or 40 swing votes that McCotter had promised were swayed.
Barack Obama signed the American Recovery and Reinvestment Act in Denver, Colorado today. Friday's final vote was 246-176, with Rep. Dan Lipinski (IL-03) voting present and three obvious-outcome votes not in attendance.
The White House released updated state-by-state and district-by-district projections for job creation today, and the average number of jobs projected over the next two years to be created by the bill in Republican-held districts exceeds those of Democratic-held districts by 418 jobs per district, 8,185 to 7,767.
Another way of saying that is, Republican districts can expect 5.4% more jobs added to their districts on average, based on White House projections. On average by district, the White House estimates that the economic stimulus will create 7,937 jobs over a two-year span. The seven Democrats who voted against the stimulus have an average of 7,843 jobs per district, and Dan Lipinski's IL-03 "present" vote (an Illinois thing?) is projected to net 7,700 jobs over two years.
Although the topline result is striking and it felt slightly noticeable on its face plugging in 435 data points, there is no obvious answer as to why. Therefore, before this analysis runs away with itself, a number of caveats apply, in no particular order:
1. These are projections, and not actual fact. 2. Correlation does not imply causation; there is no obvious reason to think that a "no" or "yes" vote is related to these district-level drilldown projections. 3. By the same token, it would be an inappropriate conclusion (no evidence) to say that Republicans somehow created this result through their stance in negotiations on the bill. 4. We don't know how the White House arrived at each specific number. 5. Not all Congressional districts are of equal size, unemployment rate, capacity for investment (infrastructure, etc.). 6. With Democrats in more urban districts and Republicans in more rural districts (on average), does this account for the discrepancy? 7. Does region or state account for a better explanation? For example, Intermountain West districts like UT-02 and NV-03 are Dem-held districts but get above average projections, and Arizona, Nevada and all Colorado districts but CO-01 on the whole are above average (though each New Mexico district is below average). Pacific Northwest is above average too, with all Oregon districts and 7 of 9 Washington state districts above the national average (WA-04 and WA-06 are barely below the national average).
Moreover, let's assume the White House is accurate in each of its predictions. Who does this benefit? Does Obama get the credit if a district gets more jobs when its Republican representative voted against the bill? Or does a voter say, "I now have a new job, my quality of life is improved, I like my incumbent representation." The answer isn't obvious, and these are averages, meaning that some D-held districts project to get a lot of jobs (OR-01, TX-25 and VA-11 are all between 9,100 and 9,400) while some R-held districts project to get fewer (AL-04, CA-40 and IA-05 range between 6,900 and 7,200).
For example, Montana, which has the largest Congressional district by population, is projected well above average at 11,100 new jobs in two years. Senators Max Baucus and Jon Tester voted for the bill; Representative Dennis Rehberg voted against it. Assuming (big assumption) that Montana gets this number of jobs, who gets the credit, and more specifically, is there risk for someone like Rehberg?
This is where the answer gets more and more complicated, and a case-by-case, district-by-district level analysis is necessary. In large part, 2010 voting outcomes related to stimulus success depend on the messaging skill of individual state parties and challenger candidates, in addition to a myriad of other items -- what else is going on in the world and the economy, and what else is going on in the state being the main issues. We probably don't want to make any blanket conclusions for this reason.
All those caveats and unclear conclusions aside, there are only 25 Republican-held districts projected to receive under 7,500 jobs out of 177 districts (14.1%), and 94 Democratic-held districts out of 257 in the same category (36.6%).
It's a projection reminiscent of statistics that show R-voting red states suckling at the subsidizing teat of D-voting blue states.
Voters who, by and large, supported Republican representatives who goose-egged the bill in two separate passes may wind up with more economic stimulus, by a small but distinct margin.
Rahm Emanuel and I share something in common: we both used to live in Illinois' 5th Congressional District on Chicago's Near North Side. I've moved on to IL-4, where Luis Gutierrez is my Representative, while Rahm has moved on to the White House.
But it looks like a clear favorite has emerged to take Rahm's seat in the Congress, and that favorite is State Rep Sara Feigenholtz. Feigenholtz has two distinct advantages in a wide-open primary field: firstly, she's raised the most money, and secondly, she has the endorsement of the SEIU -- a modest surprise as the scuttlebutt I'd heard was that the unions would be reluctant to endorse in this race given the number of "acceptable" progressive candidates. Although portions of IL-5, such as the Lakeview/Wrigleyville neighborhood, are rather well off, the district extends westward and encompasses a number of poorer Hispanic and "white-ethnic" working class communities; the SEIU's endorsement is a pretty big one in a district like this. FiveThirtyEight, in its excursions around Chicago, has also noticed a small proliferation if Feigenholtz signage/bling in the district.
The most interesting alternative to keep an eye on remains Tom Geoghegan, a labor lawyer and author who has been endorsed by the Cook County nurse's union and has many connections within the netroots. This is one race, indeed, where an endorsement of Geoghegan by some of the major left-of-center blogs could make a fair amount of difference. But if Feigenholtz (certainly no conservative herself) is consolidating establishment support, his road is largely uphill.
This is a chart, culled from Census Bureau data, showing the performance of real (inflation-adjusted) household income for various income classes during the last several presidencies. As you'll see, I've lumped together consecutive administrations when the same party remains in power. Also, the data omits transition years -- for example, 2001 is a transition year between Clinton and Bush, and it's not clear who to credit/blame for the economy's performance in that year, so I'm skipping it.
There's a lot to look at in this little chart. Under Nixon/Ford, the very wealthiest did reasonably well, but oddly enough, so did the very poorest (this may have been LBJ's Great Society programs belatedly kicking in rather than anything Nixon/Ford did). But the middle class was left out of the mix, their incomes barely growing over eight years.
In Jimmy Carter's one term in office, the economy wasn't performing terribly well for most anyone, but the poor bore the brunt of the problems. The principal problem during Carter's tenure was inflation; there is some evidence that higher inflation rates tend to hit the poor disproportionately, although this is debated.
Then we get to Reagan/Bush. And we see a large accumulation of wealth up the economic ladder. When Ronald Reagan took office in 1981, the ratio between income at the 90th percentile and income at the 10th percentile was 9.2; when he left office eight years later, it was 10.2.
Under Clinton, by contrast, the economy was a rising tide that lifted all boats. The poor, finally, did quite well for themselves, their incomes appreciating at about 2.5 percent annually, but the rich did just about as well -- in fact, the rich did better under Clinton than they had under Reagan and Bush. The rich/poor gap, if measured as a ratio, did not increase appreciably under Clinton. The 10th percentile saw their incomes increase by about 17 percent during his tenure, and so did the 90th percentile.
Finally, we get to #36, George W. Bush. Bush is getting a bit of a break here, in fact, because the Census Bureau does not yet have data online for 2008; the numbers will be even worse once it does. Nobody did especially well under Bush, but it was the poorest quartile or so who actually saw their incomes decrease.
Manifestly enough, as we see under Reagan/Bush, the government has some capacity to allocate income to one class to another with its economic policy. In general, however, the fates of different economic classes are linked. Since 1967, the correlation in the change in year-over-year income between the 10th and the 90th percentiles is .63.
This latter characteristic is something that I think a lot of liberals tend not to have a good appreciation of. There is sometimes a tendency among liberals to see the economy as a zero-sum game, but this is not really the case. When the economy is doing well, everyone tends to do well, unless the President is trying really, really hard (as Reagan did) to steer that growth only toward certain income classes. And when the economy is doing poorly, everyone tends to do poorly. The poor did awfully under George W. Bush, but the wealthy didn't perform all that well either.
This may be a result of the tendency of liberal thinkers focus their attention on the rich-poor gap, usually measured as a ratio. This can certainly tells us something valuable, but if the goal is to look after the economic well-being of the least well-off, it is probably better to look instead at how the least well-off are performing relative to themselves. A reasonable "progressive" economic goal, for instance, would be to maximize the long-run real income achieved at the 10th or 20th percentile. Essentially, this is a slightly bastardized version of the Rawlsian maximin construct.
How you go about achieving that maximization, of course, is the tricky part. I've included the qualification "long-run", because it is almost assuredly not as simple as a mass transfer of wealth achieved through taxation policy. This might make the poor better off in the near-term, but quite possibly not in the long-run if it the tax shock significantly hampered long-term growth.
For my money, the Clintonan idea of "aggressive" pro-growth policies coupled with a relatively high tax rate on the rich is an attractive one. Let the rich make their money and then tax them (and/or improve social welfare programs for the poor). But don't do things that inhibit economic growth because you're afraid of the redistributive effects. A good example is something like free trade. The emerging consensus among both liberal and conservative economists appears to be that while free trade does increase GDP (as has long been believed), it also has some redistributive effects; the "consensus" solution to this is to have free trade coupled with a more robust safety net.
There is a separate issue about the appropriate amount of business regulation. An overly lax regulatory scheme, as under Bush 43, does not appear to benefit much of anyone. To some extent, the purpose of regulation may be to prevent business from harming themselves due to a sort of tragedy of the commons. This was arguably the problem inherent to the credit crisis: each individual businesses had become so good at hedging its own risk that collectively the banks wound up hedging against themselves, the whole system eventually collapsing like a Jenga game.
Another trap that we can potentially fall into -- but this one being more perilous for conservatives -- is to pursue a set of policies that benefit existing businesses at the expense of emergent businesses. For example, I believe that this problem is manifest in the area of energy, an area where investments in cleaner-burning fuels are quite probably associated with improved long-run economic performance. This might hurt Exxon and GM -- while helping the economy as a whole, which is what policymakers should be concerned about. But existing businesses have lobbyists and emergent ones don't (or at least not as many).
The other potential lesson from the Clinton record, which I've argued may also be observable in the response of the economy to the housing crisis, is that the presence of a robust middle class in fact strongly related to the health of the economy as a whole. Note, again, that the wealthy actually did better under Clinton than they did under Reagan/Bush, even though Reagan/Bush were trying to stack the deck in favor of the wealthy. The explanation I find intuitively appealing is that there is some sort of optimum supply:demand balance in the economy, and that when too large a fraction of income accrues to the wealthy, this balance becomes out of whack because their are too many suppliers (beyond a certain level of income, the wealthy start to invest/supply their excess income rather than consume it) and not enough consumers. Almost all of the countries that are comparably wealthy to the United States have flatter income distributions, the only exceptions being Hong Kong and Singapore (which are as much cities as countries).
So to summarize, here are a few of the working assumptions about the economy that I'll tend to make on this website. I am open to being disabused of these notions, but I'll want to see evidence to the contrary:
1. Growth is good. A rising economic tide tends to lift all boats. We should generally not pass up opportunities to create growth, such as through freer trade, because we are concerned about its redistributive effects. Instead, grow first and then redistribute through tax policy and/or improved safety nets.
2. However, extreme wealth disparities may inhibit growth.
3. To the extent we evaluate the welfare of poorer Americans, we should tend to look at their income in an absolute sense, rather than relative to that of wealthier Americans.
4. Don't mistake the welfare of particular businesses or economic sectors for the welfare of the economy as a whole.
5. Identifying optimum oversight and regulatory schemes is likely to have significant nonzerosum benefits, possibly including to the regulated businesses themselves.
The fellas at Open Left have dutifully responded to my delineation between "rational" and "radical" progressivism and attendant critique of the latter. David Sirota has issued a characteristically self-aggrandizing response; I am going to start instead with Paul Rosenberg's reply, which is less personal and more thoughtful.
1. Let's not say "progressive" when we mean "populist"
Paul links to a terrific article by Jack Balkin about the difference between "populism" and "progressivism" in the American historical context. I wish I had seen Balkin's article before composing my own, because it comes very close to encompassing the distinction that I was hoping to make, and does so with better historical grounding. In Balkin's terminology, "populism" equates to what I called "radical progressivism", and "progressivism" equates to what I called "rational progressivism".
What I don't get, however, is why Paul, being acutely aware of this, tends to use the terms "populism" and "progressivism" interchangeably. David Sirota does this too; in fact he frequently takes things a step further, speaking not just as a "progressive" but often deigning to speak on behalf of progressives.
2. Populism is a means or a mode, but not an end.
By "means" I refer to a "theory of change", by "mode" I refer to something close to a style or even a brand. These definitions are of course complementary, although there are some politicians (Barack Obama probably among them) who borrow from the populist brand without really endorsing its mechanisms.
What populism is not, however, is a cogent political philosophy unto itself. Politicians including Franklin Roosevelt, Theodore Roosevelt, John Edwards, Sarah Palin, Ronald Reagan, Adolf Hitler, Hugo Chavez, Bob La Follette, Bill Clinton, Ross Perot, Newt Gingrich, George Wallace, Boris Yeltsin, Mike Huckabee, Joseph Stalin, Ron Paul and Ralph Nader can all be accredited with adopting populist framings to some degree or another -- obviously they would not agree on very much in terms of the desired outcomes of their endeavors. Just as obviously, populism has been marshaled as a force for both tremendous good and tremendous evil at various points in history. In Europe, which has had more first-hand experience with the latter, "populism" tends to have a pejorative meaning; we have a more neutral impression of it in the Americas.
Hence, we need a better understanding of what Sirota's goals are.
3. In Sirota's case, the immediate-term goal appears to be the dissolution of corporate power.
We can say this comfortably because Sirota says the same thing himself; defining populism as "challenging corporate economic power". Sirota also frequently critiques government elites, but usually only to the extent that they are complicit in entrenching corporate power. This is all good enough and well enough; corporations are not very popular these days and lately they have done a lot of stupid and awful things. Notice, however, that Sirota does not place any modifier (such as "corrupt") next to "corporate economic power". He appears to regard corporate economic power as intrinsically evil. There aren't a lot of shades of gray; there isn't a lot of distinction between Exxon and Apple, between MBNA and Starbucks.
4. A world dissolute of corporate power implies one of two things: state socialism or social anarchism.
When I suggest that Sirota's modes of thought are Marxist, I don't mean that figuratively. I mean that literally: the logical conclusion to his project is some version of a workers' state. If there were more nuance in Sirota's thinking, I might guess differently at his desired outcome (for example, European-style social democracy). But there isn't -- he exists in a world of Good Things and Bad Things and Capital Letters -- and so I don't.
Take, for instance, Sirota's oft-voiced disdain for Clintonism and neo-liberal economics. If your concern is for the economic well-being of the working class, than attacking Clinton is a strange place to start. Under his presidency, real household incomes for the bottom 10th percentile -- a pretty good Rawlsian metric for economic well-being -- increased by 17.3 percent, the largest increase of any president since the Census Bureau began compiling numbers (.pdf) on this statistic.
One can certainly raise various critiques of Clinton's presidency, many of which I'd wholeheartedly agree with, but in broad strokes his economic program would seem to have been a tremendous success, particularly for the working poor. (Although the wealthy certianly also fared well under his presidency; growth in income was remarkably evenly distributed between all income classes under Clinton).
5.The political goals of Sirota, if enacted, might be acutely harmful to the working class.
And this is what ultimately bothers me about Sirota. Compare the experience of the working class under Bill Clinton to that of the Soviet Union, which had infant mortality rates about three times that of the United States, significantly shorter life expectancies, extremely high rates of alcoholism ... life was not good. Not that I'll have to spend much time convincing you about most of this.
To be fair, I don't know that David would literally endorse a Soviet-style economic order over Clintonism ... but given the lack of restraint and qualification that he tends to place on his opinions, he should think more carefully about where his conclusions lead. In the real world, we need to recognize that corporations contribute to the economic well-being of the working class as well as detract from it; that neither unbridled laissez-faire capitalism nor socialism are anything approaching acceptable solutions, and that the trick is finding the optimum amount of regulation.
6. More broadly, populist movements may not always benefit their participants.
And to bring things full circle, one of the ironies of populist movements is that they do not always work out well for the people whom they purport to enlist in their cause. Take the What's the Matter With Kansas? argument: Was Ronald Reagan a good president for the working poor? No, but in 1984, about 60 percent of non-college graduates voted for him. This duality is more obvious in some of the European-based examples. Perhaps there are organic strains of populism that are truly self-generating, but there are also synthetic versions that consist of elites manipulating popular opinion on their behalves and wielding it as their chalice, sometimes to disastrous effect.
___ Addendum: You know what, this has obviously gotten a little carried away. The problem with Sirota is that his arguments are self-righteous, accusatory, and oversimplistic. Here, we generally aim for nuance and poise. To the extent that this post has not reflected that spirit, my apologies. I'm going to make one last substantive observation about the Clinton economic record in a separate post ... and then we're done with this.
For the second consecutive time on Friday, House Republicans rejected Barack Obama’s “open hand” on the stimulus bill. Reject the open hand, meet Obama’s “firm handshake.”
Josh Marshall’s recent editorial piece on the “Big Disconnect” cites top pollster Ann Selzer’s reaction to the anti-confluence of Beltway reporting and her polling from the Midwest, which Tom Schaller has noted is still the dominant swing region in America.
The White House is certainly aware of that disconnect, even if, as Rahm Emanuel admitted Thursday evening, it took four days of lost, non-sharp messaging in the middle of the stimulus bill debate to re-center on a jobs message that aimed at American reality as opposed to Beltway reality.
Beyond passage of the stimulus bill, there are any number of definitely and potentially tougher fights on the horizon for this administration this year: the budget bill, the Employee Free Choice Act, the structure of the second phase of TARP spending, and major housing package to be unveiled Wednesday in Phoenix.
Still, no fight looms bigger than health care. Of all the legislation coming down the pike, no fight will require more discipline in messaging from the White House and Congressional Democrats, as well as bully pulpit-ing from Barack Obama.
At the tail end of Friday’s briefing, Robert Gibbs gave a mostly unnoticed preview of this upcoming brutal health care fight, and the messaging that must be pitch-perfect throughout. (Democrats will also need Al Franken as the 59th Senator.) While the specific question topic was about a piece of the stimulus bill, this is clearly where the argument goes with the larger health care debate.
Asked whether he believed Republicans opposing the piece of the stimulus package designed to computerize health care information technology records were using “entirely political rhetoric,” Gibbs was blunt: “Yes, I do. I think it’s exceedingly similar to what we’ve heard going on the past two decades, yes.”
Get ready, Republicans, here comes the messaging:
“If I was for saving money, saving lives, creating jobs, providing less bureaucracy, I think I’d support an increased investment in health care technology ... We have to move our health care system into the 21st century. If I was for saving small businesses money in their health care, I’d be for an increased investment in health care IT.” (Gibbs’ entire answer appended below)
“Save money.”
“Save lives.”
“Create jobs.”
“Less bureaucracy.”
“21st century.”
Now, add in Obama, the master storyteller, send him around the country every single week, campaign-style, hammering the message home at townhalls and small businesses where poignant, human moments are a given. A dash of trademark Obama “I am my brother’s keeper” in the form of “no country this blessed should allow its citizens to go sick,” and even use of the “shameful” stick when necessary, and there you have your message.
That, my friends, is called cooking with gas.
Run against that, Rush Limbaugh party of “I want (Obama) to fail.” SNL is already lampooning – specifically – Republican tone-deaf messaging. When your party’s message is the punchline on late-night comedy shows, a jarring, Bartleby the Scrivener-esque “no, I would prefer not to,” that’s a sign that Marshall’s “Big Disconnect” is real.
Obama is winning the optics war of “reaching out” to Republicans among the electorate. “Bipartisanship,” I remain convinced, is really a proxy among the vague American followers of public debate for “not extreme.” “It can’t be that extreme if there’s some element of compromise.” The past eight years felt extreme, and it spurred a massive backlash at the polls two cycles in a row, which is a-historical.
Still, with their focus on “tax cuts, tax cuts, tax cuts,” Republicans seem willing to talk themselves into narrower, more circumstantial reasons for their losses in 2006 and 2008. Abramoff and scandal was to blame in 2006, Obama’s unique candidacy combined with one individual’s unpopularity (George W. Bush) was to blame in 2008, but Americans still want tax cuts and trickle-down.
This denial, and the increasing regionalization of the Republican Party, undergirds what Nate calls the Republican death spiral. Let’s remember, in reality, thanks to sweeping back-to-back electoral verdicts, the Republicans are roughly one Senate vote away from electoral irrelevance, and God help them if Democrats net three or four seats in 2010. For all the press corps questions and drama surrounding “bipartisanship,” the playing field isn’t close to equal. Obama will fully own credit for the success or failures of his policies, and that isn’t necessarily a bad thing.
For all the restless, left-of-center originated criticisms that have been leveled Obama’s way – for appointing too many Republicans to the Cabinet, for putting too many Clintonistas throughout the government, for not getting a perfect stimulus bill through Congress, for, in general, seeming too little aware, in short, that he won and let’s freaking act like it – we sit here just under four weeks from the inauguration with a massive stimulus bill awaiting tomorrow’s Denver signing and Republicans appearing to most of the country to be calculating obstructionists, hoping Obama will fail purely so that they can win back power.
Moreover, Obama’s team learned lessons and still won. They’re in a position of refining and improving. Tweak here, tweak there, ready to be new and improved on the health care fight, the flagship policy fight of 2009. What lessons have Republicans learned from these past four weeks? Where’s their adjusted strategy, following the big ‘L’ they just posted? Lindsey Graham waving the stimulus bill in the air and John Boehner dumping it on the floor of the House? Yelling “pork” ‘til blue in the face?
Health care is not the next agenda item. Structuring the TARP distribution and a major home foreclosure announcement are the center of this week's high-profile discussion. Yet, health care is the big enchilada, and all of what the first 27 days of Obama's presidency have taught us is prologue to that public policy drama. From what we've seen, while Republicans flounder, Obama and the White House are ready to roll.
*_*
Gibbs’ answer, in full:
“I think we’ve heard a lot of concern in this process for ‘spending.’ And I think whether it is the spending that is in this bill to create jobs through alternative energy, whether that’s through creating jobs to implement health care technology, whether that is creating jobs to improve schools and build 21st century classrooms and laboratories, all of those will have a lasting impact to save the taxpayers money.
Each – you saw the president I think do this in both town hall meetings this week. If you go to the bank on your way home and take out your ATM card and get $25 out of your account to use this weekend, that’s a transaction that costs the bank, I think, in many cases, half of a penny to do. Medical transaction moving your records from your doctor in Bethesdsa to an emergency room in Washington costs $10. The president believes that by implementing health care technology, we can save billions of dollars in health care costs that we see skyrocketing every year. That we see putting more and more businesses out of business, and is blamed repeatedly for patient safety and patient death.
So I think that if I was for saving money, saving lives, creating jobs, providing less bureaucracy, I think I’d support an increased investment in health care technology that would likely do all those things. We have to move our health care system into the 21st century. If I was for saving small businesses money in their health care, I’d be for an increased investment in health care IT.
I think many of the complaints that you’ve heard from different people about this bill, if you look through the lens of, particularly the health IT projects, I think many of those questions are answered for those individual critics. Whether they like the answer is an interesting thing to ask them.”
Although George F. Will's article today on the supposed global cooling scare of the 1970s was fundamtentally dishonest, it turns out that Will has brushed up against the ethical boundaries a little more strongly than that. Specifically, one of his money quotes may have been taken out of context.
As a biology professor at an Eastern college wrote in to me this morning:
The intellectual dishonesty of Will's article on the alleged global cooling scare of the 1970s is made stark by actually going and looking at the publications he cites. Will asserts that although there were skeptics of the global cooling scenario, ...."others anticipated 'a full-blown 10,000-year ice age' involving 'extensive Northern Hemisphere glaciation' (Science News, March 1, 1975, and Science magazine, Dec. 10, 1976, respectively)."
The Science magazine article he cites is a famous study of the correlation between variations in Earth's orbit and long-term fluctuations in climate, titled "Variations in the Earth's orbit: Pacemaker of the Ice Ages". Here's the final paragraph of that article, and the source of Will's quotation:
"A model of future climate based on the observed orbital-climate relationships, but ignoring anthropogenic effects, predicts that the long-term trend over the next several thousand years is toward extensive Northern Hemisphere glaciation."
Isn't it odd how Will left out the phrase "ignoring anthropogenic effects"? A non-Republican might interpret that phrase to mean that even way back in 1976, the authors of the article considered it possible that anthropogenic warming could potentially be strong enough to stave off an entire Ice Age.
I would add that in addition to ignoring the article's caveat about anthropogenic [man-made] effects, Will also failed to disclose that the article was describing long-term trends "over the next several thousand years". To the extent there were concerns about global cooling in the 1970s, they were about relatively near-term effects stemming from man-made particle pollutants -- quite different from what the Science article was talking about.
Talking Points Memo has a rundown of several other claims of questionable veracity in Will's article. His batting average on this piece seems to have been a bit lower than that of his beloved Washington Nationals.
But let's not lay all the blame at Will's feet. Why is it that claims that would never have been tolerated by a competent fact-checker on the news page are okay on the editorial page? The Washington Post owes its readers an explanation -- and an apology.
If Roland Burris had fully disclosed to the Illinois House Panel his frequent contacts with Rod Blagjojevich's coterie, and that he had been hit up by Blago's brother for money, would he have been appointed to the Senate in the first place? Or would the opposition in the Senate -- which, granted, was always on questionable legal footing -- have gelled to the point where he was denied appointment to the seat?
My instinct is that it would have been pretty close. The fiction that Burris' appointment was a one-off event that could somehow be compartmentalized from Blago's attempts at bribery may have been critical to the Democrats' ability to do the politically expedient thing and allow Burris to take his seat. With this revelation, it's no longer possible for the Democrats to suspend their disbelief.
Let's take a look at a graph. This is the graph that you would have seen in 1975 if you had evaluated average global surface temperatures over the 50 years from 1925 through 1974:
Do you see a cooling trend here? Certainly not. In fact, if you draw the graph back further, to the 1880s, you see a modest warming trend:
And yet, according to George F. Will, many scientists were convinced in the 1970s that global cooling was a significant threat to the planet. And if those scientists were so wrong before, why should we trust them when they say that global warming is a threat now?
There's just one little problem with this story, which reappears every so often in conservative discourse on the environment. Specifically, it's a crock of shit.
Certainly in the 1970s there were a handful of scientists and scientific reports that were concerned about the prospect of global cooling, the mechanism for which was usually given to be the greater number of aerosols -- tiny particles -- released by man-made pollutants that might concentrate in the atmosphere and block sunlight from reaching the planet's surface. An even smaller handful of these scientists may have been rather alarmist about the prospect; the media was happy to write cover stories on their proclamations.
At the same time, there was also already concern a about greenhouse effect caused by CO2 emissions that would result in planetary warming. There was a fair amount of debate at the time about which of these two effects -- the cooling effects of aerosols, or the warming effects of CO2 emissions -- would win out, or the planet would get lucky and stabilize at some sort of equilibrium between the two.
But there was certainly nothing of a scientific consensus, as Will sneakily implies, around global cooling. How could there have been given such underwhelming evidence in the temperature record to support the hypothesis? On the contrary, this was something of an eccentric position to hold, and most scientific papers produced at that time predicted that warming would win out instead.
(You might also have been able to infer this from the fact that Will makes more liberal use of scare quotes in establishing his position than anyone since the poor saps charged with marketing Gigli. "A Hilarious Tour-De-Force!", says the Tulsa Beacon-Journal.)
And indeed, the scientists who put their money on the warming horse have been right. This is what we get if we look at the 50 years of temperature variation from 1959 through 2008:
Or running the clock back a little further:
Few credible scientists would be bold enough to question that trend, and in fact, essentially none do.
This is disappointing stuff coming from Will, who has one of the best research staffs on either side of the Potomac, and whom I've usually regarded as being fairly intellectually honest.
In fact, more than disappointing, I find it a little depressing, having recently spoken at the TED Conference and having witnessed first-hand some of the terrific technologies that are already extant to mitigate climate change and having heard from some of the entrepreneurs who re-oriented their businesses to make them more sustainable (and increased their profits in the process). That so little progress has been made on climate change and sustainable energy in spite of the overwhelming economic, environmental and national security imperatives to do so is perhaps the single greatest indictment of our democracy.
The definitions of the terms “liberal” and “conservative” have been the subjects of much debate in contemporary American politics. But it has become increasingly clear that the term "progressive" is equally ambiguous, and is associated with at least two relatively distinct philosophical traditions. Although these two "progressivisms" share common ground on many (probably most) issues, they are at loggerheads on some others, as has perhaps become more apparent since the election of President Obama.
The first type of progressivism has its philosophical underpinnings in 18th Century, Enlightement-era thought. It believes that politics is a battle of ideas. It further believes that through the use of reason and the exchange of ideas, human society will tend to improve itself through scientific and technological innovation. Hence, it believes in progress, and for this reason lays claim to the term “progressive”. Because of its belief and optimism in the faculties of human reason, I refer to this philosophy as rational progressivism.
Rational progressivism tends to be trusting, within reason, of status quo political and economic institutions -- generally including the institution of capitalism. It tends to trust these institutions because it believes they are a manifestation of progress made by previous generations. However, unlike conservatism, it also sees these institutions as continuing works in progress, subject to inefficiencies because of distorted or poorly-designed incentives, poorly-informed or misinformed participants, and competition from 'irrational' worldviews like religion. It also recognizes that certain persons who stand to benefit from preserving the status quo, particularly elected officials but also corporations, may seek to block this progress to protect their own interests. The project of rational progressivism, then, is to propagate good ideas and to convert them, through a wide and aggressive array of democratic means, into public policy.
The second type of progressivism is what I call radical progressivism. It represents, indeed, a much more radical and comprehensive critique of the status quo, which it tends to see as intrinsically corrupt. Its philosophical tradition originates in 19th Century thought -- and specifically, owes a great deal to the Marxist critique of capitalism and the Marxist theory of social change. It also finds inspiration in both the radical movement of the 1960s and the labor and social movements of late 19th and early 20th centuries (from which it borrows the label "progressive").
Radical progressivism is more clearly distinguishable from "conventional" liberalism and would generally be associated with the "far left" -- although on a handful of issues such as free trade, it may find common cause with the "radical" right. Radical progressivism embraces the tradition of populism and frequently adopts a discourse of the virtuous commoner organizing against the corrupt elite. It is much more willing to make normative claims than rational progressivism, and tends to view conservatism as immoral and contemporary American liberalism as amoral (at best). Its project is not reform but transformation.
Rational progressives sometimes regard radical progressives as impractical, self-righteous, shrill, demagogic, naïve and/or anti-intellectual. Radical progressives, in turn, regard rational progressives as impure, corrupt (or corruptible), selfish, complacent, elitist, and too quick to compromise.
It should come as no surprise that I regard myself as a rational progressive. I believe in intellectual progress -- that we, as a species, are gradually becoming smarter. I believe that there are objectively right answers to many political and economic questions.
I believe that economic growth is both a reflection of and a contributor toward societal progress, that economic growth has facilitated a higher standard of living, and that this is empirically indisputable. I also believe, however, that our society is now so exceptionally wealthy -- even in the midst of a severe recession -- that it has little excuse not to provide for some basic level of dignity for all its citizens.
I believe that answers to questions like these do not always come from the establishment. But I also believe that it is just as important to question one's own assumptions as to question the assumption of others.
The truth is, I don’t particularly care whether you call me a “progressive” or not. In fact, I'm suspicious of people who line up on the same side of the ideological divide on every single issue. The world is more complicated than that, especially when one strives to see the world through a scientific, empirical lens. While progressives, in my view, clearly have the preponderance of good ideas, they do not have a monopoly on them. Nor do conservatives have a monopoly on bad ideas, especially when radical progressives flirt with Marxist modes of discourse.
Let me be very clear about what I am saying. I believe that our country needs a lot of work -- a lot of work -- almost certainly more work than Barack Obama is going to be able to accomplish in four or eight years. I believe that greater awareness and greater participation on behalf of everyday citizens is almost certainly a necessary condition to facilitate that work. To the extent that blogs, political campaigns, church groups, labor unions, and whatever other organization you can think of can coalesce that participation and turn it into a "movement", I am all for the "movement".
But if someone wants to marshal an army to fight a battle of wills while playing fast and loose with the truth and using some of the same demagogic precepts that the right wing does, I am not particularly interested in that. In fact, I think it is acutely dangerous.
As some of you may have seen, I have a 
