Senate Rankings, March 2009 Edition

On a slow political weekend, it's time for our monthly tour of the Senate battleground. Because of the number of high-profile Republican retirements and the particular set of seats that are up for re-election this cycle, Democrats retain an excellent chance of gaining ground in the Senate, even as they're more likely than not to lose seats in the House. Some second-tier GOP targets, however, like Connecticut and Wisconsin, are potentially becoming more viable to the Republicans.

Races are ranked in order of their likelihood of changing parties by November 2010, accounting for all factors such as potential retirements, primary challenges, and so forth.

Likelihood of party switch has increased since last month's rankings.
Likelihood of party switch has decreased since last month.

1. Pennsylvania (R-Specter)
Pennsylvania vaults from #7 to #1 as there are now four plausible ways that the Republicans could lose control of it:

a) Arlen Specter could lose the Republican primary to conservative Pat Toomey, who nearly defeated him in 2004 and now seems poised for a re-match. This news comes as a new Susquehanna poll reports two-thirds of Republicans want to replace Specter; he's actually more popular among the state's Democrats. Toomey is not a intrinsically a terrific candidate -- he's never held public office and his main asset to Pennsylvania's conservatives is simply that he's not Arlen Specter. If he wins, the Republicans have very little chance of protecting the seat in November;
b) Alternatively, Specter could hang in on the primary but lose to a Democrat in the general election;
c) Specter could retire, or his health could force him to, meaning that the Republicans would probably nominate someone like Toomey and lose;
d) Specter could switch parties, which would count as a Democratic win for our purposes.

The combined probability of at least one of these four events happening, I would guess, is something like 60 or 70 percent.

2. New Hampshire (R-Open)
At this point last month, we assumed that Judd Gregg would become Barack Obama's Commerce Secretary, with his seat to be filled by some sort of Rockefeller Republican who would not run for re-election. Now, of course, Gregg is keeping the seat, but will retire at the end of his term. The net effect is the same: an open seat in a blue-leaning state in which probably the best available Democratic candidate, U.S. Rep. Paul Hodes, has already declared his candidacy. A PPP poll out last month gave Hodes a very small lead over two prospective Republican adversaries.

3. Missouri (R-Open)
This now appears as though it will be a battle of Missouri political dynasties, with Democratic Secretary of State Robin Carnahan running against Representative Roy Blunt, who recently confirmed his interest in the race (although Sarah Steelman may challenge Blunt for the Republican nomination). As before, the race is a toss-up, perhaps slightly tilting toward Carnahan.

4. Ohio (R-Open)
A Quinnipiac poll shows Democrats Lee Fisher and Jennifer Brunner with fairly decent-sized leads over the probable Republican nominee, Rob Portman. The reason I'm not changing the standing of the race based on that poll is that (i) Portman's name recognition is fairly low at this stage and (ii) there's the chance that Fisher and Brunner leave each other battered and bruised in the primary while Portman should waltz through. Still, Republicans have only about a 50:50 chance of holding on.

5. Kentucky (R-Bunning)
Republicans are still trying to find a relief pitcher for Bunning.

6. Florida (R-Open)
There are plenty of rumors that Charlie Crist will run for Senate; if he runs he'll almost certainly win. Considering, however, that Crist would also almost certainly win if he ran for re-election as governor, and that being a governor of a large state like Florida is a more powerful position than being one of its senators, I wonder if the rumors aren't being circulated to deter potentially stronger Democratic challengers from entering. If Crist doesn't enter, the candidates are frankly underwhelming on both sides and the race will probably come down to ground game and turnout.

7. Nevada (D-Reid)
Former U.S. Rep Jon Porter, thought to be among the stronger of the potential Republican opponents against Harry Reid, has taken a job as a lobbyist, not usually a strong move for a politician looking to bolster his populist credentials. Still, Reed makes for an attractive target and Republicans have plenty of time for someone to emerge from the woodwork.

8. North Carolina (R-Burr)

9. Illinois (D-Burris)
The Illinois state senate voted down to a special election to replace Roland Burris, a decision that keeps the seat in Democratic hands for now but could allow the Republicans to claim the moral highground in 2010. Meanwhile, former Commerce Secretary Bill Daley will reportedly run on the Democratic side. Although Daley is a formidable candidate, the decision that risks further fragmenting the electorate, perhaps even enabling the nightmare scenario in which Burris wins a narrow plurality in a four- or five-way race and goes on to lose the general.

10. Connecticut (D-Dodd)
Chris Dodd's approval ratings have fallen and aren't getting up; he may be challenged by former Rep. Rob Simmons and populist icon Larry Kudlow. Connecticut is still a very blue state and Dodd is among the best fundraisers in the Senate, so this is a more difficult pickup opportunity than it appears on paper, but things are certainly getting interesting, particularly if the state's Republicans have enough common sense not to nominate Kudlow.

11. Colorado (D-Bennet)
Michael Bennet is waffling on the Employee Free Choice Act, which could increase the chance of a Democratic primary challenge, but has more ambiguous effects on his prospects in the general election, where he remains the favorite.

12. Texas (R-Open?)
Public Policy Polling shows a very competitive race in the (rather likely) event that Kay Bailey Hutchison retires to pursue the governorship.

13. Delaware (D-Open)

14. Louisiana (R-Vitter)
A Research 2000 poll has opponents (though not adult entertainer Stormy Daniels) within spitting distance of Vitter in both the primary and the general. Still, Louisiana has not been kind to Democrats of late.

15. New York (Jr.) (D-Gillibrand)
Former Governor George Pataki, who polls about evenly with Kirsten Gillibrand, is being recruited as a candidate.

16. Wisconsin (D-Feingold)
SurveyUSA has Russ Feingold's approval ratings on the decline (although still above 50 percent). Meanwhile, his decision to come out against the Administration's budget can possibly be read as a conscientious effort to avoid a challenge from the right, although it also could just be a case of Feingold being Feingold. No cause for great alarm for Democrats, but one to keep on eye on.

17. Iowa (R-Grassley)
Grassley, in fending off a (completely baseless) rumor that he was going to run for governor, reminded Iowans that he's already held 12 fundraisers toward his re-election bid. Dems need a retirement to have a shot, and those chances are diminishing.

18. California (D-Boxer)
Boxer's approval ratings are quite poor, but with the state in complete fiscal chaos, Arnold Schwarzenegger is unlikely to provide the answer for Republicans. Boxer is helped by the fact that most of the best GOP talent will gravitate toward the governor's race.

19. Arizona (R-McCain)

20. Arkansas (D-Lincoln)

21. Kansas (R-Open)
Kansas tumbles down the list with Kathleen Sebelius' appointment to HHS. Although this is still an open seat, the Republicans already have a pair of strong declared candidates whereas no Democrat has represented Kansas in the Senate since 1939.

22. Oklahoma (R-Coburn)

23. Alaska (R-Murkowski)

24. Hawaii (D-Inoyue)

25. Georgia (R-Isakson)

26. North Dakota (D-Dorgan)
Polling suggests that even if popular Governor John Hoeven were to run, he'd be a huge underdog to the equally popular Dorgan.

27. Maryland (D-Mikulski)

28. South Carolina (R-DeMint)

29. Washington (D-Murray)

30. South Dakota (R-Thune)

31. Indiana (D-Bayh)

32. Vermont (D-Leahy)

33. Oregon (D-Wyden)

34. Alabama (R-Shelby)

35. Utah (R-Bennett)
No surprise, but polling confirms that Bob Bennett looks safe -- even against former Jeopardy! champion Ken Jennings.

36. New York (Sr.) (D-Schumer)

37. Idaho (R-Crapo)

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Hoping He Fails?

Republican "holds" in the Senate, Bloomberg reports, are preventing two key economists from joining the President's Council of Economic Advisers.

March 2 (Bloomberg) -- President Barack Obama’s economic advisers are increasingly concerned about the U.S. Senate’s delay in confirming the nominations of Austan Goolsbee and Cecilia Rouse to the White House Council of Economic Advisers.

Without Senate confirmation, the two economists are barred from advising the president as the administration tackles the worst financial crisis in 70 years and tries to advance the spending plan Obama submitted to Congress last week.

Goolsbee, who has a reputation for competence and centrism, and Rouse, who specializes in education policy, are hardly the most controversial figures. Unless one of them has tax or nanny problems, they are likely to be approved by unanimous consent. If there were ever a time when our country needed economists like a fire needs firefighters, this is it.

Understaffing, indeed, has been part of the problem over at Treasury, and the source of some not-undeserved conservative critiques of Tim Geithner's underwhelming performance.

And yet, faced with a parallel situation over at the CEA (which, to be clear, is a separate office from Treasury), Republicans appear to be engaged in an active effort to make the Administration's life more difficult, apparently in a tit-for-tat over Democratic holds during the Bush administration.

This is fairly inside baseball stuff, and as such is not likely to generate a substantial backlash against McConnell & Co ... but to the extent it does get any attention, I can't see how it does anything other than to make them look like a bunch of obstructionist hacks. So why are they doing it?

The real reason is probably simply that there's a leadership vacuum in the Republican party. If someone wants to do something stupid and counterproductive -- and all it takes is one Senator to put a hold on a bill -- there is really nobody to keep him in line (except perhaps McConnell, who seems disinclined to use his authority).

But if someone wanted to make the case that the Republicans were actively trying to promote the Administration's failure, they'd be hard pressed to find a better example.

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Rich and Poor Voters in 2008

I posted some maps the other day showing estimates of who would've won each state in the recent presidential election, based on a multilevel model of state and income categories, fit to data from the 2008 Pew pre-election polls.

I realized that the maps could be usefully augmented with scatterplots showing the estimated outcome in each income group by state: that way you can see which states were (estimated to be) landslides among different income groups, and which states were estimated to be close.

Here are the results (click on the image for a larger version):

As I noted before, the estimates are based on data from five income categories (for simplicity I display the highest, middle, and lowest groups here; the results for categories 2 and 4 fall pretty much in between) and, for each state, the poll-based estimate was shifted to be consistent with the actual election results there. Also, the low-income map changed slightly, with West Virginia and Utah very slightly edging over the 50% point for John McCain. These changes occurred because I changed the model slightly, adding region as a predictor in the model.

Any inference based on a survey sample will ultimately be somewhat model-based (I'm sure Nate Silver's audience is familiar with this point); here, I'm doing my best with a quick analysis. One useful thing about the scatterplots is that it puts less of a burden on the sharp red/blue distinctions in the maps. (Yes, I know that I could use some purple to indicate close states, but that in turn would make the maps more difficult to read. So I compromise by making the maps sharp and then using the scatterplots to show more detail.)

Also, in response to some of the comments on the earlier post:

- Yes, we're looking at other variables such as sex, ethnicity, age, and education. I'm pretty sure the patterns by education and sex will be much less dramatic than those by income, ethnicity, and age.

- The polls did not include Alaska and Hawaii, so any inference for them would be entirely model-based or else extrapolated from other poll information. In Hawaii, we can safely assume that Obama won among all income groups, and in Alaska, I don't know that I'd trust the polls there anyway.

- Regarding Robert's comment that "the map based on rich Americans only corresponds so closely to the image of the US presented by pundits TV talking heads": Exactly. That's a key point of Red State, Blue State.

- I'll post the 2000 and 2004 maps too, at some point so you can see the changes over the three elections.

- Indeed, making $150,000 in New York does not make you so rich, after correcting for cost of living, as making $150,000 in Mississippi, and differences between states (or between counties within states) must be interpreted with that in mind. However, the data show that in almost every state, higher-income people are more Republican than lower-income people.

- The average income by state comes from the Census. I can't quite remember if these are numbers from 2004 or even 2000, but it doesn't really matter for the graphs, because the rankings of states by income haven't really changed.

- Mary asked for a breakdown by religion. Some of that I posted last week.

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What the Stock Market Really Thinks About the Economy

Looking at the performance of the stock market offers both promise and peril in providing insight into the future direction of the economy. The promise comes because the market, in a fundamental sense, ought to reflect anticipated future profits of a wide array of publicly-traded large and midsize businesses. All else being equal, these companies can be expected to earn more money in good times than in bad, and therefore economic expectations will be reflected in their share prices.

The peril comes because the market will also pick up a whole host of other things that aren't particularly relevant to the well-being of the economy as a whole. For example:

1. The anticipated tax treatment of stock market investments (and personal income in general);

2. The market's risk tolerance;

3. Anticipation about the degree of public spending as a proportion of GDP. If the government provides services that could potentially be provided by the private sector, this will lower aggregate corporate earnings (and therefore stock prices), whether or not it is beneficial to the economy as a whole;

4. The degree of regulatory protection offered to established, publicly-traded businesses versus other types of businesses. For example, policies that tended to incentivize the development of wind power in lieu of petroleum would tend to harm the stock market regardless of their overall macroeconomic effects. This is because oil companies are more likely than wind power companies to be (i) already extant, (ii) publicly traded and (iii) included in major stock indices.

5. Irrational behavior and crowd psychology among investors.

I would argue that all of these factors are responsible to some degree or another for the present condition of the stock market. Investors may rightly be worried about the economy, but they may also be worried about the extent to which the Obama administration will protect established corporate interests -- i.e. their interests -- as opposed to broader economic ones. This is most clearly seen with the so-called Geithner put; equity holders in Citibank would much prefer it to receive an infusion of taxpayer dollars than to be taken over by the government, since they would be severely diluted or wiped out if the later occurred. But this has little to do with the question of whether bailouts or takeovers represent better public policy and are better for the economy in the long-run.

To make myself clear, this is not some abstract, ideological critique of equity markets, nor of the institution of the corporation. I am a pro-growth Democrat, and I am an investor myself. It is, rather, an attempt to elucidate the ways in which the interests of equity holders as reflected in (say) the S&P 500 may differ from those of the economy as a whole.

A more useful way to evaluate the stock market's perceptions about near-to-medium term economic growth may be to compare the performance of different groups of stocks. Some companies are more susceptible to business cycle fluctuations than others -- Campbell's Soup is famously recession-proof, whereas a luxury hotel company will tend to be more cyclical. (Unsurprisingly, Campbell's has lost "only" about 17% off its stock price over the past year, whereas Marriott International has lost almost 60%). If we could look at the relative performance of cyclical stocks versus more durable ones, we could get a better sense for where the stock market thinks we're headed in the business cycle.

As it happens, this is very easy to do because of the presence of various sector SPDRs ('spiders'), which are essentially just mini-stock indices consisting only of certain types of companies. Two SPDRs are particularly useful for our purposes. One, which goes by the exchange symbol XLP, is a spider of companies that produce consumer staples, and includes stocks such as Wal-Mart, Coca-Cola, and Campbell's Soup. The other, XLY, is an index of consumer discretionary products, and includes things like Home Depot, Carnival Cruises, and Ford Motor Company. The delineation between the two funds is not perfect -- for example, McDonald's gets classified as a discretionary good when it behaves more like a staple -- but should do relatively well for our purposes.

The number I'm going to show you is simply the ratio of XLY to XLP -- that is, the ratio of the share prices of consumer discretionaries to the consumer staples. I will multiply the result by 100 for ease of reading, and call it the CEI, for Cyclical Expectations Index. Higher CEI's indicate positive expectations about the near-term performance of the economy, whereas lower CEI's indicate bearish, recessionary sentiment. Here is how the CEI has performed since late 1998:



It appears that when the CEI dips below 100, this indicates recessionary expectations. The CEI fell below 100 on October 11, 2000, about five months in advance of the recession that began in March 2001 (it also briefly dipped below the 100 mark following the events of September 11th). The CEI also began falling significantly as of about August 2007, losing 25 percent of its value in the second half of that year in advance of the current recession, which dates back to December 2007 . In both cases, the CEI was much quicker to anticipate the recession than the broader S&P 500:



So what has happened to the CEI since Obama took over? Let's zoom in on the past couple years of returns:



As I mentioned, the CEI was much quicker to anticipate the current recession than the S&P 500, which didn't shed any real amount of value until the recession was already well under way. But also unlike the S&P 500, the CEI has not been particularly responsive to events of recent weeks. On inauguration day, the CEI stood at 85.5; yesterday, it closed at 85.1 (although it's closer to 83.6 as of midday today). The S&P 500, by contrast, has lost around 12 percent of its value over that period. And since Election Day, the CEI is down about 10 percent versus the S&P's roughly 30 percent.

There is also some evidence that the CEI responded favorably to the stimulus package. On November 24, 2008, the CEI jumped by 6.5 percent, its largest single-day increase since April, 18, 2001, when Alan Greenspan cut interest rates by a larger-than-expected margin. What happened that day? Obama made it clear that he wanted an "aggressive" stimulus package. (This was also the day that Obama officially rolled out his economic advisory team. However, the markets had known about the composition of Obama's advisory team as of the previous week -- and had already rallied in response to it -- whereas the characterization of the stimulus package was actual news).

All of this gives us a rather different perspective on what the stock market is really telling us about the broader economy. The CEI is down about 10 percent since Election Day, is up about 10 percent since the last day of trading before Obama announced his "aggressive" stimulus, and is essentially unchanged since Obama's inauguration. The market is not becoming particularly more pessimistic about macroeconomic conditions (although it has certainly retained its previous pessimism) -- if this were true, we'd see cyclical stocks losing further value relative to more economically robust ones. But that largely isn't what we've been seen. Instead, the stock market is engaged in something of a pity party -- the prevailing emotions being fear and loathing. It is concerned about policies which might be burdensome to equityholders in large corporations while perhaps nevertheless being boons to economic recovery.

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Obama Bets Big on Sweeping Health Care Reform in 2009

Last night, Nate concluded that, based on what is likeliest to happen to his approval ratings in the coming 18 months, Barack Obama’s optimal window for aggressive agenda-setting is 2009 (“it makes a lot of sense for Obama to be pursuing a very ambitious agenda right now”).

Today marks the beginning of the White House Health Reform Summit. In an ambitious East Room speech beginning now (1pm Eastern), Obama states definitively, “[O]ur goal will be to enact comprehensive health care reform by the end of this year.” He’s all-in.

“Health care is no longer just a moral imperative, it is a fiscal imperative,” Obama says.

By so clearly delineating his intention to sign legislation in the next 10 months, the White House is ignoring the “cable chatter” and the vogue-of-the-week “overload” buzzword. It surely knows that a major benchmark tied to those approval ratings will be Obama’s effectiveness in shepherding the process forward. It’s doubtful that voters would penalize him for a slop factor of a couple extra months, particularly if there are unexpected signs of economic turnaround, but there isn’t much more room based on the clarity in this speech.

This means Obama has two choices: (1) accomplish the sweeping goal he’s laying out; or (2) make it clear through an aggressive use of the bully pulpit that he’s doggedly on the job, in the event Congress balks and thwarts the effort. If he can’t do either one of these things, with (1) clearly being preferable to (2), voters will hold him accountable.

Significantly, the reform must be ambitious for him to get credit. He’s referencing Teddy Roosevelt, 100 years of health buildup, and deriding “tinkering.” Voters will know the difference between a tinker and change you can believe in, and Obama seems to understand that.

The speech is clearly one the White House feels good about. Calling the exploding cost of health care, “one of the greatest threats… to the very foundation of our economy,” Obama blames “failures of will, or Washington politics, or industry lobbying” as the culprit for the current crisis.

As has become a recent trademark, Obama cites an election mandate to justify the aggressive goal. While he will listen to many viewpoints and insists “[t]here will be no sacred cows,” Obama strongly warns that this effort will not be hijacked by oppositional will. “The status quo,” he says, “is the one option that is not on the table.”

“I am here today because I believe that this time is different.”

His chips, now pushed forward on the clean green felt, tell us he knows this hand is make-or-break.

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“Democrat Party" Decrier Rips Admin for “Childish” Limbaugh Strategy

Former White House Press Secretary Ari Fleischer slammed a “petty” Barack Obama and his “childish” staff last night for engaging in the Limbaugh Strategy. In the same breath as he piously decried childishness, Fleischer used a Limbaugh trademark – referring to the Democratic Party as the “Democrat” Party.

On David Shuster’s MSNBC show, Fleischer did not answer repeated and pointed questions about whether hoping Obama fails is “unpatriotic.” The infamous Bush servant, who once used the White House podium to thuggishly lecture Bill Maher and all Americans on patriotism – “all Americans... need to watch what they say, watch what they do” – described Limbaugh as “a conservative radio host, a very popular one, and I like him.”

Here’s the transcript of the initial exchange (the whole weaselly video is worth watching):

Shuster: When Rush says that all Republicans want the President to fail, Limbaugh’s wrong, right?

Fleischer: Well, David, I think this entire issue is nothing but ridiculous. You know, I’m reminded of a President, who, in his inaugural address said the following: “we come to proclaim an end to the petty grievances and... recriminations... that... have strangled our politics.” He cited Scripture and he said, “the time has come to set aside childish things.” Well, Barack Obama’s Chief of Staff is acting childish, and so is everybody else in the Democrat Party who is picking this ridiculous fight.

Fleischer also was an instrumental part of the organized, funded "Freedom's Watch" effort to portray all Democrats as unpatriotic in the aftermath of the MoveOn “BetrayUs” ad. But, let’s not go down the Fleischer road. He’s more or less irrelevant. In an era when there has been a lot of talk about mutual respect, it is striking that a huge number of Republicans continue to go out of their way to use the epithet “Democrat Party” rather than the party’s actual name, the Democratic Party.

Out of curiosity, I googled the terms “Democrat Party” and “Democratic Party” on a bunch of political websites, particularly right-leaning ones. In Limbaugh's case, there were 740 hits for "Democrat Party" site:rushlimbaugh.com, and 219 for "Democratic Party," for a Democrat/Democratic percentage of 337.90%. By comparison, ours was 102 "Democrat"s and 897 "Democratic"s. This is not a scientific study, of course, it's more an overall impression. It wouldn't be worth anybody's time to read every entry and comment that has ever been written or published on these sites, and obviously those google returns are substantially lower than the actual number of times the term has been used.

Even the Limbaugh/FiveThirtyEight comparison appears wildly closer than reality. Neither Nate nor I have ever used "Democrat Party"; that term is exclusively used as an epithet by conservatives in our Wild West comments section. Meanwhile, any listener knows Limbaugh's real ratio is far higher than 3.4-to-1. He occasionally messes up and says "Democratic." He used "Democrat" nine times in his CPAC speech, but slipped up and used "Democratic" once.

Those caveats aside, I believe the table is useful for a global impression.

Site                 -rat/-ratic%
rushlimbaugh.com           337.9%
michellemalkin.com         108.5%
hannity.com                 60.3%
littlegreenfootballs.com    52.6%
thenextright.com            41.4%
redstate.com                39.0%
townhall.com                22.5%
freerepublic.com            21.2%
realclearpolitics.com       14.3%
worldnetdaily.com           13.2%
fivethirtyeight.com         11.3%
dailykos.com                 5.8%

I’ve been wanting to write about this for awhile. During my On the Road trip, in my first McCain office stop in Reno, I interviewed a University of Nevada student volunteer named Brian Neppl about the McCain field office there. He was explaining something, referred to the “Democratic Party,” paused, apologized, and corrected himself: “Democrat Party.” What caught my attention was the un-self-consciousness with which he did it. Republicans, who have decades of think-tank fueled training in the precise use of words (think: Frank Luntz) seem to have a specific design.

The intent seems to be twofold: First, it seems to be an attempt at branding/labeling/controlling the way language sounds in an audience’s ears. Democrat apparently sounds "worse" than Democratic, and it's also an attempt to separate the Democratic Party from small-d democratic, a popular American concept. If such a tactic nets votes, it’s objectively justifiable. Second, it’s designed to get under the skins of Democrats. From a Republican perspective, both seem to be independently important reasons to standardize the epithet.

As to the first goal, it’s unclear whether this could work, or whether, if it did, there would be any meaningful result that would ostensibly help further Republican fortunes at the ballot box. I’m open to hearing what this might be.

Musing out loud, if a critical building block in the Republican ideological persuasion strategy is first to argue that the media has a liberal bias, and media insists out of accuracy in using “Democratic” while actual Republican officeholders Mitch McConnell, Eric Cantor, George Bush, et. al. use “Democrat,” then perhaps it subtly seems like the media is taking sides by choosing the correct term. Thus, the "liberal media" charge in turn has more merit, and that premise is critical in Republican argument given all the decades of incredible energy dedicated to that claim.

Another thought is that it’s a form of Josh Marshall’s “Bitch-Slap Theory” of politics that he formed in the Swiftboat context of the 2004 presidential campaign. Republicans “proved” John Kerry wasn’t tough enough to fight the War on Terror if he wasn’t tough enough to fight back against his smearers. So, Republicans may think the terminology it’s a form of baiting Democrats: ignore it and you’re letting the playground bully have his way with you, react to it and you’re reacting to something that has no actual harm associated with it. Dems look weak either way.

(It’s worth pointing out that one reason folks like Fleischer are fighting back with such vehemence is that the Limbaugh Strategy – specifically, requesting of other Republicans who are uniformly quaking in fear to stand up to Limbaugh’s comments – is the Bitch-Slap Theory turned on them. How tough can Republicans really be if they can’t stand up to the radio guy? Michael Steele is going to stand up to Al Qaeda?)

As for the second goal, the non-tactical, end-in-itself enjoyment of antagonizing Democrats, to use Fleischer’s term, is pure, uncut childishness. Moreover, it’s just boring. Newsflash – human beings have figured out a lot of ways to antagonize other human beings with pejoratives. It’s like Palin-as-hockey agitator, no great skill involved (and of course "Democrat Party" is a Palin staple). It’s literally the most basic childhood taunt – taking someone’s real name, and calling them something else to provoke a reaction. It's the single-celled amoeba of verbal harassment. It’s unmistakable that much of the term’s use involves an attempt at agitation.

Again, objectively, there’s nothing wrong with Republicans methodically doing this – refusing the basic respect of allowing the Democratic Party its own name. They can elect their own behavior all they want; it’s a free country. Democrats may choose a reflexive reaction, but nobody "makes" you react, you have responsibility for how you react.

On the flip side of the coin, denying another person or group basic respect means that once the epithet escapes a Republican’s lips, he or she can’t complain when no respect is returned. Some Democrats aren’t bothered. Their perspective is that the very nature of such a tiny, repetitive jab, like a sibling flicking you on the shoulder, is that it pales in comparison with the constellation of behaviors that create actual wounds.

However, some Democrats find it to be a threshold issue in a conversation. It's irrelevant whether it wounds; it's a communication signal. If your behavior choice is a playground tactic, why should my behavior choice be to listen to what you say in whatever else is coming out of your mouth? You won’t agree to my name. I am supposed to take anything you say seriously? Couples therapists know a thing or two about this one. Respect is a threshold condition for listening.

If Republicans genuinely want Democrats to listen to their policy ideas, they shouldn't use the term because it's counterproductive. For example, when I hear the term, nothing else matters that comes out of that person's mouth. That Republican has failed the threshold bad faith test, and who cares what they say?

By the same token, if Republicans don't care if Democrats listen to them, which may indeed be the case for many, they don't have to care about this sort of symbolic signal-sending. In last summer's Republican National Convention party platform meeting, Republicans changed "Democrat Party" (ensconced in the official platform in 1996) to "Democratic Party." Mississippi Governor Haley Barbour grudgingly admitted that probably they shouldn't act like kids and instead use the real term, "at least in writing."

While the terminology is trivial in some ways, the same way that emphasis of Obama's middle name is trivial (it is his name), there is a serious policy extension of the tactic. This threshold issue of withholding basic respect underlies historical Republican demonization of gays, blacks, immigrants, and other groups. Republicans may protest that conclusion, but think of Limbaugh's "Halfrican," or try talking to an Arab-American while saying everything normally and rationally except always calling Barack Obama: Barack Hussein Obama. Do you think the rest of whatever else you say will be heard? When Sean Hannity uses "Hussein," over and over, he is not trying to convince an undecided to adopt his viewpoint, and certainly not persuade an Obama supporter to come around to his way of thinking. He's speaking to the home crowd, his intent is to use the word as a weapon.

One of the reasons the "childish" party of Fleischer and Limbaugh is having such a tough time in the wilderness is they've done a too-clever-by-half job figuring out how to systematically weaponize language. There's no referee. It's their right. It's also no great parlor trick, and you can go to any grade-school playground and find the same. The day Republicans work to signal good faith by policing their own house on basic respect in language will probably run parallel with the day we'll see the party reborn as an ideologically grownup force.

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When Will Voters Blame Obama?

Buried in the latest NBC/WSJ survey (.pdf) is a question asking voters who they blame for the country's economic problems. Currently, 8 percent of voters say that Obama's policies are "mostly responsible" for the poor economy and another 6 percent blame him in part. But the longer the crisis lasts, the less patient voters will be:



We can translate these responses into a graph -- doing our best to translate the poll's somewhat vague wording into precise numbers -- and compare them to a related question about when voters expect the recession to end.



Obama crosses the 50 percent threshold at almost exactly 18 months from now, which would mean September 2010. At that point, a majority of voters say they will hold Obama accountable for the performance of economy.

Perhaps not coincidentally, 18 months is also about the point at which a majority of voters expect the recession to have ended. By comparison, of the several dozen economists polled in the Wall Street Journal's monthly forecasting survey, 65 percent expect the recession to have ended by the third quarter of 2009, and 100 percent anticipate its conclusion by the end of 2010. (As a caveat, the Journal's forecasters are generally a bullish bunch).



So this seems like pretty good news for Obama. The public has very low expectations for the economy -- the average voter is more pessimistic about the economy than all but the most pessimistic economists. And it will be quite some time yet before the public pins most of the blame for the economy on Obama.

Cutting against this somewhat are two other factors. Firstly, it is generally believed -- and I'll find a link for you on this if I can -- that voters react slowly to changes in economic well-being. That is, if the economy exits the recession in July 2010, it might take a few months for the voters to notice, and this might or might not be soon enough for the Democrats to avoid blame at the midterm elections. Secondly, the unemployment rate -- perhaps the economic indicator that ordinary voters are most concerned with -- has been among the last things to recover in the so-called jobless recoveries following recent recessions. It's plausible that GDP growth will dip back into positive territory in the third quarter of 2009, for example, but that we won't see a material rebound in the employment numbers until months later.

On balance, the public seems prepared to be pretty darned patient with Obama. The question is whether public will in fact be as judicious as it expects itself to be after some number of additional months of dire economic headlines. On that front, I'm a bit skeptical, and I'd expect Obama's approval rating to lose a couple of points each month until the recession ends. This is why it makes a lot of sense for Obama to be pursuing a very ambitious agenda right now. If the economy recovers within the next year or so -- beating voters' expectations -- then Obama's approval ratings will probably wind up being quite high. But until that recovery occurs, Obama's approval ratings are likely to get worse before they get better.

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Rush is the Least of the Republicans' Problems

Rush Limbaugh is not the leader of the Republican Party. That's because they don't really have one.

True, by definition, there has to be one Republican who has more influence than any other on the medium-to-long term direction of the party. Maybe it's Rush. Maybe it's Sarah Palin. Maybe it's Newt Gingirch, Charlie Crist, Mitch McConnell, John Boehner, Sean Hannity, John McCain, Mike Huckabee, Michael Steele, George W. Bush, Arlen Specter, Mitt Romney, or T. Boone Pickens. I don't know. I don't know that I care.

But that's not usually what we think of when we think of a "leader". Instead, we think of a "leader" as some individual who (i) almost everyone else in the party defers to, and (ii) has the moral and/or institutional standing to speak on behalf of the party as a whole. There is no guarantee that any one individual will satisfy these criteria at any given time. And in the Republican party at the moment, pretty clearly nobody does.

Rush and Michael Steele, for instance, went after one another in the most public way possible. Leaders do not, as a matter of course, have other major figures in their party seeking to humiliate them. They are too intimidating for that. Nor, for the most part, do they seek to publicly humiliate others. Their power is understood, and does not require such displays of force (although what happens behind closed doors might be a different matter).

Indeed, when a party doesn't occupy the White House, and hasn't designated a Presidential nominee, it usually won't have a "leader". Every now and then you'll get a Gingrich circa 1994 type, but these situations are exceptional.

Opposition parties, in fact, can sometimes function fairly effectively without a leader. Who was the leader of the Democratic Party from, say, 2005-2007? Howard Dean? Nancy Pelosi? Al Gore? Bill Clinton? Hillary Clinton? Harry Reid? Markos Moulitsas? It's not at all clear (although Dean probably has the strongest case). But these folks generally worked well in tandem with one another, and the party did quite well for itself. Everyone was working from the same playbook, which was to parlay George W. Bush's unpopularity into huge electoral gains.

The Republicans' problem is not that they don't have a leader, but that they don't have a direction. The House Republicans aren't on the same page as the Senate Republicans, who aren't on the same page as the Red State Governors, who aren't on the same page as the Purple State Governors, who aren't on the same page as the Beltway Elites, who aren't on the same page as the Media Elites. Nobody is happy with their statition in life. Nobody, except maybe Newt Gingrich and John Huntsman, is in anything other than survival mode. Nobody (including Steele, the RNC Chairman) is willing to put the best interests of their party ahead of their desire to mark their territory and increase their personal sphere of influence.

This is not the sign of a healthy party -- but Rush Limbaugh is the least of the Republicans' problems.

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re: Minnesota

I largely abandoned this story when it exited the recount phase and entered the legalistic quagmire phase. But Eric Kleefeld hasn't over at TPM, and I suggest you go read his coverage. The latest? The Coleman team, having apparently realized that they'll have no shot to win a re-re-count, are now pushing for a re-vote.

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Predicting What You Already Knew

Harvard economist Robert Barro's article in the Wall Street Journal about the relationship between stock market crashes and depressions is just ... plain ... weird.

The bottom line is that there is ample reason to worry about slipping into a depression. There is a roughly one-in-five chance that U.S. GDP and consumption will fall by 10% or more, something not seen since the early 1930s.

Our research classifies just two such U.S. events since 1870: the Great Depression from 1929 to 1933, with a macroeconomic decline by 25%, and the post-World War I years from 1917 to 1921, with a fall by 16%. We also assembled long-term data on GDP, consumption and stock-market returns for 33 other countries, sometimes going back as far as 1870. Our conjecture was that depressions would be closely connected to stock-market crashes (at least in the sense that a crash would signal a substantially increased chance of a depression).

This idea seems to conflict with the oft-repeated 1966 quip from Paul Samuelson that "The stock market has predicted nine of the last five recessions." The line is clever, but it unfairly denigrates the predictive power of stock markets. In fact, knowing that a stock-market crash has occurred sharply raises the odds of depression. And, in reverse, knowing that there is no stock-market crash makes a depression less likely.

There's nothing wrong with Barro's research per se. It's just strangely simplistic and incurious, particularly by the standards of a top-notch economist at a top-notch institution. What the paper does (it will cost you $5 to download and read it) is essentially to take a census of (i) stock market crashes and (ii) severe economic downturns in industrialized economies from the late 19th century onward. It finds, unsurprisingly, that the one thing tends to be found more frequently in the presence of the other.

And that's really all it does. It doesn't address what order the events occur in: stock market crashes that somewhat lag depressions are treated the same by Barro as those which lead them. Nor does it purport to address the really meaningful and interesting questions, which are as follows:

Does the stock market contain information is not well reflected by other economic indicators? That is, can you make a better prediction about the fate of the economy by knowing the trajectory of the stock market than you can with other readily available economic indicators?

If so, does a stock market crash merely predict a depression? Or is it actually a contributing cause toward a depression?

Without answering these questions, the paper isn't a whole lot more insightful than one telling you that beachballs are found more often in the presence of sand, and vice versa. Do beachballs predict sand? That is a matter of semantics, I suppose. But do beachballs tell you anything useful about sand? Not really.

Actually, I'm not being fair to Barro and his co-author José F. Ursúa. There is a very interesting and worthwhile part of the paper about the relationship between stock market crashes and the equity premium.

But this is not the part that's being reproduced in the Journal. Rather, the Journal is engaged in an ongoing project to use the stock market as proxy for the performance of the economy as a whole, and by extension, the performance of the Obama administration. (It is certainly not alone in this regard; tune on CNBC or browse the archives for other examples.) This article tends to cement in the public's head the relationship between the stock market and the economy, and therefore must have been appealing to the Journal.

Obviously in the long run, there is going to be some reasonably strong relationship between the stock market and the economy. But the stock market can also deviate significantly and over long periods of time from economic fundamentals. It's a pretty rough indicator -- empirically much less useful than other metrics like money supply, manufacturing output and interest rate spreads in predicting the economy's fate.

And if there's anything that should have taught us that, it's been the past dozen or so years. The failure of markets to price assets efficiently is arguably one of the principal causes of the current economic crisis. I am increasingly wondering whether blind faith the rationality of asset markets might tend to perpetuate it.

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IL-05: Quigley Appears Headed for Congress

9:29 PM: The AP has now called the race for Quigley. So, why did he win?

The answer begins with name recognition: Quigley has been appearing on ballots in IL-05's environs for over a decade now, as he was first elected to the Cook County Board of Commissioners in 1998. Although most voters probably have no idea what the Board of Commissioners does, they know Quigley's name, and that's worth something in a 12-candidate field. By contrast, Feigenholtz' and Fritchey's State House districts cover just a small fraction of IL-05's territory.

The rap I heard against Feigeholtz, who had the SEIU's endorsement and a lot of money in the race, is simply that she fell somewhat flat on the stump. Not dislikable by any means, but just a little stiff, unable to engage votes in an election where they were having a great deal of difficulty engaging.

9:13 PM: Quigley now leads both John Fritchey and Sarah Feigenholtz by about 2,400 votes with 88% of precincts reporting. There probably aren't more than about 6,000-7,000 votes remaining to be counted, and those votes are being split amount literally 12 candidates, so it's next to impossible to see how he loses.
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Cook County Commissioner Mike Quigley, whom we dubbed the favorite last week to succeed Rahm Emanuel, appears as though he'll be the next Congressman from Illinois' 5th Congressional District. With about 70% of the ballots in, Quigley leads John Fritchey by about 2,100 votes and Sara Feigenholtz by about 2,500 in city of Chicago precincts (.pdf), more than enough to offset his slight deficit in the suburbs.

The Republican race, for the moment, is too early to call, with Tom Hanson and Rosanna Pulido within about 100 votes of one another amidst very low turnout.

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White House v. Limbaugh: Grand Theatre for an Audience of Three (or Four)

Don’t kid yourself. While L’Affaire Limbaugh is incredibly entertaining political theater – among others, it dominated Matthews, Cooper, Olbermann, Maddow and Jon Stewart last night – the tactic has a calculated purpose and an immediate context: votes on the budget bill. Soon enough, it’ll be votes on health care legislation. There are really only three attendees at this play.

Senators Arlen Specter, Olympia Snowe, and Susan Collins.

(A fourth might be Sen. George Voinovich, whose state gets a visit this Friday when Barack Obama travels to Columbus.)

Upcoming legislative fights are expected to be brutal, tougher than the stimulus bill. The votes of Specter, Snowe and Collins, critical for passage of the stimulus, are still considered the first gettable Republican votes. The spectacle of Limbaugh as Republican-in-Chief sucks all the oxygen from the room when these moderate Republican senators may want cover for any potential “no” vote – or “no” leverage in negotiations.

Don’t think the White House doesn’t know that. Gibbs yesterday: “I think maybe the best question, though, is for you to ask individual Republicans whether they agree with what Rush Limbaugh said this weekend. Do they want to see the President's economic agenda fail?” (emphasis added). It’s not about Limbaugh. It’s about Specter, et. al. It’s about winning the budget fight, the health care fight.

Gibbs was buoyant at Limbaugh questions. Like a schoolteacher rewarding a pupil, Gibbs called one Limbaugh question “a good question.” A bit later, Chuck Todd suggested, “well, just ignore (Limbaugh).” No, no, no, no. The White House wants this. Gibbs leapt to the defense of questioners:

Look, I don't think it's a crazy question to ask about the commenting on whether or not somebody that seems to be, maybe for lack of a better word, a national spokesperson for conservative views and many in the Republican Party, what do I think about, or what does this White House think about him, on at least two separate occasions in front of large and applauding audiences seeking the failure of the President's economic agenda.

In other words: “C’mon Chuck, the Limbaugh question is a really, really good journalistic question, and we support good journalism.”

Sunday, Obama Chief of Staff Rahm Emanuel somberly “complimented” Limbaugh’s intellectual honesty in wanting Obama to fail: "He is the voice and the intellectual force and energy behind the Republican Party, and he has been upfront about what he views, and hasn't stepped back from that, which is he hopes for failure." The White House doesn’t want to miss a layup.

Not everyone agrees. Today, veteran Democratic messaging strategist Peter Daou panned the Limbaugh strategy, arguing that while it may seem like a good idea today due to irrational Democratic exuberance in the afterglow of the election, in the long term elevating Limbaugh is a mistake because his toxic effect on political debate will ultimately hurt Democrats. Daou, who worked for Hillary Clinton, also mocks the idea of Obama’s powerful campaign as pure myth, instead suggesting that Obama beat Clinton because Limbaugh tore her down for 15 years.

Daou is completely wrong about why Obama won, but that’s incidental. He’s wrong about Limbaugh because Limbaugh is already a tested brand, and the verdict has been rendered. Muhammad Ali, he is not. Independents aren’t going to suddenly start listening to Rush somewhere down the road, just as they aren’t going to suddenly start appreciating Al Sharpton, who also has a brand. Limbaugh doesn’t have any new, dynamic ideas that will one day become ascendant if the Democrats aren’t careful. Limbaugh has precisely the same ideas, and proudly boasts he always will:

We’ve got factions now within our own movement seeking power to dominate it, and worst of all to redefine it. Well, the Constitution doesn’t need to be redefined. Conservative intellectuals, the Declaration of Independence does not need to be redefined and neither does conservativism. Conservativism is what it is and it is forever.

Most significantly, the Obama brand and Limbaugh brand are in direct opposition. Obama’s brand is about intellectual curiosity, empathy, personal respect for his ideological counterparts, and problem-solving. Limbaugh plays “Barack the Magic Negro” on his show and makes fun of Michael J. Fox’ Parkinson’s disease.

Do Snowe and Collins want Obama showing up in Portland, Maine, name-dropping Limbaugh in a speech, and then facing those inevitable questions Gibbs urged the press to ask of them? It’s increasingly clear that, having already taken control of the public perception of bargaining in good faith, Obama is willing to become more rhetorically aggressive.

This weekend, we saw a subtle but key shift in Obama’s rhetoric. Did anyone notice Obama’s most recent YouTube address? Andrew Malcolm at the L.A. Times, in a caustically hostile post yesterday, said that on public relations with the budget and healthcare Obama “doesn’t think either are going too well.”

However, for those used to watching Obama’s tone carefully, the final minute of Saturday’s 5-minute internet video address – echoed again in Obama’s remarks introducing Kathleen Sebelius as HHS nominee – is strikingly more feisty. The first few minutes is normal Obama, the last minute says, “bring it on.” Key graf:

I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this: So am I.

The system we have now might work for the powerful and well-connected interests that have run Washington for far too long, but I don’t. I work for the American people. I didn’t come here to do the same thing we’ve been doing or to take small steps forward, I came to provide the sweeping change that this country demanded when it went to the polls in November.

Without any Republican willing to stand up to Limbaugh, there’s no middle ground between him and Obama, and nowhere to hide for the few moderate Senate Republicans Obama needs. Ultimately, this tactic is about the votes this year, the ones that will make or break the Obama presidency. If successful health care legislation is passed because Arlen Specter votes for it, Obama is willing to trade off a few more bucks in Limbaugh's pocket.

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How Did the Rich (and the Poor) Vote in 2008?

Update: New graphs here.

Following what we did for 2000 and 2004, we took the Pew pre-election poll data and broke it down by state and income. The numbers are noisy in some of the states (for example, New Hampshire had 15 respondents in the lowest income category and only 11 in the highest category), so we piped the data through a hierarchical model to get a more stable estimate for the voting patterns among rich, middle-income, and poor within each state. Here's what we got (red and blue states are those McCain or Obama would've won):

Update: My original maps were slightly wrong--they were based on unadjusted poll numbers. I re-posted the corrected maps 6.28pm.

The most striking pattern is our estimate that Obama would've won almost all the states, if only low-income voters were counted. This is our best estimate for each individual state; however, given the uncertainty in these estimates in small states such as Idaho and North Dakota, we wouldn't claim with certainty that there was such a clean sweep.

Among rich voters, Obama won in California and some northeastern and midwestern states--"blue America," if you will. (I don't really know what to say about New Mexico, but there is such a thing as sampling variability!)

The five income categories I used in the analysis are: 0-20,000; 20-40,000; 40-75,000; 75-150,000; over 150,000. The graphs above show the estimates for the highest, middle, and lowest of these five categories. I assume the numbers represent family income (as reported by the survey respondent).

P.S. I don't know what sort of technical detail people want on this blog--I got enough complaints on my last couple of posts--so I'm posting the R code for the fitted model here.

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The Manic-Depressive Market

Wading into a discussion about the stock market is dangerous business. In contrast to politics, where there are relatively few people willing to do serious quantitative analysis, there are entire industries full of such geeks in the financial sector. Still, the performance of the markets is something I think about a lot. It's something I have to think about because the stock market is increasingly being used -- often wrongly or disingenuously -- as a proxy for the success or failure of the Obama administration.

Perhaps the core question in analysis of the stock market are whether such markets are informationally efficient. This is basically the same as asking whether the behavior of stock market is predictable. Predictable behavior in the performance of the market -- patterns, that is -- imply that it is not efficient, since those patterns represent information that investors are neglecting to use. For example, if a stock priced at $10 per share today can reliably be expected to be priced at $11 per share tomorrow, then something is wrong, since other investors should have detected this pattern and should have bid the stock up to $11 (or $10.99) in the first place.

Here is a perhaps the most basic question along these lines: if the stock market goes up today, is it more likely to go up tomorrow?

Over the long-run, the answer to this question has been 'yes' -- although not by an enormous margin. Since 1900, the Dow Jones Industrial Average has posted a gain 54.2 percent of the time on days following a gain, but 49.8 percent of the time on days following a loss. There has been some serial correlation in its returns.

What's interesting, however, is the nature of this correlation has changed over time. From 1946 through 1979, the market posted a gain about 57.7 percent of the time following a gain on the previous day -- but just 45.6 percent of the time following a loss. This suggests that the market was slow to react to new information, with rallies or slumps sometimes taking several days to play out.

You might expect that as information flow improved throughout the 1980s and 1990s, particularly with the increasing availability of cable news and computerized trading, this pattern would tend to dissipate. And you'd be right. Between 1980 and 1999, he market posted a gain 51.8 percent of the time following a prior day's gain, versus 52.7 percent of the time following a loss -- essentially no difference. The simple arbitrage opportunity available in previous years -- assume the market will do tomorrow what it did today -- would no longer make you any money.

Since then, however, something funny has happened. The market has developed a tendency toward inverse serial correlation; it is more likely to follow a gain with a loss, and vice versa. Since 2000, the market has gained ground just 47.7 percent of the time following a prior day's gain -- but 54.2 percent of the time following a loss.


In contrast to the phenomenon of positive day-to-day correlations in stock market returns, which can plausibly be explained by slow-moving information (you find out on Wednesday what your stockbroker found out on Tuesday -- therefore, a stock that goes up on Tuesday tends to go up on Wednesday), these inverse correlations are more perplexing. Perhaps the market is routinely overreacting to information -- when a news event merits a correction of X in a certain company's stock price, its price instead changes by X + 20%. Perhaps it is the result of program trading: a certain series of algorithms designed by a hedge fund, which might perform well if left to its own devices, could begin to behave oddly in the presence of other such algorithms which are seeking to do the same thing.

Either way, the whole thing is a bit disquieting. The stock market is sometimes described as a drunkard's walk, which implies that it moves about seemingly at random. But real drunkards do not walk at random: instead, they tend to wobble, lurching from one side of the sidewalk to the next in a way that in fact is somewhat predictable. That is more the way that the stock market has tended to behave in recent years.

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FiveThirtyEight Interviews Sen. Jon Tester

Last Thursday morning, just before the Obama administration released its budget, I sat down with Senator Jon Tester of Montana for a full-scale interview in his Russell Senate office, and below is the transcript.



[Full disclosure, I worked for Sen. Tester on his United States Senate campaign in 2006, so it was a point of personal privilege to begin what we hope and expect will be a robust series of interviews with Senators, House members, and other notable political figures here in town. I plead guilty to any charge of bias. I think the interview speaks for itself.]

538: This morning GM reported their giant loss of $9.6 billion for the quarter, and the President said the other night, “We are committed to a retooled, reimagined auto industry... the nation that created the automobile cannot walk away from it.” Montana doesn’t have a lot of auto jobs...

JT: No, but we are impacted by the auto industry because of mining. The mine is for the material you put into the catalytic converters. It’s a big market for ‘em.

538: It’s has been and is going to be a controversial issue going forward, as far as how much money we can give to bailout the auto industry? What's been your take on money for the auto industry?

JT: I didn’t vote for the bailout portion. I thought if they were going to take the money they needed to take it from the Wall Street bailout dollars. But I will tell you, if there’s some parameters put on the money, I'd take a look at it. I think that they’ve been out-competed at their own game. And I don’t see it as being a labor issue, as much as I see it as being a mileage issue, a dependability issue, making products that people want to buy. You know, we’re impacted, you’ve been all over the state of Montana. It’s a big state, we drive a lot of miles every year. Dependability and affordability is pretty darn important. I think getting down to it, I think there needs to be some parameters on what they’re doing. They need to get cutting edge again. They need to start building vehicles that – 25, 30 is fine but let’s start thinking 40, 45, 50 miles a gallon. Let’s start working towards battery technology or whatever it is, and even outside that box, to make things so that they’re energy efficient. I think it’s critically important.

538: Speaking of energy, that was one of the three big items the President had the other night in his speech. Obviously during your campaign, energy was a huge part –

JT: Still is.

538: And because Montana is referred to as the Saudi Arabia of coal, how confident are you about things like clean coal technology? We’ve heard a lot of pushback about whether clean coal technology really can exist. In Montana it’s obviously a huge issue. Are you feeling confident that in this budget that’s being announced even as we speak, and in the Senate negotiations, that there will be monies for things like clean coal?

JT: Well, I think it’s one of the things we need to do in Congress. The president’s going to put forth his vision, and we need to take a look at that vision and make sure it matches up. And if there are things we can do to make it better, we’ll make his vision better. For example, clean coal technologies. 50% of that (points to light) comes right from coal. Of our electricity, of our energy. So it ain’t going away. So let’s figure out a way to burn it better.

And then let’s work on some other technologies too, like renewable energy. All the stuff that we can do – and there is all sorts of stuff out there including things that are long term, like fusion. But the truth is we have to figure out ways to can burn it better, burn it cleaner, so it doesn’t have the environmental impact. The climate instability factor right now is a big issue. I mean, it’s a big issue. We had a great December, and it’s been dry ever since then at the farm. Weather’s unpredictable in Montana anyway but it’s really unpredictable now.

538: A quick aside, you were legendary during the campaign to go work on the farm for I think it was a week, at least a week if not two weeks.

JT: Harvest.

538: This may be a good time to ask about 2012, it’s obviously a long ways away but you know that your race will probably be one of the top races targeted, given the way Montana is and the fact that it’s become such a swing state now. And as a freshman Senator having that defense. Should we expect to see you on the farm in 2012 as well?

JT: Yeah. (Smiles.) I literally can work, and I do, long, long, long hours. I’m used to it. It’s where I come from, it’s what you do. You get up in the morning and you work all day long, and when it works to the point that you can quit you go to bed at night and do the same thing (the next day). I think it’s good for me, I think it’s good for Montana, to make sure that I stay connected with the land, to make sure I stay connected with working folks, to make sure I have a sound understanding that there are challenges out there. And if you live those challenges, you can represent those challenges a lot better here in Washington, DC. Yeah, I mean, I’m a farmer. I’m a farmer first. I've always been a farmer, I always will be a farmer. When they put me in the ground, it won’t say “Senator” on it. It’ll say, “he was a farmer.” Or scatter my dust, I should say. Yeah, I’m always gonna be doing that stuff. It’s good for my mental health and it’s good for my physical health.

538: Let me ask you a couple quick questions about Montana. You’re on both the Indian Affairs Committee and the Veterans Affairs Committee, and I know that has been very important to you, not only from the time that you campaigned, but during your time here so far. What are you proudest about that you’ve been able to do in the last couple years on those issues for Montana?

JT: The mileage reimbursement was a big issue for veterans. When I got back here and found out it was 11 cents a mile I mean, that’s ridiculous. And I found out from a veterans on the ground too, a bunch of listening sessions that we had – I mean, a lot, I can’t even tell you how many we’ve had, somewhere probably close to 20. Well over a dozen. And one of the first ones we had, a guy said, "I’m a disabled vet, to get to the hospital or the clinic it’s 11 cents a mile." And that was when gas was 3-and-a-half, 4 bucks a gallon. So getting that bumped up to (28.5 41.5 cents/mile) where it should be was important. And we took it in two steps, and I think it’s fair now.

The issues as far as veterans go, the issues around those community clinics is important. And we’ve gotten some work done, you know, Cut Bank, Lewistown, in particular. Havre’s coming online. We're getting a new clinic down in Billings. That clinic they had down in Billings was just a joke, to be honest with you. And so, that kind of stuff, access to health care for veterans is really important, it's something I’m really proud of. And we’ve got more work to do, and I think there’s some work in the more remote areas of Montana, building partnerships with the local hospitals or community health clinics, things like that. That’s from the veterans standpoint, that’s it.

Our next challenge is making sure we get the right kind of analysis as people leave the active military into civilian life to make sure they’re getting the right ratings. Particularly for unseen injuries like PTSD and TBI. That’s our next challenge. And if we do that right it will save a ton of money and the people who serve this country will be benefited so much better.

From an Indian Affairs standpoint, the challenges there are many. In fact, when I first got here I met with the large land-based tribes, the ones that had a lot of land. And I said, "What are the issues?" And they started reeling ‘em off, and I said "Hold it. You’re gonna have to prioritize because you’ve got too many." And it basically falls around – and this can be the order although sometimes the order changes – health care's the big issue, housing and water. We did some stuff in the Senate, unfortunately the House, I mean we passed the HASDA, which is the housing bill, hadn’t passed in years. The House didn’t take it up, which is unfortunate. We've got some things that we’re trying to do. A lot of the health service stuff is a resources issue, it’s a money and manpower issue. We’ve introduced a bill called the Path Act that’s going to hopefully empower tribal colleges to have nurses in particular, and administrative personnel available, people on the reservation being trained for jobs on the reservation, that understand the reservation. So that, I think, can help, and quite frankly, adequate funding for Indian health services so they don’t have to cut the funding off, cut the services off 1st of July or 1st of June or whenever the money runs out.

From a water standpoint, we’ve got the Crow water compact that’s setting in here, we’re going to try to get that through. That’s important. And then we’ve got some regional water systems that we’re working on. North-central's Rocky Boy line and the northeast Fort Peck line are both a couple hundred million dollar projects, actually it might even be up to 300 million with inflation. That will supply the Rocky Boy reservation as well as Fort Peck and the rural areas, too. Kind of a win-win deal. So those are things I’m proud of that we’re working on, and we’ll probably be working on 'em for a long time yet to come.

538: I’ve noticed a theme in a lot of these different answers keeps coming back to health care. There’s health care in veterans affairs, in Indian affairs, and health care is going to be the biggest -

JT: Absolutely.

538: - it seems at least from the president’s speech the other night, that that’s going to be the biggest challenge of the year. And I think it was $634 billion that’s been floated out there, I'm sure the details will become a little clearer and you guys will have your say, $634 billion for health care that’s been set aside this year in the budget over a ten year period as a first shot.

JT: I have not looked at that -

538: It’s coming out as we speak, so I’m sure you’ll have time to reflect on it. I’m looking to hear your perspective on the difference between the 111th vs the 110th, where there are more Democratic Senators, closer to the filibuster-proof but still not quite there. This is going to be a big fight, and you were involved in some of those negotiations around the stimulus bill trying to work out the compromise. What is your perspective, are you expecting to play a large role in some of that compromise?

JT: Well, I’ll play whatever role we can. I’m not on the health committee, because you can’t be on 'em all, we've got a picked up committee load now (chuckles, referring to recent Appropriations Committee appointment). But we will be inserting the rural perspective, whenever we can, because it’s important. We’ve got different challenges than they do in this city. They’ve got their own challenges here in the urban areas more generally. So we’ll be inserting that when possible, and we’ll be working.

I can tell you, it’s not gonna be easy. It’s not gonna be easy. At all. It’s going to be very hard, and a lot of heavy lifting. And proof of that, when Obama was giving his speech the other night and talked about children’s health insurance, a good, good, good portion of the Republican side, particularly in the House, never stood up. That’s children’s health insurance. That’s pretty basic stuff. And if we can’t even get to that point, you know, it’s going to be a lot of work getting people to come together. Because what we’re talking about is health care for people who don’t have health care, and some of those people make your income level, so they’re not poor people.

538: Just so you know, I don’t have health care.

JT: Exactly right. And my kids, who are supposed to be out on the farm, one of the reasons they're not there yet is health care. Absolutely is health care. And you can say it’s health care because of available insurance, or you can say it’s health care because they can't make as much money to pay for the health care when they move onto the farm. So it’s an issue, it's an issue that affects me directly. It's an issue that affects far too many people, whether you don’t have insurance, or whether your deductible is so doggone high that you're underinsured.

538: What would be your advice for the president? He’s going to have to be doing a lot of selling. We’ve seen him start to do some of this road show work where he’s going out in the country. Those kind of things. Are there specific bits of advice, knowing how tough the fight’s going to be, that you would have if you were his adviser saying we need to get this done?

JT: Well, we absolutely have to have this be bipartisan. We’ve got to have some folks on board. And we’ve got to have both parties – it’s a big issue. I mean, it’s a Big. Issue. And it should not be defined by a Democratic issue or Republican issue. Health care is important for everybody.

So, I think the fact that the president has reached out and is trying to work with the Republicans, trying to bring them on board, it’s smart, because it’s going to be critically important on this issue. I don’t think it’s going to be done if we don’t get support. And if it isn’t done, and if it isn’t done thoughtfully so that health care access is improved and health care quality is maintained – we definitely can’t go backwards – and we don’t insert a lot of prevention and wellness into this program, the people who suffer is going to be everybody. Democrats and Republicans will suffer in the end. Our business base will suffer. Everything. The economy of the country will suffer.

I believe it was the head of the OMB, Peter Orszag, said, “if you don’t get a hold of this, by 2020 you will have no discretionary money. It will be gone, all gone to health care." Well, that tells me that this problem isn’t going to solve itself. We've got to be proactive, we've got to work for solutions. We need everyone at the table. So, I'll do whatever I can in support.

From a presidential standpoint, he’s got to get out and talk about the vision he has with the health care professionals that are on his staff. And, to be honest with you, it’s unfortunate Ted is sick, because Senator Kennedy is going to be playing a big role in this and Senator Boxer Baucus is going to be playing a big role in this, and getting people together and hopefully coming up with something that works. That’s what's important.

538: Have we learned any lessons since the early 90s when this was tried, have we learned any lessons since this was tried, in the way we talk about health care? Republicans in the past have been very effective in framing issues and using the kind of language – have Democrats gotten better at being able to talk about this?

JT: I don't know. I think regardless of what we talk about, we need to talk about it from a more on the ground level. We’re talking about people here. We’re not talking about policy, ultimately, we’re talking about people. We need to take it to that level. Talk about people. It’s not just poor people, there are a lot of regular folks out there that are hurting because of this.

From a message standpoint, I think things have changed a lot from what they were, '94 or '95 whenever that was rolled out. I think you’ve got issues out there that are bigger, there are more people who understand the system is broken, including some of the insurance companies. Absolutely the health care professionals understand it's broken, and the patients. So I think there's more of a critical mass that understand we have to do something. In the 90s – of course I was 12, 14 years younger and I wasn’t involved in the local government or state government - it wasn’t a big issue on my screen then and we were paying for our own health care. But it sure is now. And for my kids. So it’s a different story.

538: Do you think that – again, one of the things we’re hearing a lot of criticism from the Democratic side, in the blogosphere and you’re familiar with that because that’s probably the first way that I encountered you was some interaction with the blogosphere. So you must undoubtedly be aware that there’s a criticism that because of the need to get this extra one or two Republican votes, that the price to be paid is so high in terms of watering things down. That’s the perception, that the stimulus bill was watered down, or that this health care idea might be watered down because this need for bipartisanship makes a worse bill. You hear those criticisms, what’s your reaction to that?

JT: My reaction is take a look at the final product. You take a look at that jobs bill that we passed. Recovery bill, stimulus, we call it "jobs" because that’s what it was about. There was a lot of good stuff in that bill. A lot of good stuff in that bill. So the glass still half-empty, half-full, take a look at what’s in that bill. There’s great stuff for energy, there was great stuff for infrastructure, for water, and there was tax relief for middle class folks.

I mean, the truth is you can pick holes in it, and I did – I mean personally, when it was first brought it up, I said, “Well, this could be better, that could be better, this doesn't need to be in there and this could be bigger” and all that stuff. But the truth is, if you look at the final product, it’s a pretty good piece of legislation. And I think it could help to put some people to work, which is the overall goal of this thing.

So when it comes to health care, I think it’s going to take more than three Republicans to get health care policy passed, myself. I think it’s going to take people sitting at the table to get it done, and I think Obama’s put it out. And I will tell you if there’s an attitude of obstructionism when it comes to health care, we’re not going to end up with anything. We aren’t. And who’s going to suffer? Democrats, Republicans aside, I’m gonna tell you who’s going to suffer. It’s people. It’s businesses. It’s working families. It’s people who work in this country and have built this country for the last 300 years. They’re the ones that are going to suffer. So this is bigger than Democrats or Republicans, and I hope we can put the politics aside. I really do.

538: There’s a lot of talk about if the Republicans are seen as obstructionists that in the next midterms – we’ve seen two unprecedented waves in a row – that then you might have that filibuster-proof majority, it almost seems like now the filibuster is a standard part of any vote. It’s no longer 50, it’s got to be 60. Obviously on something like this it's going to be a big deal. Are you, is there some – I know you don’t like to be a political pundit – is there any sense from your caucus that if the Republicans are seen as totally obstructionist on this, that in two years from now we’re going to be looking at a better possibility because there might be a better chance?

JT: I’ve never taken part in those discussions so I don’t know. I can tell you that in two years from now, it’ll be two years without health care. I mean, it’ll be that many more people who are going to be hurt. And it’ll be that many more businesses that are gonna be put into an economic disadvantage.

538: I want to ask you about education. You’re an education guy. I know that’s some of your background, and the other night there was one moment where you were standing next to Bill Nelson the other night it looked like, is that right?

JT: I was -- right next to Bill Nelson and Sherrod Brown.

538: And right after Obama said the line about challenging every American to have at least one year of higher education and that dropping out of college – dropping out of high school was not just quitting on yourself but quitting on -

JT: Quitting on your country.

538: - on your country. What did you think of that part of the speech?

JT: I thought it was absolutely spot on. My grandmother emigrated here from Sweden. And she pounded education into my mother and her kids, and my mother pounded education into us. It’s very, very important. And I think we’ve lost that edge that we had 100 years ago in understanding how important education, particularly public education is to this country. If we’re going to make this country continue to be the leader in the world, education is the key. And participation and access is absolutely part of that. So I think he is right on. Those guys, the folks who came from the old country, they literally – they worked. They understood the value of education, they understood how it could help you in your quality of life. And I think we’ve lost – and it could easily be regained – but I think we’ve lost that sense of how important education is to this country and how important it is to our economy.

538: Have you noticed anything substantially different between the last Congress and this Congress? Is there a tonal sense of change or is there, or how would you characterize it?

JT: A lot more intense. Russ Feingold told me after the 110th, the first six months or four months, I can’t remember exactly, but he walked up and he said, “This has been the hardest working stretch that I’ve seen. You’ll never have a stretch any harder than this.” And these first two months have been very intense. I mean, we have been incredibly busy. So busy that last year I got back every weekend but one, and that was during the lame duck session. Because of the inauguration, and then because we were held over, I’ve missed two weekends already and we’re not to the first of March. So it’s much more intense. Much more.

538: Was there a point where during the first two years where you knew you’d just gotten comfortable? I know that during the time of the campaign a big theme was, send me to Washington because I don’t look like Washington, I’m not like Washington, and I know that a big part of who you are is not wanting to fall into the – have you come to any personal place on this?

JT: We have a routine, this session’s easier from that perspective than last. You know the expectations, you just kind of know what the schedule’s gonna be, although the schedule is still very very fluid (chuckles).

I can tell you that I’ll never, I don’t think I’ll ever be comfortable here, do you know what I mean? I don’t think it’ll ever be something that I walk in and go, “You know what (snaps fingers), this is gonna happen, that’s gonna happen. We’ll do this, this, this, and this is taking care of that." I just don’t think it’s ever gonna happen. And I think that’s probably a good thing. I mean, it is. It’s very challenging in that regard.

But this session is easier from a standpoint of anticipation of the schedule. Knowing, finally figuring out you can’t go to every committee meeting because they’re stacked on top of one another. I mean, I came out of state government where they made a point that you could go to every committee meeting because they were never scheduled together. It’s different story here. So you’ve got to pick and choose. It’s the way it is. But just from a comfort standpoint, I’m always going to feel less comfortable here than where I’ve come from.

538: What don’t people know, people who sit back aren’t in Washington, they see the way the Senate works, the sausage making process. If you could sit down with somebody that you’ve learned that would help them better appreciate you guys have to do in order to get a bill passed, how would you explain that?

JT: Well, I don’t think people understand how hard people work back here. I’m talking Senators and the staff. I mean, people log hours back here. And they work very, very hard. And the reason they do that is because that’s part of the making of the sausage. Unless you know your stuff and go forward with it, you just can’t be successful. You have to be on top of the edge, you have to be ahead of the curve, and so consequently you're working all the time.

And I’ll give you a prime example. Reading that 800 page bill. “Oh, what a task!” (laughs) It was nothing! You sit down and you read the bill and you understand the bill. This isn’t like reading War and Peace for God’s sakes, there’s about a paragraph on each page and you just read the bill! But you have to read the bill. And to make the assumption that nobody reads the bill, and for people to stand up and say, “I couldn’t read the bill because it was too long,” it’s a cop-out. It’s a cop-out. You can always find time to do that kind of stuff. Because it’s part of your job.

538: I want to ask you about transparency too. It’s been coming up in the briefing questions, and the Obama administration was coming in with the idea that, "we’re going to be the most transparent government that you’ve ever seen." When you ran for Senate, you were the only one who said, I’m going to put all my meetings online every day, so presumably this will be – (laughing)

JT: Yeah it will be! Tonight you'll be on! (laughs, looks at business card) Let's see, what’s the title gonna be, Sean Quinn...? (laughs)

538: Yeah, yeah. (laughter). So in terms of the conference committees, and those sensitive negotiations, those haven’t been transparent, and there’s some pushback questions directed at the Obama administration, presumably directed at Congress, why aren’t we seeing a more transparent look at these negotiations? I know it’s a complicated issue and I wanted to hear –

JT: It is a complicated issue, and to be honest with you, one of the foundations is things need to be as transparent as possible. I have not sat down in a conference committee yet. If I ever get a chance to sit in on a conference committee, I could answer that question better because I’d know what’s goes on and I’d know if there’s anything going on that couldn’t stand the light of the press, to be honest with you. So I fundamentally think things should be open unless there’s a reason to have them closed, I haven’t been in on a conference committee to know if there’s a reason to have them closed. So I can’t tell you.

538: Who would you say have been your mentors in the Senate?

JT: Max (Baucus) and I are close, we work on everything. Byron Dorgan is a good guy, and a chairman of the Indian Affairs committee and neighboring state, good guy. I work with Byron a lot and like Byron a lot. Jay Rockefeller is a good guy, that’s more on a personal level instead of a professional level because we don’t serve on any committees together, but I just like him. I think he’s a good guy. And so consequently, even though it’s casual chat, every once in awhile you insert a question that’s important and I value his judgment. Patty Murray is a great person. We utilize her more especially now that I’m on Approps. She’s great. Just process stuff, she’ll help me be able to get through the weeds in a big way, I know that. There’s a lot of good people here. Mark Pryor, he’s a great guy. Super fella. The people in my class of '06, and the people of '08, all great guys, women, super people, and I get along with them fine. But I would say if there was one that I probably visit with more than any of ‘em it’s probably Dorgan. I mean, outside of Max, it’s Dorgan.

538: Thank you for your time, sir.

JT: It’s good to see the old Las Vegas boy made good.

538: I consider this the "Tester Bump."

[Note: a couple minor edits noted with strikethroughs, my fault on the transcription]

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