House Effects, Retro-Style

This stuff isn't really news, so I'll put it below the fold. It's for those of you who might be interested in seeing how secondary analysis of survey data has changed over the past fifteen years.

Check out this graph of "house effects" (that is, systematic differences in estimates comparing different survey organizations) from the 1995 article, "Pre-election survey methodology," by D. Stephen Voss, Gary King, and myself:



(Please note that the numbers for the outlying Harris polls in Figure 1b are off; we didn't realize our mistake until after the article was published)

From the perspective of fifteen years, I notice two striking features:

1. The ugliness of a photocopied reconstruction of a black-and-white graph:

2. The time lag. This is a graph of polls from 1988, and it's appearing in an article published in 1995. A far cry from the instantaneous reporting in the fivethirtyeight-o-sphere. And, believe me, we spent a huge amount of time cleaning the data in those polls (which we used for our 1993 paper on why are campaigns so variable etc).

3. This article from 1995 represented a lot of effort, a collaboration between a journalist, a statistician, and a political scientist, and was published in a peer-reviewed journal. Nowadays, something similar can be done by a college student and posted on the web. Progress, for sure.

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Is Obamacare a Favorite to Pass?

That's what the punters at Intrade think right now, where the 'Obamacare' contract is just barely better than even-money to pass at 52 percent. It has moved up fairly significantly within the past 72 hours, as the contract was mostly trading in the 30-40 percent probability range before.

Back in January, in the immediate aftermath of Scott Brown's victory when the contract was trading at around 33 percent, I examined the evidence in detail and concluded that, although passage was easy enough to envision, "I'd probably take the short side of those odds if forced to put money on it". That meant I thought the bill had perhaps a 25 or 30 percent chance of passing. So how do I feel about the contract at its more expensive price now?

Let's look at the factors which have changed since January 27th, when I wrote the original analysis. First, here are the ways in which conditions have improved for the Democrats; they are listed in declining order of importance.

Positive Factor #1: The White House has gone "all-in". The Administration was sluggish to get involved for much of the health care debate, preferring to let Congress do its own bidding. However, the White House has pretty clearly made a decision to invest its political capital now, between putting a (fairly) specific proposal on the table, holding a bipartisan summit, taking meetings with reluctant lawmakers, making the case to the public for reconciliation, and explicitly invoking the idea that the presidency depends upon the passage of the bill.

Positive Factor #2. Smooth sailing in the Senate. Open Left's whip count on use the reconciliation process in the Senate is now up to 46 committed votes. Moreover, just one Democrat (Blanche Lincoln, naturally) has expressly objected to the use of reconciliation whereas several others who were thought to be problems for ideological reasons (e.g. Mary Landrieu, Ben Nelson) have failed to rule it out. In addition, "process hawks" like Robert Byrd, Kent Conrad, and Russ Feingold have been relatively warm to the idea, deeming the relatively minor changes the Senate would exact to its original bill germane under reconciliation rules. It's hard to see how Democrats aren't bound to get at least 50 votes plus Joe Biden for a reconciliation fix, although they'll probably want a couple of spares in the event that the procedural fight gets messy on the floor.

Positive Factor #3. Few substantive disagreements about the nature of the reconciliation bill itself. The basic parameters of what would be included in the reconciliation sidecar are more or less agreed upon: scaling down the excise tax; removing the Cornhusker kickback; re-jiggering the formulas for subsidies, and perhaps adding some additional oversight provisions and closing the Medicare donut hole. Some further provisions -- like national versus state exchanges -- are still being debated but are unlikely to break the back of the legislation. The more controversial issues, meanwhile, are probably out of the way. To the non-delight of some liberals, Jay Rockefeller and now the President himself have put the kibosh on the latest public option boomlet. And neither pro-Stupak nor anti-Stupak forces are of the belief that the abortion language can be addressed in the reconciliation process. In addition to all of this, the House now seems to have acknowledged that it must move first on health care reform.

Positive Factor #4. Rate increases by Anthem and other private insurers. This makes the moral case stronger and gives nervous Democrats a good talking point for the campaign trail.

Positive Factor #5. One additional 'no' vote planning to retire. This is Eric Massa, who is retiring either because he had a recurrence of cancer or because he sexually harassed a (male) staffer, depending on who you believe. Massa's no vote was a bit strange before -- he said he opposed the bill from the left, but he is in a moderate district and has opposed other parts of the Democratic agenda from the right -- so nothing is to be taken for granted. But clearly this would seem to be an easier vote to swing now, especially if there's some kernel of truth behind the harassment allegations and he feels guilty for having created a minor P.R. nightmare for his colleagues. There's also a chance that Massa could decide to (or be pressured into) vacating his seat immediately, which would reduce the number of votes needed for passage from 217 to 216.

Here, on the other hand, are the factors that have worsened or at least are continuing to work against passage of the bill.

Negative Factor #1. Key 'anti'-blocks not budging. Bart Stupak certainly hasn't backed down from his threat to vote against the bill because of its abortion language, and continues to claim that he might take as many as 11 other Democrats with him. As before, I tend to think that with the possible exception of Stupak himself, the abortion language (which is fairly restrictive in the Senate's bill anyway) is mostly just an excuse for Congressmen who don't want to vote for the bill for other reasons, such as because they're in a tough district or because they're a Republican (Joseph Cao). Therefore, I'm not sure how many of these votes are beyond the reach of persuasion. Nevertheless, the Stupak fight greatly increases the Democrats' degree of difficulty. In addition, although the Blue Dogs have been somewhat quiet, we've seen very little of the sentiment that some like Jason Altmire expressed in the pre-Scotty Brown era, which is that they might vote for the revised bill precisely because it was more moderate. Finally, Dennis Kucinich -- always a party of one -- still seems inclined to vote against the measure.

Negative Factor #2. Attrition. Jack Murtha has died, and Neil Abercrombie has retired. When coupled with Robert Wexler's earlier retirement, this takes the Democrats down to 217 votes from the 220 they had in November. The slight mitigating factor is that, because of the retirements, there are now only 432 sitting Representatives so 217 votes rather than 218 are required for passage.

Negative Factor #3. Continued distress from national environment. Although the health care bill itself has not become more unpopular since the House voted on it, there has been some decline in the Democrats' generic ballot standing, and the number of retirements among prominent members (Evan Bayh, Bill Delahunt, etc.) will do little to quell fears among Democrats who think the bottom is falling out. Nor will the Charlie Rangel and (alleged) Eric Massa scandals.

Negative Factor #4. Bipartisan summit was underwhelming. Although the decision to proceed with the Blair House Summit may later have some utility in mollifying concerns that the Democrats are "ramming the legislation through" without consulting Republicans, there was no immediate P.R. victory nor any manifest change in public opinion on the health care bill. If Democrats were holding out hope for some paradigm-shifting moment in which the health bill suddenly became more popular in the near-term, they are not likely to get one.

Negative Factor #5. The ticking clock. The best-case timetable for completion of the health care bill now appears to be the end of March, which is barely seven months away from the November elections. Some states are already starting to have their primaries, lots of filing deadlines are passing -- the attention paid to electoral politics are increasing. Moreover, some Democrats might not want to vote against a bill that they voted for before, but also might not want to take another vote on an unpopular bill if they can avoid it -- these Democrats might have some incentive to delay the process.

***

So where does the health care bill stand? The positive developments as outlined above are probably more important than the negative ones, and so I think my post-Masspocalypse sense that the bill had a just a ~25-30 percent chance of passing is clearly too pessimistic. In particular, the possibility that the bill will die for any reason other than simply not having the votes in the House now appears to be quite minimal. The Senate should fairly easily have 50 votes for reconciliation, and the White House is now invested enough that they're unlikely to prematurely cut off debate unless things really are hopeless.

I also think, however, that a relatively 'macro' analysis like this one can conceal the significant hurdles that the bill faces at a 'micro' level in the House. The math on holding those 217 House votes was never very easy for Nancy Pelosi and its not clear that it's gotten any easier. If everyone voted the same way today that they did in November, the bill would pass 217-215. However, two previous yes votes -- Bart Stupak and the Republican Anh "Joseph" Cao -- are almost certainly to be lost, whereas nobody who voted against the bill before has yet affirmed that they'll switch to vote for it. That makes the starting point 215-217 against.

If these were Pelosi's only problems, then it's almost certain that she could persuade at least two of the four retiring members to switch their votes, giving the bill its majority. However, she also faces pressure from other Stupak voters and from some nervous moderates, whereas the universe of potential no-to-yes flips is very small outside of the retirees. Generally speaking, moreover, we've heard more negative/nervous sentiments from previous yes voters than optimistic ones from previous no's, with the abortion fight and concerns about the use of the reconciliation process providing them with some cover in the event of a flip-flop.

The one last advantage that Pelosi has is that she can schedule the vote the very moment she gets to 217. Maybe the bill has 216 votes next Tuesday, and 216 next Thursday, but on Wednesday Dennis Kucinich gets high and decides that he'll vote for it. OK, so that's a joke, but there's a difference between a bill which needs 217 at all points in time and one which needs 217 votes at some point in time.

That's a lot of evidence to weigh. My head says yes -- Pelosi will squeak this through -- while my gut frankly says no. Either way, I'm not sure there's a lot of arbitrage against that 52 percent number at Intrade, but I'd hesitate to call the bill a favorite to pass.

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Popularity of Health Care Bill Unchanged Since House Vote in November

On November 8th, when the House narrowly voted to approve the Democrats' health care bill, voters opposed the measure by about a 49-42 margin, according to the Pollster.com trendline. Right now, the numbers are -- well, almost exactly the same: 50.2-42.5 against if you want to be precise:



This is not to suggest that a House member who voted for health care in November wouldn't have some reasons to oppose the bill now. For one thing, the Democrats' position in the generic ballot has declined somewhat (although President Obama's approval rating really hasn't). For another, we're now a few months closer to the midterms.

Still, what's probably changed the most is the attitude of the Democratic caucus in the wake of Scott Brown's victory in Massachusetts along with several prominent retirements among Democratic Congressmembers. It's not that the forecast has really changed all that much since November -- although clearly the Democrats have lost some further ground, especially because of their Senate-side retirements -- as that its consequences have become more manifest.

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In Texas, Anti-Washington Trumps Anti-Incumbent

Texas incumbent Rick Perry today won the Republican primary to be his party's nominee for governor for the third time, securing 51 percent of the vote against Kay Bailey Hutchison's 31 percent. Although about a quarter of the returns remain to be counted at this point, Perry further appears as though he'll secure the outright majority necessary to avoid a run-off.

The results are not particularly surprising in light of recent polls, all of which since October had shown Perry leading, usually by double digit margins. Indeed, what was a hotly-anticipated race going in -- it's unusual to have a sitting U.S. Senator challenge an incumbent governor from her own party -- has turned into something of an anti-climax, as Hutchison failed to make the race close enough to secure earned media or much in the way of momentum.

Still -- while minding the usual caveats about the perils of drawing lessons from any individual race -- it's interesting to compare the messages that each candidate put forward during the campaign. Perry's was an anti-Washington message, focusing in particular on Hutchison's support for the federal bailouts and her role in creating the nation's ever-expanding debt:



Although not all of Perry's ads were negative, his more upbeat and positive spots tended to focus on the same themes.

Hutchison, by contrast, ran on a somewhat muddled and generic anti-incumbent message. Her last couple of attack ads, like the one below, devolved into literally just stringing together random pull quotes from local newspapers ("lobbyists!" "bully pulpit!" "ethical clouds!") while failing to cohere into any one rationale for voting against Perry:



This is not to suggest that Perry has necessarily navigated his way through any trouble; the general election campaign against Bill White, a moderate Democrat who is the Mayor of Houston, is considered to be a toss-up. And he may be better off than most incumbents because Texas has had somewhat fewer employment problems than most large states, with its unemployment rate topping out at 8.3 percent. But as tough as this cycle is liable to be on statehouse incumbents, it's much, much worse for incumbents in Washington.

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Left-Right Populism, Part 2

In a previous post, I considered what policies might offer the possibility of forging some sort of Left-Right populist consensus. As an afterthought, I realized that anything to do with eliminating waste and fraud also has the potential for cooperation. Just today, in fact, President Obama mentioned favorably a suggestion by Sen. Tom Coburn about using some method of random undercover searches to identify fraud in Medicare and Medicaid claims.

A related budgetary controversy is earmark reform, the signature complaint of Sen. John McCain. Despite the general anger directed at election-minded members of Congress who pursue pork, I'm not entirely convinced earmark reform could really generate a populist meeting-of-the-minds...but neither am I certain it is necessarily divisive, which is why I didn't put it on the previous list or this one.

So, turning to a short list of policies that are likely to divide economic populists on the Left and Right, my sense is that the obvious, key point of division is the size, complexity and functional operation of the national government. Populists on the Right may be fine with exercising government muscle to, say, take down (or let fail) Wall Street bankers or catch Medicare billing scams. But they are not keen on populism that comes with a hefty price tag. Populists on the Left don't mind spending more, but are wary of quick-fix solutions to structural budgeting and deficit problems.

1. Stimulus II. Though there is strong case to be made that the stimulus monies spent by the national government have worked, as little appeal the first stimulus package had for populists on the Right, another one would be greeted with even more ire. The Democratic National Committee's "hypocrisy watch" campaign to try to embarrass Republicans who complained about and/or voted against last year's stimulus package yet took and even took credit for some local project included in the bill may or may not work politically. But either way, it sure will make it tougher to sign up GOPers for any future such expenditures. Meanwhile, at the more abstract level, the argument about FDR and 1937 may never end. In short, consensus here will be very, very elusive.

2. Public option. There seems to be mounting support for the once-dead public option. House Democrats initially opposed to it but who are retiring may end up coming around, and Obama is targeting them; liberals are lining up commitments from Democratic senators. (Update: Three more senators have committed to vote for public option.) But this is the feature of healthcare reform proposal that populists on the Right point to first when the claims of “socialism” and “government takeover of 25 percent of the economy” getting bandied about. Little to no chance of Left-Right convergence here: To become law the public option will need to be forced through Congress almost exclusively on the strength of Democratic votes.

3. A national consumption or flat tax. Some consumption taxes make sense, particularly those impose on items with inelastic demand that create social problems—the so-called sin taxes on things like cigarettes or alcohol. And a consumption tax on gasoline might appeal to enviros on the Left and Right alike. (Question for which I've never quite received a satisfactory answer from conservatives: Why isn't there more of a push for gas taxes from the Right, especially given the potential national security implications or lower demand?) But because most consumption taxes would be regressive if not highly regressive, the idea that a consumption or Mike Huckabee-style national sales tax could substitute for the income tax is a non-starter for populists on the Left. As for the flat tax? Sure, the tax code could benefit from some simplification. But the whole point of having progressive rates is, well, to add progressivity to the tax structure, and the whole point of creating various deductions from the nominal rates is to encourage or induce taxypayers (not force, induce) to make choices that are individually and collectively beneficial, like saving for college or their retirement, buying instead of renting a home (OK, that incentive proved to be somewhat problematic), making charitable contributions, and so on.

4. Balanced budget amendment. Two quick comments for the crowd advocating this reform: One, politically it will never get the two-thirds vote of both chambers of Congress, no less ratification by three-quarters of the states; and two, with the feds already engaging in trickery like using current Social Security receipts (“Lockbox”!) or taking war costs off-budget to hide the true extent of the deficit any given year, would passage of such an amendment have any real meaning? Give it up.

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The Difference Six Years Make

In 2004, the Bush-Cheney re-elect campaign ran what was then the most sophisticated, state-of-the-art field organizing campaign in presidential history. Four years later, the Democrats, led by Barack Obama’s David Plouffe, built a field organization that made the 2004 Republican model look antiquated. Along the way, both parties figured out new and inventive ways to identify, register and mobilize voters these past six years.


Because the current set of US Senate seats up for election this November were most recently on the ballot back in 2004, the net effect of the Bush and Obama organizational efforts during the two presidential cycles of the past six years can be measured, if incompletely and imperfectly, in the registration differences between autumn 2004 and today.

What is the net partisan effect of registration differences* during this period in the top dozen most competitive Senate contests (as ranked by Nate, left)?

Before answering that, let’s be clear that comparing the final 2004 registration data with the most current available figures provides only a baseline indicator of partisan competition in these states--a starting point of sorts. Doing so cannot account for potential turnout differences between the parties this fall, in a midterm cycle; it cannot account for partisan defections by voters registered with one party who vote for candidate’s of the other, nor the behavior of independents and unaffiliated voters; and registration disadvantages can of course be overcome by better candidates and campaigns, and vice versa.

Those qualifiers aside, in 10 of the top 12 Senate race states, Democrats are in a better registration situation today than they were going into the 2004 elections. The two exceptions—Arkansas and Kentucky--are not particularly surprising, given that they include many of those 22 percent of the counties nationally where Obama underperformed relative to John Kerry in 2004.

Again, registration gains or losses aren't everything. Turnout drops off during midterm cycles, and comparisons between registration baselines in a presidential cycle (2004) with that of an upcoming midterm cycle (2010) are imperfect. What I think we can safely conclude is that there is the potential for the Democrats to capitalize on a net positive field organizational gain during the last few years in order to buffer their expected losses this fall. The degree to which they are successful in doing so--and the recent decision to bring David Plouffe back into a prominent political role advising the White House is concession that there is a problem here that needs solving--will not be known until we get the results this November.

*A note on sourcing: For states that record partisanship at registration, Secretary of State/Board of Election totals from 2004 and the most current data were compared; for states that do not, CNN Exit poll responses from 2004 and 2008 were compared.

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Lincoln Logs a Challenger as Halter Tries to Halt Her -- But are Democrats Spinning their Wheels?

There are four basic questions we can ask any time that a candidate undertakes a primary challenge -- like the one that Arkansas Lieutenant Governor Bill Halter announced today in an effort to knock off embattled incumbent Blanche Lincoln. Let's run Halter and Lincoln through the gauntlet and consider whether the primary challenge is a sound strategy.

1. Can the challenger win the primary? Halter certainly has a credible shot -- but the indicators are mixed. According to a survey last month from Public Policy Polling, Lincoln's approval rating is 54/32 among Democrats. That's not so great for a Senator within her own party -- although, of course, much better than Lincoln's standing with Republicans and independents, who have grown to dislike her immensely. Halter's favorability score, meanwhile, is not overwhelming: 35/20 among Democrats. It's also not clear that there's that much room to run to Lincoln's left in Arkansas, which has one of the more conservative sets of Democratic primary electorates in the country -- only 36 percent of Democratic primary voters identified as liberal (and 12 percent as very liberal) in 2008, according to exit polls. Along the same lines, while 25 percent of Arkansas Democrats say that Lincoln is too conservative, 18 percent think she's too liberal. Halter can perhaps win just by being fresher/different/"better", but there's not likely to be the appetite in Arkansas -- even among the Democratic primary electorate -- for a mere Southern-fried coastal liberal.

2. Can the challenger win the general election? Is he more or less likely to win the general election than the incumbent? Perhaps we should ask this question about Blanche Lincoln first. Although it previously appeared that she might have a chance to hold her seat in Arkansas because of the weak field of GOP candidates, she faces very, very long odds now that incumbent U.S. Rep. John Boozman has entered the race. Boozman, in fact, has 56 percent of the vote in that PPP poll to Lincoln's 33 percent. That's pretty much off-the-charts bad; no incumbent in any Senate or gubernatorial race in 2006 or 2008 faced anything like that kind of deficit. Lincoln's approval rating in that poll is also incredibly bad: 27 percent approve and 62 percent disapprove, which is pretty near to David Paterson territory. This is a poll of registered voters, by the way -- the numbers among likely voters might be even worse after accounting for the Republican enthusiasm advantage. Lincoln would need a miracle -- or for Boozman to have a major scandal or somehow not to be the GOP nominee -- to pull this one out.

Halter's numbers in the same poll, meanwhile, are 30-53 against Boozman -- producing the same 23-point gap that Lincoln faces. But, the numbers are not quite created equal: the undecided vote is 6 percent higher in Halter's race -- and when you're losing this big, you'd rather have more undecideds rather than fewer, since that means more volatility. Likewise, the numbers may be more malleable in a race that doesn't feature an incumbent. Still, I'm not sure this ought to provide too much comfort to Halter. Although a lot of Arkansas voters don't know who Halter is, his favorability rating is 21-29 among those who do. And trying to run to Lincoln's left in the primary probably won't do much to endear him to independents or moderate Republicans.

For my money, Halter is more likely to catch lightning in a bottle and win the race -- but that probably means he has a 5% chance of winning to Lincoln's 3%, or something on that order.

3. To what extent, if any, can the challenger be expected to provide more value to his party if he wins the seat? Lincoln rated as the 52nd most liberal from among the 59 Democrats in last year's Congress according to the newly-released National Journal rankings. Progressive Punch has her as the 54th most liberal among sitting Democratic Senators, and DW-NOMINATE as the 55th most liberal. On the other hand, Barack Obama's vote share in Arkansas -- 38.9 percent -- was the lowest of any state that currently has a Democratic Senator, except for Alaska where you had a scandal-plagued incumbent and Sarah Palin on the ballot to prop John McCain's numbers up. So while Lincoln might be conservative relative to her caucus, it's not clear really how much more liberal she could be without being almost assured of being voted out of office. In fact, Lincoln rated as the 10th most valuable Democrat relative to her state, according to our proprietary analysis. Nor is it clear that Halter would be much more liberal than Lincoln. His campaign website conspicuously avoids discussion of issues while focusing instead on biography. The gains here are likely to be fairly marginal, at best -- and perhaps dependent on whether Halter is willing to be a one-termer for the sake of advancing Democratic goals.

4. What potential intangible or indirect benefits, and intangible or indirect costs, result from the decision to undertake the primary challenge? One such benefit -- indeed, probably the largest benefit of any kind considering how unlikely either Lincoln or Halter is to hold the seat for the Democrats -- is that Halter could presumably push Lincoln to the left until such time as the primary occurs, such as may have happened in Pennsylvania with Arlen Specter and Joe Sestak. On the other hand, Arkansas ain't Pennsylvania, and Lincoln's immediate reaction seems to be to pivot somewhat in the opposite direction -- using Halter as a prop to burnish her credentials as a centrist. (Frankly, if I were advising her campaign, that's probably what I'd tell her to do -- although, actually, if I were a completely scrupulous and honest advisor to Blanche Lincoln, I'd tell her to retire and to save the money.)

There's also the residual effect that the primary challenge could have on other moderate/centrist Democrats. In general, it's probably healthy for a party to have its candidates operate under some threat of a primary challenge. With that said, Lincoln voted for the health care bill, for the stimulus package, and -- for those self-styled progressive populists in the audience -- against the distribution of the second half of TARP funds. And she's now in trouble for some of those votes. If the message that the moderates take away is that, even if they vote for the liberal agenda, they're going to be punished anyway, it's not clear how much that incentivizes them to take tough votes on liberal issues that might be unpopular in their state.

*-*

In summary, this is not a terribly good place for an ideological primary challenge. There's not much room to Lincoln's left in Arkansas period, especially not in a cycle such as this one. She has voted with her caucus reasonably often -- more so than someone like Ben Nelson or Evan Bayh. And the challenger, Bill Halter, is quite unlikely to win the general election.

The thing about this particular primary challenge, however, is that while the upside might be limited, the same is true of the downside because Lincoln is so unlikely to retain her seat anyway. Halter is clearly a smart (he's a Rhodes Scholar) and likable candidate and I can see why people would want to take a chance on him. But at best, this is perhaps the right challenge for the wrong reasons -- and at worst, it's a misdirection of resources that could be better spent elsewhere.

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Obama's No F.D.R. -- Nor Does He Have F.D.R.'s Majority

Every time I read an article like this from the Weekly Standard's Fred Barnes:

Is Obama the new FDR? The answer is no.

If Franklin Delano Roosevelt were president today [...] liberal health care reform would have been enacted already. [...]

The reason is tied to what is probably the greatest difference between FDR and Obama. Roosevelt took command of Washington. Obama hasn’t. “FDR became the father of the modern presidency by moving the Chief Executive to the center of the American political universe,” John Yoo writes in his new book on presidential power, Crisis and Command. “Roosevelt’s revolution radically shifted the balance of power among the three branches of government.” [...]

FDR seized legislative authority. The bills that Congress passed in his first 100 days and beyond were produced by the Roosevelt administration and ratified reflexively by Congress.

...I wonder why there's no mention of this:



When F.D.R. took over the Presidency in 1933, the Democrats controlled 64 percent of the Senate seats and 73 percent (!) of the House seats, counting independents who were sympathetic to the party. And those numbers only increased over the next couple of midterms -- during their peak during 1937-38, the Demorats actually controlled about 80 percent (!) of the seats in both chambers. Obama, by contrast, came into his term with 59 percent majorities in both chambers. That's not much to complain about by the standards of recent Presidencies, but is nevertheless a long way from where F.D.R. stood during his first two terms, or for that matter where L.B.J.'s numbers were during the 1965-66 period, when the bulk of the Great Society programs were implemented.

F.D.R. and L.B.J. might have been great cleanup hitters -- and you'll get no argument from me that Obama's aptitude at shepherding his agenda through Congress has been mixed, at best. But they basically spent the first several years of their Presidencies playing in the Congressional equivalent of Coors Field. Considering how dramatic the impact of the loss of just one Senate seat has been on both the perception and the reality of Obama's agenda, that needs to be kept in mind when drawing the comparison.

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Winter Olympics Balance of Power Shifting Toward U.S., Asia

One of the more cynical perspectives you're liable to hear about about the United States victory in the Winter Olympics medals table -- the Americans took home 37 pieces of hardware, the most of any country in any Winter Olympiad ever -- is that it results substantially from the introduction of new-fangled sports like snowboarding, freestyle skiing, and short-track speed skating.

There is some truth in this: 20 of the United States' 37 medals came from events that were not contested the last time the Olympics were held in Canada, at Calgary in 1988. Still, that leaves 17 medals, including 5 golds, that the United States did win in old-school events -- far more than the 6 medals and 2 golds they actually won in Calgary. Moreover, the expansion of the Winter Olympic program -- which has roughly doubled in size since 1988 -- has benefited many other nations as well, with more medals now being awarded not just in snowboarding and short-track but also in several other events (like biathlon and curling) in which the United States is not especially proficient.

Suppose that we eliminate all medals won in this year's Olympics from sports that were not contested in 1988. Which country would have owned the podium?



Germany would have won, with 20 medals, although the United States would be just a tick behind them at 17, followed by Norway at 16. However, Germany's putative win requires a bit of an asterisk: the country was not unified in 1988. If we take the 20 German medals and allocate them based on the birthplaces of the respective athletes**, 11 would have gone to those from the former East Germany and 9 from the former West Germany. That means the United States would have won the medal count after all -- if 2010's athletes were contesting the 1988 events based on 1988 borders.



As you can see, I've also put back together the Soviet Union, Czechoslovakia and Yugoslavia, but none of them have enough hardware to lap the United States. Indeed, the decline in the performance of the Soviets is pretty remarkable: from 29 medals in 1988 to just 9 in old-school events in 2010 (and no golds). East Germany experiences nearly as significant a decline: from 25 medals in '88 to 11 this year. Other big gainers, apart from the United States, include Norway and the Asian countries (and to a lesser extent Canada). The other big loser is Switzerland, which though not an Eastern Bloc country isn't the Olympic power that it once was.

The basic story is that we're seeing those medals won by the former Soviet/Eastern bloc countries shifting to North America and Asia, with Western Europe holding roughly steady.





The lesson here may be that a centrally-planned economy is not good for very many things -- but the Olympics may be an exception.


** For medals won in team events, the German medals were broken into shares -- 3/4 of a medal to West Germany and 1/4 to East Germany, for instance, for the Germans' silver in the team ski jumping event, since 3 of the 4 members of that team were born or naturalized in former West German territories whereas the fourth was born in East German owned lands. One German athlete, Jenny Wolf, was born in Berlin; I was not able determine which side of the Wall she was born on, so I split her medal between the two countries as well.

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Left-Right Populism, Part 1

I’m not sure there truly is the possibility of forging a left-right populist coalition, and I'm particularly wary about it ever happening in the South. Nor am I sure that forging such a coalition, if possible, would benefit President Barack Obama or Democrats in Congress.

For the sake of argument, however, let’s assume that a coalition can be formed and it would help the White House and many Democrats both politically and electorally. What combination of policies would be necessary to do this?

In this, the first of two posts, I consider what might be the policy cornerstones of left-right populist coalition. The criteria for inclusion are policies that (a) offer widespread potential appeal to working-age, working-class voters--particularly whites, of course, since it is their votes that are most in play; and (b) can be translated or communicated easily and thus capitalized on politically/electorally.

1. Push payroll tax cuts. When factoring in the employer’s half of the contributions to FICA and Medicare, a solid majority of Americans pay more in payroll taxes each year than they do income taxes. Liberals view this as a travesty, conservatives a testament to the fact that millions of Americans pay little to nothing in income taxes. On the other hand, giving small businesses a payroll tax break for hiring new workers—which accounts for $13 billion of the $15 billion in incentives in the new jobs bill passed this week by the Senate—is hard for anti-business tax conservatives to complain about. (Note that while only four Republicans, including Scott Brown, helped end yet another attempted Republican filibuster, when it came time for final vote 13 Republicans voted “aye.”) Relatedly, though I could not find more recent polling on the question of payroll taxes v. income taxes, a Mark Penn poll from 2001 suggests that the public prefers the former to the latter. Give Harry Reid credit for pushing this jobs bill through and, even though it’s far smaller than what the House is proposing, Nancy Pelosi would be wise to carve out something similar to the Senate version and pass that now and take up other matters in separate legislation. (If we’ve learned nothing from the Clinton years or Obama’s first year, it’s that a small bill can get passed through Congress with far less fuss and attention than a big one. Piecemeal legislative strategies work.)

2. Reverse the Citizens United ruling. Americans across the board are upset with the recent Supreme Court ruling. Reversing it through constitutional amendment, as Sen. Chris Dodd is proposing, will be tough; reversing it in the near term by Supreme Court appointment even tougher, because the next two justices likely to retiree in time to give Obama a chance to fill their seats, John Paul Stevens and Ruth Ginsberg, were of course in the four-member minority that dissented from the five-member majority's ruling. So for now, agitation and rhetoric will have to suffice, but Democrats and similarly outraged Republicans should their amplifiers up to 11 because, as I discussed earlier this month, the Citizens ruling is the rare example of something in which Americans hold nearly unanimous opinions.

3. Push through that new regulatory agency. This is the third policy subject on which there was movement this past week. (The Reid jobs bill passed, the Dodd constitutional amendment was proposed.) But the news here, which also involves Chris Dodd, was more discouraging: The retiring Connecticut senator's attempts to create a new regulatory agency to oversee the banking industry are bogging down. Of course, part of the problem here is that Dodd is retiring and, even if he weren't, he's not exactly the ideal person politically to be pushing such an agenda. That said, I'm going to make what many will surely call a crazy suggestion: The Obama Administration ought to consider reviving Eliot Spitzer's career by bringing him back from political exile to spearhead the formation of (and to potentially lead) such a regulatory agency. I know, I know: Spitzer's personal resume is icky. But he's done some great writing on these topics for Slate and is clearly a person seeking redemption. Yes, Spitzer has criticized Administration figures like Tim Geithner in his public writings and comments, but he's also given some good advice to Obama. And who better than a guy who excels at taking on big institutions and is desperately seeking a path to political redemption? Besides, Spitzer's sexcapades are unrelated to policy, unlike Dodd's AIG and financial industry connections. Oh, and precisely because Spitzer is a controversial jerk people love to hate, there's zero chance the media would ignore him or his activities.

4. Create financial services industry tax preferences for domestic investiture. Before the recent financial crash, Wall Street was accounting for 40 percent of corporate profits. The problem isn't that this is "obscene" per se, it's that it testifies to the fact that we make profits by moving money around instead of investing it. About a month ago, Obama called for taking $30 billion of the TARP bank bailout monies and using it to invest in small businesses. This is the kind of move that liberals and conservatives applaud because it entails the use of taxpayer monies to help small businesses hire new workers, rather than prop up banks who made poor decisions in the first place. So if this is a good idea in the short term, why not make it a policy or tax preference in the long term? That is, why not alter the tax code to encourage financial institutions to make investments in domestic as opposed to foreign entities, and for productive and job-making ventures rather than mere wealth creation for their investors? Making profits by moving money around tends not to trickle down, exaggerating existing wealth and income disparities. So let's figure out a way--and I'm neither a tax code expert or financial services industry expert, so I'm not sure how this would be enacted--to tax profits at a lower rate when those profits are derived from domestic investitures that create new infrastructure and jobs in the good old USofA instead of just creating larger paper assets for investors at the top of the food chain?

As I see it, three threads are common to these four ideas. First, although there of course are costs to creating and running a new regulatory agency or lost federal treasury revenues to absorb on account of new tax preferences, none of these are "big government" programs in terms of what they would contribute to deficits and national debt. Second, they have a certain little-guy-ahead-of-the-big-guys tilt to them that should make it hard for sensible people in either party to oppose. And third, with a little but not too much effort the benefits of each can be easily explained and justified to the public. In a later post, I'll get to policies that are likely to thwart liberal-conservative populist coalition-building.

Oh, and a final comment I simply cannot resist: Go USA hockey!

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US Manufacturing Is Not Dead

Today’s economic article at 538 is from me (Hale Stewart) and my co-blogger at the Bonddad Blog Silver Oz. Over the last few weeks we have been discussing manufacturing in the US – or, more specifically, the argument that the US doesn’t make things anymore largely as a result of free trade agreements. Unfortunately, the US still makes plenty of goods. In addition, free trade is not the boogie-man job killer many purport it to be. As always, please click on all the pictures to get a larger picture.



There is a common theme across the internet: US manufacturing is dead and it's never coming back. Well, there's a big problem with that analysis: it's not true. In fact, as the chart above indicates, it's actually false. Note that since 1960, the index of industrial production has risen from a little below 30 to its current level of about 100. And note the increase is continual -- meaning the number didn't just hover around 30 for most of that time only to spike up in one big move. The index has continually risen over that entire period. This situation is also obvious on a logarithmic chart:


Instead, what people are commenting on is the drop in manufacturing employment. Consider these two charts.



Durable Goods Employment remained fairly steady at 10 million to 11.5 million employees between the mid-1960s to the early 2000s. Then total employment dropped like a stone, losing three million people over the last 10 years. These are levels last seen in 1950.


Non-durable goods manufacturing is even worse. From the mid-1960s to the early 200s, total employment in this area hovered around a 6.8 million. However, starting in 2000, the number fell off a cliff, losing almost 2 million people. This is the lowest the number has been in over 60 years.

However, over the last 15 years we've seen an increase in manufacturing productivity. Consider the following:


Manufacturing Output per hour has increased continually since records have been kept, as has




Multi-factor productivity.

What does all this information tell us?

US Manufacturing is alive and well. The real issue is manufacturing employment, which is dropping like a stone. And the reason for the drop is an increase in productivity.

In addition, SilverOz adds the following:

Many people have a knee-jerk reaction to the decline in manufacturing jobs and immediately blame outsourcing/imports for this decline. The following graph demonstrates that the linkage between increased imports and a decline in manufacturing jobs is virtually nonexistent.



What we clearly see is that imports increased quite dramatically over the last 30 years, while good producing jobs remained fairly level (dipping during recession and then recovering) until this last recession, which took a huge toll on manufacturing employment even though imports actually declined. This again plays much better to the argument that productivity increases are the greatest contributor to our decline in manufacturing employment than the outsourcing/imports argument.

And the following is from co-blogger SilverOz:

A recent debate elsewhere interested me enough to do some research on the effects trade has on goods producing employment in the US. Now, I want to state upfront that this is a look at the aggregate and that there are obviously anecdotal cases of individual companies/plants moving to overseas locations for competitive reasons, however, I want to separate the publicized and emotional loss of individual plants from the broad case that free trade is a job killer.

As we all know, the trade deficit has ballooned in recent decades as is evidenced by the following graph (all graphs are thumbnails due to the quantity in this piece):

We can clearly see that really beginning for good at the end of the 1991 recession the trade balance went down dramatically, with the only sustained recoveries occurring during recessions. So, let's look at how goods producing employees have been affected by this trade deficit by decade.

The trade deficit really got its start during the early 80's recessions when high interest rates by the Fed created a strong dollar really hurt exports causing their nominal dollar value to flat line from 1981 through 1986 before they took off again in 1987. The following graph shows goods employment vs. the trade deficit for the 80s:



This graph shows no link between the increasing trade deficit and goods employment in the 80s with goods employment rebounding even while the deficit grew following the end of the 81 recession.

Next up are the 90s; the decade of grunge, the stock market bubble, and NAFTA. One would expect to see massive declines in goods employment following the implementation of NAFTA and a ballooning trade deficit towards the end of the decade, but as you can see by the following graph the opposite actually occurred. Following goods jobs reaching their post-recession trough (the first jobless recovery) in late 1992, the exploded up 10% from that bottom at the same time that the trade deficit went from essentially -$18 billion to over -$90 billion.


Now let us move on to our most recent decade; where trade with China exploded, we endured two recessions (both with jobless recoveries), and an enormous increase in national debt. AS you can see from the following graph, the goods employment trough didn't occur until about 2 years after the first recession ended, which also coincided with a huge increase in the trade deficit, yet once again goods jobs held their own during the massive trade imbalance.



Then, during the most recent recession, goods jobs dropped like a rock (down nearly 20% from the pre-recession peak) and yet the trade deficit actually decreased (and yes, oil was a part of this, but it has also been a big part of our trade deficit all along.

So then, what does can account for our decline in goods employment over recent years, especially over the last decade where it really dropped off a cliff? The most simple answer seems to be that our productivity has reached a point where it can outstrip production demands, which leads to a decline in the labor intensity needed for goods production.



Let's examine this a bit further. From the end of the 1990 recession to the pre-2001 recession peaks productivity was up about 47%, industrial production was up about 61%, and goods employment was up about 9.3% (I used the end of 1990 recession value and not the trough in actual goods employment here). So during the 90s, production outstripped productivity (although both were up a ton), while job creation came in at only +9.3%, obviously lagging. However, from their 2001 recession troughs (again using the end of the recession for jobs), productivity was up about 25%, industrial production was up about 15%, and jobs declined by about 4.3%. This graph demonstrates that when productivity outstrips production goods jobs decline, but that even when production outstrips productivity job growth can be anemic so long as the productivity growth is still substantial. The current recession is showcasing productivity's effects on jobs very well, as while production has dropped about 13% during this recession, productivity is actually up over 5%, and industrial production is now at it's 2002 levels, but with roughly 20% fewer workers making those goods.

In conclusion, the data appear to show that the real factor in goods job creation (or loss) is the relationship between productivity and production, which unfortunately leaves little room for protectionism (even sans the trade war implications that would create), as unless productivity falls precipitously we would see no net job creation from any such endeavor.

And just so we don't define this as a US problem, I will direct you to a conference board study that highlights China's loss of manufacturing jobs to productivity too.


Here are some general conclusions.

1.) The US still manufactures goods. In fact, the US still manufactures plenty of goods. Take a look at the types of exports in the latest trade data from the Census. It includes exports of industrial supplies, capital goods, autos and consumer goods.

2.) While outsourcing does happen -- that is, companies do go overseas to open new factories at the expense of US employees -- it is not the primary cause of manufacturing job losses.

3.) Going back to the recent post on employment remember that in this recession the unemployment rate of specific groups was heavily influenced by education level. In fact, according to the BLS, higher education levels (college graduates and above) were remarkably untouched in the latest recession while lower education levels (high school graduates, high school with some secondary education) had higher rates of unemployment. Lower levels of education are typically associated with manufacturing and construction employment -- the two areas of jobs that account for the largest percentage of job losses in this recession.

US manufacturing would be greatly helped by two developments.

First, China needs to float its currency. A country that has 10% GDP growth but little currency appreciation is obviously manipulating its currency's value to a high degree. Given China's growth rate, investors should be flocking to China driving up the yuan's value. That is not happening. A real free-floating currency would cure a lot of the trade deficit problems.

Secondly, there have been calls for a US industrial policy -- that is, for Washington to essentially "pick winners and losers" by promoting some industries that they feel have a high probability of success. Asian countries have been doing this for years with remarkable success and it is a policy which we clearly need to copy. I'm a big promoter of nano-technology, alternative energy and stem cell research, but those are just my choices. There are plenty others out there that would also make sense.

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