There has been a recent poll in which 55% of Americans approve of Bush's handling of the US economy. Fox News from where I have gotten this poll is saying that this number will show that the Bush re-election is inevitable. However there are several major caveats that need to be made. First the last two paragraphs are interesting as most people expect the national economy to be getting better but a small majority of people expect that their local economies will either be the same or getting worse in the next six months.
This finding is intriguing as it shows the divorce between perceptions and realities that are occuring. The American economy is splitting into two sections; those who own captial are doing extremely well, and those who sell their labor are doing poorly. The rest of this essay will expand upon the basic economic uncertaininty that the majority of the American public faces.
The average American worker is not gaining ground. Real wage growth is decreasing and as Uber Alles shows that median income has dropped for two years in a row. This is at a time when basic necessities such as natural gas and healthcare are rapidly increasing in price. Matt Yglesias links to a Fortune column which states that "Many of his clients say they'll be giving raises of even less than 3%. Why so stingy? "Inflation is low. At the same time, many businesses have only recently gotten their costs in line, producing earnings that are much improved, and they want to stay the course until uncertainty about demand has really lifted," LeBlanc explains. "Another thing is, the labor market is still soft, so few employers are worried about turnover." Don't we know it. "For most workers, the situation will be very discouraging," he predicts. "More people will be getting zero pay increases in order to allow for bigger raises for top performers. After taxes, pay raises may not even be enough to offset higher health-insurance deductions from paychecks. On top of that, many employees are doing more work than ever because co-workers have been laid off."
These data points are the result of a declining share of national income which is going to labor. Brad DeLong is linking to an article in which the share of profits and productivity gains are shrinking for the average worker while profits are aggregating into smaller and smaller concentrations of people. Included in the share of national income which goes to labor are the costs of fringe benefits which people can not eat and these benefits are under pressure to be cut as their costs have also increased rapidly. These low wage gains are leading to a record number of personal bankruptcies. As Calpundit notes, organized labor in the service industries is the difference between barely scratching by and at the mercy of any emergency and being able to live a life that has some uncertainity insurance and asset accumulation made possible. However unionization is at a relative low rate.
Under the Bush administration, these trends will not be changing. Instead they will continue to accelerate as there are further proposals to favor the wealthy and attack union and other pension plans which give economic security to the working class. Angry Bear notes that the Republican Party wants to continue moving to a consumption based tax system in order to shelter as much wealth as possible from any and all forms of taxation. The propaganda will be one of fairness and social mobility but as Paul Krugman recently wrote that income and wealth mobility in America has signifcantly declined in the past generation as the strong institutions in American civil society which created a great Compression of wealth after the Second World War lost their strength and political consensus.
Retail sales for December are projected to be weak. Deep discounters had success as well as the very high end luxury stores while the middle ground department and mall stores had difficulty. This continues to show the bifurtification of the American economy right now. The rich truly are getting richer and benefitting from the tax and incentive policies that the Bush Administration has instituted which favor an aristocracy of incompetents.
If you are a working stiff, the Bush economy has not been a good economy for you. It has created a massive amount of uncertaininty for most people, as there has been increased job competition, high real debt service costs as wage inflation and wage growth are minimal and a continued assault on the ability of people to accumulate small amounts of wealth. For these reasons, Bush is extremely vulnerable on the economy.
Crossposted at Fester's Place
Monday, December 22, 2003
I am a #1 for Dean, strong supporter and right now it will take a couple of sticks of dynamite to get me off of the Dean campaign, but with that said, I like what I have been hearing from Wesley Clark in the past couple of days. I am firmly convinced that we will be seeing the ugliest campaign in my lifetime and probably the lifetime of my parents. The nominee of the Democratic Party will be smeared as anti-God, pro-sodomy, pro Saddam, pro-French and anti-Apple Pie and baseball. It will not matter who the nominee is.
We are already seeing the smear machine cranking up against both Dean and Clark as I think that they are the only ones with the organizations capable of running effective decentralized campaigns which are in my opinion the best way to win in 2004.
Resume will be unimportant in protecting Clark, as we have the Max Cleland example of a triple amputee from Vietnam being smeared as unpatriotic and not knowing how to protect America. He, as well as Dean, will have to convince on a visceral level that they can provide better security for all Americans than Bush. We know that Bush is a policy disaster but he is doing something so he has institutional inertia on his side.
Well Clark is doing a good job of creating the groundwork for that visceral knowledge. First he is willing to rip Tom Delay a new asshole when Clark's patriotism was impugned by the Roach. I am very glad that Clark gets that being civil is a loser's strategy in this game. I am also glad that the facts and the evidence are on our side.
More importantly in the creation of a visceral reaction are Gen. Clark's comments when asked what he would do if anyone impugns his patriotism: ""I'll beat the s--- out of them," This is the type of visceral toughness that will need to be exuded in order to convince people that Clark will protect them. Dean has controlled, focused anger and the wrestler's build which can communicate this message, and Clark has 35 years of training on how to systemically and methodically cause serious bodily harm.
I am glad that both are willing to utilize their respective assets to communicate viscerally.
Crossposted at Fester's Place
Sunday, December 21, 2003
New to the Blogroll
The Decembrist--a former high level aide to Bill Bradley and current research director (on sabbatical) of George Soros' Open Society Institute. (Via Ruy T.)
AB
What is the Face of Next Year's Politics
The Boston Globe is examining the role of the economy in next year's election using New Hampshire as a case study. It has lost 20,000 jobs during this recession and jobloss recovery but it is starting to add jobs again at a reasonably rapid rate. The economy has diversified over the past decade since the last major recession and it has diversified by going into high tech and away from manufacturing. However the state's largest employer used to be Digital Computers, now part of Compaq, but now it is Wal-Mart with that honor.
New Hampshire will need to make a decision as to whether to measure the economy by the derivative of the growth path and give their support to Bush in 2004 or to ask themselves the question "Are you better off now than four years ago." This will be the primary theme of the economic issue debate over the course of the next year as the Bush administration will try and trumpet every small piece of good news while burying all of the bad news. However there are certain demographic concerns that should be making New Hampshire a little more blue.
The high tech revolution has finally reached the Granite State and that means a whole lot more college educated workers and "Creative Class" individuals are working in the state. This has already made parts of Southern New Hampshire competitive for the Democrats as that part of the state is fundamentally populated by Massachusetts Techies who are looking for some place cheaper to live.
These will be the two battle lines next year; how well are we doing, do we look at rates of change or absolutes, and do the techies/creatives have enough mass to decide the vote.
Crossposted at Fester's Place
Consumption Taxes in Disguise
Via Matt Yglesias (see Digby as well), I see that consumption taxes are back on the agenda. Here's Matt, writing about David Brooks' latest editorial:
The program that Brooks describes sounds reasonable enough, but this bundle of proposals is, in fact, designed to accomplish something rather different. The idea is to shelter from taxation various savings and investment schemes that will provide a minor level of help to average middle class folks. At the same time, however, there will be no caps on the quantity of money that can be thereby sheltered.
By definition, all money is either saved or spent. So if money saved is exempt from taxation, then only money spent is taxed -- a consumption tax. If you follow the links under the "Topics" section to the left, you'll see me argue that consumption taxes, unless very carefully designed, will be regressive. This is because as a household makes more, it spends less income on consumption, so replacing income taxes with consumption taxes benefits the wealthy. Presented as a consumption tax, such a plan would surely be unpopular; presented as a savings-encouragement plan it might sound good, but it's just a dressed-up consumption tax.
AB
Tammy Bruce is Everywhere
Bob Somerby spent much of the past week dissecting Tammy Bruce (here, here, here, and here) -- remind me never to get on his bad side. In case you missed it, Ms. Bruce is a recently hired 'liberal' analyst for Fox News, but her liberalism can really make you yearn for Alan Colmes. In a nutshell, she starts most of her statements with "as a progressive, lesbian, liberal, and feminist ..." before going on to some nutty attack on Democrats and liberals.
As I read the Howler pieces, I thought "nice job, Somerby, but why waste your time on someone so insignificant?" Sure, it highlights Fox News' silliness, but we already knew that.
Then, driving in my car the other day I hear YANCLM (yet another conservative loud-mouth) on the radio, a woman. Briefly I wonder at what point talk radio will run into diminishing marginal returns to conservative blowhards, but before I can finish the thought I hear her say something very close to "I'm a progressive and a former leader of NOW," and the alarm bells went off. Yes, it was in fact the same Tammy Bruce, guest-hosting the Larry Elder show. If you've ever heard the Larry Elder show, you might be wondering why such a staunch conservative would have a "progressive, lesbian, liberal, feminist" guest-host.
AB
Saturday, December 20, 2003
Happy Holidays!
I’m leaving today to spend a week with some of my family, and before I go I wanted to wish all of you regular Angry Bear readers happy holidays. I also particularly want to say welcome and thanks to fester, who has graciously agreed to help us out through this stretch. It will be a pleasure to catch up with his posting here when I'm back.
Speaking of which, I’ll be back for a few days around December 28 to 31, before leaving again for a week of work-related travel. During those few days before the new year I’ll be opening myself up to criticism, ridicule, and provable (in another year – but who’ll be counting by then?) charges of not knowing what I’m talking about, with a series of posts entitled: Kash’s Calls: Predictions for 2004. You can expect a collection of my guesses predictions about things that will happen in the year 2004 regarding topics related to this blog.
Will my predictions be obvious, shrewd, controversial, insightful, or absurd? I guess we’ll all find out in another week...
Kash
Friday, December 19, 2003
The Republic of Texas
Via Orcinus, Texas separatists are up to it again:
But now a newly revived wing of the Republic of Texas is attempting to stage a visible comeback. The group has planted an 1836 Independence flag and declared the unassuming East Texas rail town of Overton their provisional capitol. The group's so-called "citizens" and elected "President" Daniel Miller set up what they call their provisional government in a 16,000-square-foot building that once was a hospital.
Visitors are invited to apply for passports.
I guess the implications are mixed. The current redistricting fiasco in Texas is driven by the fact that there are more Democrats than Republicans in the Texas House delegation (17-15), so Texas secession would further tilt the House towards the Republicans (redistricting will soon accomplish that anyway). On the other hand, the loss of Texas Senators Kay Hutchison and John Cornyn would leave the Senate with 49 Republicans, 48 Democrats, and Jim Jeffords in the miscellaneous category, shaking things up a bit.
Now, you might be thinking that this would also mix things up presidency-wise, given that the separatists actually claim that Texas has never rightly been part of the United States and that Article II, Section I of the Constitution says "No person except a natural born citizen, or a citizen of the United States, at the time of the adoption of this Constitution, shall be eligible to the office of President." But President Bush is safe in the event of a Texas secession; from his bio:
President Bush was born on July 6, 1946, in New Haven, Connecticut, and he grew up in Midland and Houston, Texas.
Oh well.
AB
P.S. I'm making light of this in this post, but these far-right groups are full of seriously dangerous nutbags with massive ordnance and chemical weapons (cyanide bombs).
Via Gary at Uber Alles we see that there is a new report out that the largest counter terrorism exercised conducted since 9/11 was "was marred by communications problems, serious shortages of medical supplies and hospital rooms and confusion." The context to this quote is a simulation of responding to a dirty bomb attack. Confusion is to be expected in any large scale exercise but I imagine that a dedicated administration that wants to improve domestic security and first responder resources could have seen a better exercise.
And hey it is not important as we got Saddam last week and that solves all problems... Right....
Well no. Oliver Willis is linking to a couple of stories that suggests there could be a series of attacks in New York City or other major metropolitan areas in the next couple of weeks. Well prepared and resourced first responders are the second best line of defense that we as a nation have against terrorism. The first is active and effective intelligence gathering and disruption of attacks and organizations before they can strike. However we do not have well prepared first responders due to conscious budgetary decisions made by the Bush Administration.
Crossposted at Fester's Place
Confirmed: Nader is Thinking of Running
Last month, AB did some excellent investigation to determine who was behind the “Nader 2004 Exploratory Presidential Committee.” He determined that it was, indeed, Nader’s people.
Today, the BBC is confirming AB’s conclusion:
In an interview with BBC Radio 4's Today programme, Mr Nader said he was "testing the waters" by forming an exploratory committee to look into the possibility of running.What amazes me most, however, is the reason that Nader gives for considering another run:
He said he wanted to be sure that he would have adequate funding and support to launch another presidential campaign. "I will make up my mind one way or the other in January," he said.
Mr Nader was scathing about the choices offered by the Republicans and Democrats. "The country's in real trouble and these two parties are converging more and more," he said. "You just can't stand by and watch the two parties, at varying speeds of decline, take down our country."I can’t just stand by and watch Nader spout such nonsense. It’s ridiculous to argue that both parties are taking down our country, given that only one of the two parties controls all three branches of government. And the two parties have probably not been this far apart on major issues since the 1960s. Can he really keep a straight face and say that things would be no different if Gore were president? That Gore would also have gutted environmental protections, given massive tax cuts to only the wealthy, sharply curtailed our civil liberties, and prosecuted an unprovoked war?
It’s irrational drivel and nonsense.
Kash
Thursday, December 18, 2003
Introducing the First Guest-Blogger: Fester
As you may recall, Kash and I will be blogging lightly till around 1/7/2004; particularly lighly in the first week of January. So I solicited guest-bloggers to keep the content fresh and informative during the gap. I'm happy to introduce the first guest-blogger, Fester from Fester's Place. Welcome!
In the interest of disclosure, note that Fester is a Deaniac, while I'm only a Leaniac (leaning ever more towards Dean, but enthusiastic about Clark as well). I believe that Kash's presidential preferences are unknown at this point.
AB
CNN is reporting that the 1st Brigade of the 82cd Airborne Division will soon deploy to Iraq because there is a an oncoming troop shortfall. Additionally the 3rd Brigade of the 82cd Airborne, currently deployed around Fallujah have been ordered to stay for another two months. This is because the National Guard brigades are still stuck in training for combat operations.
Now lets go to the analysis here. This is yet another signifier that things are going poorly in Iraq and that next year will not be pleasent either. Currently there are sixteen US brigade groups in Iraq. We are seeing some rotation into the country, for example the 3rd Brigade, 2cd Infantry Division (Stryker equipped) has just rotated into the country. The next rotation plan assumes that there will be 14 US brigades to provide security, and three of those will be National Guard brigades. If the US thought that 14 brigades was sufficient to provide security it would not be sending a fresh, rested and ready brigade that constitutes the mobile strategic reserve right now. This is yet another admission that we just simply do not have enough forces available to occupy Iraq.
Secondly, the recent report that stated that the Army would see 4 divisions declared combat incapable assumed that the 1st Brigade of the 82cd Airborne would be combat effective. The rest of the 82cd has been assumed to be combat ineffective as they will have been coming out of Iraq and Afganistan. Now this news of an extended deployment for the 3rd Brigade and the deployment of the 1st Brigade will push back the date by which the 82cd Airborne is combat effective by at least another 2 if not 4 months. Next summer the US Army will have the 3rd Infantry Division as the sole uncommitted combat ready unit available.
Thirdly, this will contine to play hell with retention as the 1st Brigade has already fought in Afganistan in 2002-03, the 3rd Brigade will be overseas for at least 8 months and everyone can read the writing on the wall. We are already seeing the Reserves experience general retention and recruitment difficulties. Why should soldiers who are leaving the US Army sign up for the Reserves or the Guard when they know that it is another guaranteed deployment.
As I have stated before the US could commit more troops to Iraq if we decided we did not want or need a strategic reserve, a functioning army or a functioning reserve system. Choose at least one. Well we are choosing to give up the strategic reserve and the reserve system is under strain. Let's hope that we do not see a long term trifecta, but I will not put it pass the current reality that this is a distinct possibility.
Crossposted at Fester's Place
Hi everyone, I have been lucky enough to be allowed to guest blog at one of my favorite blogs over this Christmas week. My normal blog home is Fester's Place where I will still be keeping up with my normal blogging for the next week or two while I am over at Angry Bear. I plan on writing on economics, military analysis and Democratic politics. So nothing different on the topics, although AB and Kash do a far better job than I. Please tolerate my ramblings.
Dan Drezner: "the very foundation of troubles in this country?"
I knew there had to be some good reason why I nominated Drezner for the best Right-of-Center Blog for the upcoming Koufax awards.
AB
UPDATE. Sheesh. Read the article in Slate that inspired Drezner's hate-mail. It's a pretty moderate questioning of Bush's policy implementation skills that concludes "Bush's process failures make him far more vulnerable on national security issues than one might imagine." My guess is that most of Drezner's emailers only read the title of the piece, Bush the Bumbler, and not the text. In all likelihood, Drezener didn't come up with the title; Slate's editors did. (I know that news stories have text penned by the reporter and headlines penned by headline writers, which explains why you see so many articles headlined 'Up is Down' but when you read the text it clearly indicates that 'Down is Up'. However, I'm not sure if the same applies to the headlines on Op/Ed pieces -- knowledgeable commenters?)
No Sh*t
SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger (news - web sites) declared California in a fiscal crisis Thursday and invoked emergency powers so he could impose $150 million in spending cuts without the Legislature's approval."I had to do this," Schwarzenegger said at a news conference Thursday.
The move comes as local governments in the state edged closer to financial meltdown following the loss of millions of dollars a day in revenue resulting from Schwarzenegger's decision to cut a car tax.
Let the recall begin.
AB
An Interesting Question
Where's the inflation?
Everywhere you turn, there are red-light indicators of inflation: the dollar's value is plunging, gold prices are through the roof and commodity prices are marching upwards, including Alan Greenspan's pet indicator, scrap steel...This piece asks the right questions. Yes, it is a bit of a mystery, though regular readers of Angry Bear already know my answer to the question…
Kash
Slightly Sinister
Yes, many of us have commented on it before, but it’s worth a repeat: the Bush administration loves to change history. Today’s Washington Post runs a short story on it:
White House Web Scrubbing: Offending Comments on Iraq Disappear From SiteMilbank picks out just two recent examples, but there are dozens. It’s a good reason to regularly check out sites like The Memory Hole.
It's not quite Soviet-style airbrushing, but the Bush administration has been using cyberspace to make some of its own cosmetic touch-ups to history...
Kash
p.s. No, I'm not awake at this hour because I just saw TROTK. I wish.
UPDATE: See this AB post for another Orwellian example.
Wednesday, December 17, 2003
Math and Economics
Economics and economists use a lot of math. Sometimes perhaps even gratuitously. Daniel Davies has a lengthly disquisition of the issue over at Crooked Timber. Here's a sample:
The use of mathematics in economics isn’t the sort of Theory we’re concerned with trying to stamp out; like the War on Drugs, the War on Theory isn’t meant to touch the recreational hobbies of nice people like us. Nobody would question the right of economists to use whatever mathematical toolkit they need in order to write economics, because unlike the Bad Writing crowd, they’re using mathematics precisely in order to ensure the rigour of their analysis, not to cover up a lack of such rigour.Well, not quite. The position that mathematics in economics is a) the best way to do economics and b) the only rigorous way to do economics can be attacked on two separate fronts.
I may have something to add after I actually read the post.
AB
Rogue Attack Operation?
There's a little more detail today on the funding for the anti-Dean attack ads that Kash wrote about yesterday. Who is in the group?
The group, called Americans for Jobs, Health Care & Progressive Values, was formed a month ago by veteran Democratic campaign staffers who refuse to identify their financial backers until Jan. 31 ... The group's treasurer is a longtime fundraiser for Rep. Richard A. Gephardt of Missouri, one of Dean's rivals in the Democratic presidential race, and its spokesman recently quit as press secretary for Massachusetts Sen. John F. Kerry's presidential campaign. Both Gephardt and Kerry have denied any involvement with the group.
Who is funding the group?
A secretive political group financed in part by labor unions has raised $500,000 to air anti-Howard Dean ads in three early primary states, angering the Dean campaign and drawing sharp criticism from campaign finance reform advocates.
Are they happy with their investment? Apparently not.
Two of the unions renounced the effort Tuesday, saying the ads — including one featuring an image of Osama bin Laden — are not what they thought they were paying for.[snip] ... "I tell you, these ads are despicable," said Rick Sloan, communications director for the International Assn. of Machinists and Aerospace Workers, which donated $50,000 to the effort. "If I have my way, we'll ask for a refund."
... Robert Gleason, treasurer for the International Longshoremen's Assn., said his union also donated about $50,000 for what it thought would be general issue ads on jobs and health care, as in the group's name. When the first anti-Dean ads were aired, the union decided not to send more money.
A final note: all three of the unions that have admitted funding the group behind the attack ads have endorsed Dick Gephardt. Still, I'm inclined to believe the unions' statements of regret and dismay, as well as Gephardt's denial of involvement.
AB
Tuesday, December 16, 2003
Inflation Still Falling
This news surprised most economists: today’s release of the November CPI showed a fall in prices of .2%. The core rate, excluding food and energy, showed a fall in prices of .1%. The 12-month inflation rate in the US has now fallen to 1.20% (see this graph for context).
Those economists would have been less surprised if they had read this post. I'll spare the bother of repeating it here, and just say: "Yup. Still true."
Kash
Closer to a Yuan Revaluation?
Back in August, I wrote that a rise in inflation in China might make the Chinese government more inclined to revalue the yuan against the dollar. Part of Stephen Roach's commentary this week suggests that that time might be getting closer:
Meanwhile, there has been an important shift in the Chinese inflation dynamic: After 15 months of deflation, China transitioned back into positive inflation territory at the start of 2003. And slowly but surely, the rate of inflation has begun to accelerate. The just-released inflation report for November 2003 was mildly disturbing — a 3.0% y-o-y increase, which represents the sharpest rise in nearly seven years. The mix of Chinese inflation is important, but not for the reasons we stress in the industrial world. The recent surge is concentrated in food prices, where annualized inflation is now running at an 8.1% rate. Weather-related or not, this is a big deal in a nation that still has about two-thirds of its population living at poverty levels. Unlike the West, where we strip out food in an effort to come up with “core” inflation, the Chinese have no such luxury…As you know, the China issue has been growing for months. So this news matters. If the Chinese are serious about wanting to slow inflation, they will have no choice but to revalue, for various reasons. But first, they'll probably try to sell some of their $500 billion of US government bonds.
The year 2004 could bring some interesting times...
Kash
Does This Rule Out Dean-Clark ’04?
Salon recently interviewed Wesley Clark, and asked him about the possible “dream team” Democratic ticket against Bush:
[J]ust 48 hours before before the capture of Saddam Hussein outside of Tikrit, Clark made his strongest statement to date about why a Dean-Clark ticket is a bad idea. Clark, who says that he's uniquely qualified to go "toe-to-toe" with President Bush on security issues in 2004, said that whether he's on the ticket or not, the Democrats can't win with Dean as their presidential candidate.Of course, when running for president one must not seem to be really running for vice-president. But if we take him at his word, Clark seems to be ruling out an alliance with Dean.
"I don't think the Democratic Party can win without carrying a heavy experience in national security affairs into the campaign," he told Salon in a phone interview last week. "And that experience can't be in a vice president."
Asked if he was referring specifically to the much-discussed possibility of a Dean-Clark ticket, he said: "It's no substitute. It won't work, and it won't carry the election for this party."
Or, do his comments leave that door open just a crack...?
Kash
Ugly, Ugly Fratricide
This is not pretty. And one wonders why the Republicans have gained such complete control over the US’s political system, given that the majority of American’s are closer to Democrats than Republicans on the issues...
Dr. Dean, the former governor of Vermont, had billed his speech here to the Pacific Council on International Policy as a sweeping international tour of what he said were his moderate foreign policy views…Regardless of your opinion of Dean, I think that anyone who wants to get rid of Bush in 2004 should find this disgusting.
"The difficulties and tragedies which we have faced in Iraq show the administration launched the war in the wrong way, at the wrong time, with inadequate planning, insufficient help, and at the extraordinary cost, so far, of $166 billion," he said. "The capture of Saddam does not end our difficulties from the aftermath of the administration's war to oust him."
Dr. Dean's Democratic opponents immediately seized on the speech to raise new questions about his viability in a general election... At the same time, a group of Democrats known informally as a "stop Dean" coalition began running a television advertisement in New Hampshire and South Carolina that shows a photograph of Osama bin Laden with the warning, "It's time for Democrats to start thinking about Dean's inexperience."
Kash
Monday, December 15, 2003
Guest Blogging
Just a reminder: Kash and I are looking for guest-bloggers from 12/20 to 1/7 (I'll be blogging through the end of the year, then taking a week off. Kash is off for 2.5 weeks.) Happily, we have one great guest so far (the much anticipated unveiling will come at the end of this week), but we could use one or two more. If you're interested, click here.
AB
It's Your Children's Money. Quick! Keep Taking It!
Here's the new fiscal responsibility plan: cut the deficit in half by 2009. Maybe. There's a major caveat:
In an interview Friday, Joel Kaplan, deputy director of the White House budget office, said Bush would halve the deficit "by pursuing very aggressively his pro-growth economic policies, and by leading the Congress toward overall policies of fiscal restraint. And if the Congress adheres to those two programs, we'll be successful in halving the deficit from its '04 peak within that time period."
I'm pretty sure the Republican Congress is in on the tax cut side. They're still working on the spending restraint, however (via Atrios).
Seeing this made me want to track down some old Bush quotes about his budget and tax plans. Here's a nice excerpt from the 2000 campaign website:
Cut Taxes Responsibly: Governor Bush’s $460 billion tax cut over five years will contribute to raising the standard of living for all Americans. His budget uses only about a quarter of the surplus for tax cuts, reserves all Social Security funds for Social Security only, and still leaves extra money for debt reduction, defense, education, and other priorities.
Of course, you have to visit the Internet Wayback Machine to find that promise. For some reason, it's no longer part of the official site.
Also while wandering the Web for quotes from 2000, I found this from an 11/1/2000 CNN piece:
"We've got a surplus in Washington, D.C.," [Bush] said. "Let me tell you what I think a surplus means. It means the government has got more money than it needs. That's why it's called a surplus."When you have a surplus, it means our people are overtaxed, that your government is overcharging you. I propose responsible priorities for our surplus -- a balanced budget and a fiscally responsible plan."
But that was then.
AB
P.S. I'm pretty sure that when the administration says (first quote, above) "pursuing very aggressively his pro-growth economic policies" they mean more tax cuts. Yes, tax cuts are stimulative in the short run, but when did Conservatives morph into Keynesians? Must have been some time in early 2001.
Sunday, December 14, 2003
Good News
The latest news is that Saddam Hussein may have been captured. Clearly, that would be unambiguously good news. But it leads me to wonder whether the opposition is driven by pro-Saddam loyalty or anti-American sentiment. If the former, then things could take a turn for the better; if the latter, then we're likely to keep seeing more of the same. Either way, it is -- at the least -- an important symbolic victory.
AB
Saturday, December 13, 2003
Yet Another Miserable Failure
From today’s Washington Post:
KIRKUSH, Iraq, Dec. 12 -- More than half the men in the first unit to be trained for the new Iraqi army have abandoned their jobs because of low pay, inadequate training, faulty equipment, ethnic tensions and other concerns, leaving the nascent 1st Battalion dramatically understaffed just days before it is scheduled to leave training camp for its first assignment, Iraqi, U.S. and other coalition officials say.Kash
How Do You Decide on a New Constitution?
It’s not easy. Just take a look at what the EU is going through this weekend as they try to write their first Europe-wide constitution. The biggest issue is how much representation in the Council of Ministers to give to each country. They have to be careful to set it up right, or they could end up with a system that’s not very representative… maybe even one that allows a minority of population to control policy-making, or even elect the EU’s leaders…
Kash
Friday, December 12, 2003
Into the Breach Again I Go...
Fight it... Fight it... No... Can’t... Resist... Must... Bring up... Trade... Again...
It's not my fault. Blame Brad DeLong. He put up a provocative post yesterday about this week’s Economist piece (subscription required) on white collar jobs in the US being outsourced to places like India. DeLong’s point is that The Economist goofed. He says:
The fact that trade balances--that dollars paid to Indian call-center workers show up as demand for American exports or as funding for investments in America*--means that the Economist is doing a bad thing when it talks about "job loss" rather than "job shift." Bad Economist! Go lie down now!! No biscuit for you!!!Needless to say, Brad’s post has generated a storm of comments, many of which are intelligent, articulate, and almost all of which I’ve enjoyed reading. Numerous commenters raised the issue of the job losses that the IT sector in the US has experienced over the past 2 or 3 years. There are dozens of comments along this line, but I’ll reproduce one particularly persuasive comment by a contributor named Camille Roy to give you the flavor:
Dear Mr DeLong,I am completely sympathetic to the feelings and fears behind these types of comments. It is true that jobs have dramatically disappeared in Silicon Valley. And it is truly awful for those who lost jobs, or can’t find jobs.
Love your blog, but this is bogus. In fact the stream of consciousness in this thread, in so far as it characterizes these out sourced jobs as low-skill jobs we may be better off without, is bogus. (The ivory tower mentality reflects poorly on your profession.) I am speaking from the line of fire, as a silicon valley software engineer with over a decade of advanced lab experience in the best companies in the valley. I know what's going on and it is ugly. The wages dropping like a stone etc, etc. I know the companies around here are sending work off-shore as fast as they can and I know that there are very few replacement jobs. Job losses here are around 300K and there is nothing on the horizon for these highly trained unemployed.
I would like to pose two questions in response to these concerns.
First, how can one tell that outsourcing is responsible for recent job losses in IT? I would argue that nearly all of those job losses are due to the end of the massive internet technology bubble of the late 1990s, coupled with the general job market recession. In other words, I bet that job losses would be about the same in the industry if no new jobs had been created in India.
My second question is related: If outsourcing is responsible for the loss of jobs in IT, then what explains the job losses in other industries? Many have argued that manufacturing jobs have also disappeared because of international trade. But jobs have also disappeared in industries that face no international competition, such as transportation and retail trade.
The table below shows the percent change in total employment, given by the BLS, between September 2000 and September 2003. Jobs that face no international competition, such as courier services, rail transportation, and various wholesalers, have disappeared just as fast as (or faster than) jobs in software publishing, accounting, and research and development, which are supposed to be the major victims of outsourcing.
What explains this? It’s simple: the state of the economy is the reason for the loss of jobs in the US, not international trade.
As I argued at length a few weeks ago, the process of losing jobs to international competition is no different from the process of losing jobs to technological advances. They both cause pain and hardship for some people, and benefits for others. Why treat international trade any differently from technological progress? If you're worried about the state of the job market in the US, then you should focus on the state of the economy, and the competence of the people running it. Don't worry about international trade -- it's a red herring.
Let me end this post with another comment from DeLong’s post, by a contributor named Bulent Sayin:
Suppose, just suppose, that these whatchamacallit "call center" operations did not go offshore, instead, they were completely automated.Kash
I mean suppose these call center jobs were lost to software, not to workers in India, with exactly the same effects on American call center workers. (If it is going to make you happy, assume that the conputers hosting that software is located in US; but that won't make helluva difference, I can tell you.)
What would you say to that?
More importantly, what would you do about it?
Uncompetitive and Unmonitored
Josh Marshall has a lovely follow up to Kash's earlier post on the likely impact of the administration reducing competition for reconstruction contracts in Iraq (illustrative example of this effect: importing gasoline from Kuwait costs $2.64/gallon). Here's the news from Marshall:
When Congress voted the $87 billion for military expenditures and reconstruction in Iraq they were keen to create an office of Inspector General at the Coalition Provisional Authority (CPA) to watch out for all manner of waste, fraud, abuse, price gouging and various other shenanigans.Now it seems that Paul Wolfowitz has gutted that provision. ...
I still try to picture Wolfowitz as a misguided idealogue, but damn it if he doesn't make it tough to see him as anything other than a naked shill for war profiteers.
AB
UPDATE: Wolfowitz must have been anticipating this morning's NYT, which alleges more attempted profiteering:
Kellogg, Brown & Root, also submitted a proposal for cafeteria services that seemed to be inflated by $67 million, the officials said. The Pentagon rejected that proposal, they said.The problems involving Halliburton, where Vice President Dick Cheney was chief executive, were described in a preliminary report by auditors, the officials said. The Pentagon contracts were awarded without competitive bidding and have a potential value of $15.6 billion; recent estimates by the Army have put the current value of the Halliburton contracts at about $5 billion.
The solution to inflated bids? More competition? No. Less auditors!
Thursday, December 11, 2003
Medicare, continued
Reader and commenter Greg refers me to this important story on Medicare in the Boston Globe. It's an oped by two professors, Jacob S. Hacker, assistant professor of political science at Yale and Theodore R. Marmor, professor at Yale School of Management. There's a lot of good stuff in the piece, some of which I've touched on already, but there's one little piece that I hadn't heard about until now:
In a relatively unnoticed provision that wasn't in either the original House or Senate legislation, the bill creates a new standard for Medicare "insolvency." It would define the program as insolvent whenever, in two consecutive years, more than 45 percent of its spending comes from general income tax revenues (not incidentally, the most progressive source of Medicare financing) rather than payroll taxes and premiums. When this ceiling is hit, which is likely to happen sometime in the next decade, the law will require the president to propose spending cuts and tax increases within the program.
What this provision means is that if premiums do not cover 55% of the costs of the programs, then the president has to cut benefits or increase payroll taxes (which are a flat 2.9%), rather than income taxes (which are progressive). And the adverse selection problem seems almost certain to ensure that enrollees' premiums do not cover 55% of the costs.
AB
P.S. All of these posts are not intended to endorse a broad and generous Medicare drug benefit. In fact, my feelings about this issue are quite mixed. I'm in favor of coverage for poor seniors (as measured by wealth, not income) and even catastrophic coverage for most seniors, but there are a number of other social programs that may deserve even more attention. For instance, education and health care for children. What I am definitely opposed to is the media systematically overstating the benefits and understating the costs of the plan (Hint: if it truly is fantastic, then why delay implementation untill after the 2004 election?)
Best Lefty Blogs
Wampum is now taking nominations for the "Koufax Awards," a set of awards for various outstanding achievements in the field of excellence by lefty blogs. In most of the categories, the competition is likely to be fierce (but friendly).
- Best Blog: Likely to be a close race between Atrios, Marshall, CalPundit, and Kos.
- Best Writing: Looks like Dave Neiwert will start with a slight edge, but Jeane DÂ’Arc and Digby are right on his tail.
- Best Post: This one is tough, I'll have to ponder it for a while. A number of people have nominated Orcinus' The Political and the Personal for Best Post, which truly is a great post and shows why Dave belongs in the "Best Writing" category.
- Best Series: You guessed it, Dave Neiwert's is again a top contender; this time for his Rush, Newspeak, and Fascism series. Deltoid's merciless dismantling of the fraudulent John Lott is another popular nominee (and Dave can't win everything, can he?) Charles Kuffner's coverage of the Texas Redistricting Boondoggle was also impressive. Finally, there's Slacktivist's ongoing heroic effort to read, analyzye, and blog the disturbing bestseller, Left Behind--so you don't have to.
- Best Single Issue Blog: I'm assuming that "politics" doesn't count as a single issue, because all the nominees are political blogs. But if by single issue they mean, for example, "Law" then Mark Kleiman is a good candidate, as is last year's winner Jeralyn Merritt. Hmm, I wonder if two economists blogging about politics and economics counts as a single issue blog?
- Best Group Blog: This is the only category where there's little doubt over the outcome. Crooked Timber wins by a mile.
- Most Humorous Blog: I don't really read blogs that are just humor, all the time. But TBogg and Roger Ailes consistently crack me up. So does Jesse.
- Most Humorous Post. Those with very short memories have an easy decision, Atrios' Preznit Giv Me Turkee. But if you think back to October when Luskin had his lawyer send a threatening letter to Atrios, the decision becomes much more difficult. The Poor Man's parody of that letter ("...tricksyness in the first degree, and we hates you") is a hilarious classic.
- Best Design: Ampersand won last year. Blah3 seems to be giving Barry some competition this time around.
- Best New Blog: I don't remember whether they qualify (the first post must be on or after 7/1/03), but 18 Minute Gap and Suburban Guerilla are strong contenders. Ruy Teixeira may prove even stronger. Ruy T. would also be strong in a most difficult to spell category.
- Best Special Effects: Uggabugga looks like this year's strongest contender--it's the go-to blog for great graphs and figures. (Speaking of which, if you haven't ever taken a look at the Four Views of the Red/Blue states maps to your left, give it a click.)
The nominations are open throughout December and the voting starts in January.
AB
P.S. Where's the "most charts and graphs" category?
P.P.S. Every time I hit "Publish" I remember one more great blog or post that I forgot to mention. You can corrrect my omissions in comments here or at Wampum.
Real or Parody?
I really can't tell. Read No More Mr. Nice Blog's for an (alleged) exchange between Tim Russert and Hillary Clinton on the subject of her being the nominee and see if you can tell whether it's a parody or if Russert is that much of a moron.
AB
P.S. Sure, I could go to msnbc.com and find the transcript, but that would take the fun out of it.
Thoughts on Campaign Finance
I used to be a huge supporter of campaign finance reform. I love the ideal of reducing the influence of money in politics, and the unseemly quid pro quos that it engenders. But I’m starting to wonder.
So far, the efforts to temper the importance of money in the political process have primarily addressed the source of money. The campaign finance law upheld yesterday by the Supreme Court, for example, is chiefly significant for its ban on soft money contributions, which had no legal limit and were thus generally enormous.
But, as the LA Times notes today, the law will probably have minimal effect in reducing the importance of money in politics. They’re right.
The law wiped out a vast source of unregulated funding, known as "soft money," that became a subject of scandal in the 1990s as corporations, unions and wealthy individuals wrote large checks to political parties. But as opponents of the law predicted, much of that money is finding its way back into the political system through other means.I can’t believe I’m saying this, but I have to agree with McConnell on this one. (Just goes to show that this universe is indeed big enough that everything happens at least once.)
"This law will not remove one dime from politics," said Sen. Mitch McConnell (R-Ky.), the law's leading congressional opponent. "Outside special interest groups have become the modern-day political parties. Soft money is not gone — it has just changed its address."
I think that our efforts to date to limit the influence of money in politics have been very much like our efforts to reduce the amount of illegal drugs consumed in the US. This campaign finance law almost exclusively addresses the supply of money, just as the “war on drugs” tries to reduce the supply of drugs. As in the drug issue, however, trying to limit supply but not demand will do very little to the overall quantity consumed, because the supply is virtually perfectly elastic. For all practical purposes there’s an infinite supply of both drugs and political money.
As one piece of evidence simply take a look at the quantity of money that will be raised and spent in the 2004 election cycle. It will be far greater than the amount raised in 2000, despite the campaign finance reform. I doubt the reform has even dented the rate of growth.
There’s only one way to reduce equilibrium quantity when supply is infinitely elastic – reduce demand. So to reduce the influence of money in politics, I’m convinced that we will have to directly address the demand for money. Since the lion’s share of political money is spent to buy TV ads, I would argue that the only solution is to start limiting the quantity and/or timing of TV ads that candidates can run. Do that, and you have huge and meaningful campaign finance reform, because you’ll be cutting the demand for political money.
First amendment problems? Sure – huge ones. Which is why I don’t see it happening without a constitutional amendment, which means it will probably never happen in my lifetime. Which is also why I was basically agnostic on the Supreme Court's decision on campaign finance reform. Neither decision would have made a difference to the amount of money in politics.
Kash
Be Famous!
Not really, but you can be famous for fifteen minutes, or more accurately, famous for fifteen people. For various vacation and job-related reasons, Kash will be posting rarely from around 12/25 to 1/8 and I won't be able to post much during the first week in January. But you can.
My first guest-blogging experiment was a smashing success (it brought Kash to the blog), so bringing in a guest-blogger or two seems like a much better idea than going on hiatus. If you're interested, email me a sample post. Regardless of who wins, I'll definitely post every reasonable entry (perhaps with some editing), so there's nothing to lose.
There are few requirements. An interest in economics is important but a Ph.D is not. Acceptable political views range from a bit right of Nader to John McCain, which probably encompasses at least 70% of the population. And it's definitely open to people with their own blogs. In fact, it's probably a great way for a new blog to gain a modest amount of exposure.
AB
If You Thought Ari Fleischer Was Good
Susan, in her run-down of the candidates, has an idea for an even better press secretary, though I'd replace "Dean" with "any Democratic President":
Al Sharpton. Rev, I like your style. I really do. But I wish you'd answer questions directly, it's really annoying. However, my fondest wish would be to see you as White House press secretary under President Dean's first administration.
AB
Wednesday, December 10, 2003
A New Transfer from US Taxpayers to Corporate America
This newly announced transfer is more subtle than some of the Bush administration’s many, many actions that have transferred wealth from US taxpayers to a few select corporations – and thus to those few individuals who own and run them – but it’s a transfer nonetheless.
What am I referring to? I’m referring to the Bush administration's announcement that firms from Canada, France, Germany, Russia, and other war-opposers are not allowed to bid for the $19bn in Iraq reconstruction contracts. The result of such a ban will be to reduce the competition that the various contracts will be subject to. And when competition is reduced, prices almost always go up. A perfect example of what happens when contracts are awarded with less-than-full competition can be found in today’s NYTimes:
The United States government is paying the Halliburton Company an average of $2.64 a gallon to import gasoline and other fuel to Iraq from Kuwait, more than twice what others are paying to truck in Kuwaiti fuel, government documents show...Less competition (and Halliburton faced none in receiving its contract), higher prices.
A company's profits on the transport and sale of gasoline are usually razor-thin, with companies losing contracts if they overbid by half a penny a gallon. Independent experts who reviewed Halliburton's percentage of its gas importation contract said the company's 26-cent charge per gallon of gas from Kuwait appeared to be extremely high.
But who pays these higher prices? Naturally, the US taxpayer. Nearly all of the money for Iraq’s reconstruction is coming from US taxpayers, as we all know. And where does the extra money go? In this case, Halliburton will earn increased profits, most of which will probably go to its executives and largest shareholders.
With the Bush administration’s newly announced rules regarding bidding for future reconstruction contracts, we can be sure that the winners of future contracts to rebuild Iraq will also face less competition, charge higher prices, earn higher profits, and accomplish less than they would have if they had faced full international competition. Of course, some bids may still face competition, either between competing US firms, or with firms from the other members of the coalition such as the UK, Micronesia, or Albania. But many contracts will doubtless face less competition than they would have otherwise.
That's why these new rules mean that US taxpayers will have to pay more money to get less rebuilding done in Iraq -- and the difference will end up as increased profits for a few big American corporations. As AB put it yesterday in his excellent analysis of Medicare reform, I will leave it as an excercise for the reader to figure out which US firms will gain the most.
Kash
Campaign Finance Reform Upheld
The Supreme Court just issued a ruling upholding the McCain-Feingold campaign finance law that was passed in 2002. So now it's official: the ban on soft money stands.
Who is celebrating more today, Democrats or Republicans? I think it’s an open question -- but it may well be Republicans. Democrats have suffered most under the campaign finance law, because in the past they’ve typically received a few mega-donations for the bulk of their funding, whereas Republicans have been better at receiving a larger number of $1000 or $2000 hard money donations.
But that may be becoming less relevant. As I discussed in this previous post, some mega-donors are finding alternate ways to use their money to help Democrats. One unintended consequence of campaign finance may therefore be the rise of organizations like MoveOn, as this interesting Salon article describes. It’s an interesting question, whether MoveOn would have been so successful without campaign finance reform.
Kash
Playing Hardball with Bush
Hardball is the only game that the Bush administration is interested in playing, both domestically and internationally. It played it again yesterday, with the news that countries that didn’t support the Iraq invasion will be punished by being declared ineligible to bid on reconstruction contracts.
The Europeans are catching on, though. First, there was the case of the steel tariffs, where the EU discovered that threatening to impose tariffs on the US worked to get Bush’s attention. Now the lesson seems to be sinking in: diplomacy and dialogue won’t accomplish things with the Bush administration – only threats and punishment will. So, they’ve switched tactics over another trade dispute, and on December 8 they decided to levy tariffs on $4bn of US goods in retaliation for a US law that the WTO has ruled unfairly subsidizes US exporters at the expense of other countries.
The interesting thing is that the WTO actually issued its final ruling in the EU’s favor on this case back in May, at which time the EU had the legal authority to impose retaliatory tariffs on the US. However, until this week, they had decided not to actually impose the tariffs, and instead pursue a dialogue with the US to allow for a non-confrontational resolution to the US’s violation of WTO rules. It seems that after having hardballs thrown at them by the Bush administration for 3 years – with another one yesterday – and seeing the positive results when they throw a hardball back at Bush, the Europeans have learned that dialogue and patience will not be rewarded.
Kash
Tuesday, December 09, 2003
Food For Thought
Take a quick look at the graph in the previous post and ask yourself what happens when healthy seniors who are reasonably sure that their drug costs will be under $800 decide to opt out of the coverage program. Hint: total revenue from drug premiums goes down and the average drug cost per enrollee goes up.
AB
Medicare Drug Benefit Update
Reading Today's Daily Howler, I see that the NYT has a new story on the Medicare drug benefit. The Problem? The NYT's figures and analysis exclude the $420 annual premium, grossly overstating the true benefits provided under the plan.
To illustrate the distortion, I took the data from an earlier post on the Medicare Drug Benefit and divided the out-of-pocket expense by total drug costs to derive the percentage of drug costs paid by the enrollee. Then I repeated the analysis with the enrollee's premium costs excluded. As you can see, excluding those costs changes the picture substantially, particularly when expenses are in the non-catastrophic range. For example, $810 is the break-even number, meaning that if an enrollee's total drug costs are $810 then total out-of-pocket expenses are exactly $810. If drug costs are less than that, the enrollee is paying more than she would without coverage, and vice-versa. While in reality a senior with $810 in drug costs pays an amount equal to 100% of their drug costs, the Times' error makes it incorrectly appear that the government is paying a bit more than 50% of that senior's drug costs (and the senior a bit less than 50%).
Note that the problem is not that seniors with less than $810 in drug costs will pay more under the plan than they would otherwise. That's the nature of insurance and risk-sharing. Everybody puts some money into a pool at the start of the year. Those who are unlucky and need a lot of prescription drugs withdraw money; the fortunate ones are healthy and do not take money out of the pool. (One difference in this case is that seniors put only a portion of the money into the pool. Taxpayers add the rest.)
The problem is that by excluding the deductible the NYT -- either out of ignorance or malevolence -- grossly overstates the value of the just-signed plan. Left as an exercise for the reader is why the allegedly Liberal New York Times would distort thusly.
AB
The Dean Endorsement, con’t
Wondering if Gore’s endorsement of Dean matters? Take a look at this graph to see the effect it has had on Dean shares in the Iowa Electronic Market. The price of Dean shares is represented by the green line.
Apparently, at least among the individuals trading shares on the IEM, this news has increased Dean’s chance of winning the nomination from about 60% to about 70%. Not a bad bounce from a single endorsement.
For those who aren’t familiar with it, by the way, the IEM is a forum at which individuals can buy and sell shares representing individual candidates, either for the nomination or for the general election. If you’re holding a share of Dean and he wins the nomination, you get $1. If you paid less than $1 for the share, you keep the profits. It’s a fantastic way to check the opinion of a bunch of people (those who trade on the IEM) who put their money where their mouth is.
Kash
The Fed’s Take
The Fed’s Open Market Committee – the group that sets the US’s short term interest rates – met today and decided to hold interest rates constant. They also issued a statement indicating their sense of the economy’s direction:
The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. However, with inflation quite low and resource use slack, the Committee believes that policy accommodation can be maintained for a considerable period.Kash
Comparing Two Great Depreciations
The dollar continued its fall against the euro today, hitting its eighth record low in a row. It’s now down to around 1.22 $/€. This set me to wondering. Sure the dollar has fallen pretty consistently over the past couple of months. But is this depreciation of the dollar large by historical standards?
The most dramatic depreciation of the dollar over the past quarter century was the roughly 50% fall in the dollar between early 1985 and late 1987. That dollar depreciation was intentional – all of the major economies of the world agreed to jointly act to push down the dollar, in the famous “Plaza Accord” of 1985. (Okay, maybe 'famous' is the wrong word to use... unless you're talking to a bunch of international economists.)
So I find it interesting to see that the recent history of the dollar against the euro looks remarkably similar to the path of the dollar against the DM back in the 1980s. Here’s the graph:
The answer to my original question is yes. The current depreciation is indeed large by historical standards – and is starting to approach the magnitude of the most dramatic dollar depreciation in the past quarter century.
Kash
Dean Endorsement
I'm not sure what to make of Gore's endorsement of Dean, other than that it's clearly good news for Dean. If I were a right wing columnist or blogger, I suppose I'd be trying to figure out how this either proves that (1) Hillary will run in 2004, or (2) Hillary will run in 2008, so Bill Clinton wants the 2004 Democratic candidate to fail and is somehow using Gore's endorsement to achieve that end.
AB
UPDATE: Dan Drezner steps up to the plate on Hillary:
Gore's endorsement would throw a significant monkey wrench into this Southern Strategy. [Wouldn't the Clintons be happy about this, since it increases the odds that Hillary will be able to run in 2008?--ed. ]
That makes sense, Prof. Drezner. Dean won't do well in the South so supporting Dean means you want the 2004 Democratic nominee to lose, which means you really want Hillary to run in 2008 (notwithstanding that she'll do no better in the South than Dean). All conservatives (including Mickey Kaus) should pause, count to ten, and reflect on the logic of their argument before making any statements about Hillary Clinton.
Monday, December 08, 2003
Just Like the Texas "Education Miracle"
We learned last week that the Texas Miracle was really the result of low standards on the TAAS, not accurately reporting dropouts, and excluding expected low-performers from taking tests.
John Ashcroft, meet Rod Paige: it appears that the same tactics are being used to inflate the terrorism conviction rate:
In a speech before the FBI Academy in September, President Bush said that since the attacks, U.S. prosecutors have charged more than 260 suspected terrorists, of whom 140 have already been convicted.
But critics say the new data - compiled by researchers at Syracuse University's Transactional Records Access Clearinghouse, using Justice Department reports - provide a very different picture, one that suggests the government is inflating its success by categorizing minor prosecutions as related to terrorism ... but the number of individuals [convicted of international terrorism related offences] who received sentences of five or more years actually dropped.
I suppose the administration could counter that only the minor offenders are being tried, while the alleged serious offenders are simply being held without trial in Guantanamo -- though now about 20% of those prisoners are scheduled for release.
AB
P.S. Regular Daily Hower readers knew way back in 2000 that there was something fishy about the Texas education numbers.
Even the Conservative Washington Times...
... is reporting negatively on current deficit and spending levels:
"In the historical context, you can think of times when politicians have gone for big-government solutions, and you can think of times when politicians have gone for tax cuts and limited government," said Robert Bixby, executive director of the budget-watchdog Concord Coalition.
"What's been unique about this Congress is they've tried to do both at once," he said.
But we can all be thankful, says Lindsey "I was worried about blowjobs not budgets in the 1990s" Graham:
Republican leaders also say spending is more restrained than it would have been if Democrats were in control.
"The Republican Party could be fairly criticized for not having the discipline in spending we should have," said Sen. Lindsey Graham, South Carolina Republican, who voted against the Medicare bill last month because of its huge costs. "But we're the best game in town. Compared to the Democrats, we're great."
Due to the onerous time commitment from his role as a leading member of the impeachment brigade, Graham must have failed to notice that the size of the federal government shrank when the Senate and White House were under Democratic control in the 1990s.(*)
AB
(*) The above link shows that the number of executive and legislative branch employees fell from 1985 to 2000; the number of judicial branch employees actually increased. Because the executive branch employs by far the most people, that decline in the 1990s drives the total change. The following graph, from this post from July, shows Federal spending as a percent of GDP falling sharply under Clinton -- from 22% of GDP to 18.5% of GDP:
Saturday, December 06, 2003
The Rhetoric v. Reality Game: Military Readiness
Here’s one of my favorite games for a snowy weekend: Rhetoric v. Reality! Simply compare things that Bush said while campaigning to the reality of his administration. Here's an easy one from today's news.
First, George Bush during the RNC, August 3, 2000:
“Our military is low on parts, pay and morale. If called on by the commander-in-chief today, two entire divisions of the Army would have to report, "Not ready for duty, sir."”Second, Dick Cheney, August 27, 2000:
“Military readiness has reached its lowest level in modern times, and the Clinton-Gore administration has done very little to reverse that decline.”Note that at the time, the U.S. Army disputed those claims:
The U.S. Army said Friday that Bush was wrong when he said in his speech Thursday night to the Republican National Convention that two of the Army's 10 divisions were not ready to fight.So much for the rhetoric. What about the reality? How well have Bush and Cheney done in improving military readiness? From today's Washington Post, December 6, 2003:
Bush had said: "If called on by the commander-in-chief today, two entire divisions of the Army would have to report ..., 'Not ready for duty, sir.'"
But Maj. Thomas Collins, an Army spokesman, told CNN: "All 10 Army divisions are combat-ready, fully able to meet their war-fighting mission."
Four Army divisions -- 40 percent of the active-duty force -- will not be fully combat-ready for up to six months next year, leaving the nation with relatively few ready troops in the event of a major conflict in North Korea or elsewhere, a senior Army official said yesterday.Excellent -- a find like this should get me a lot of points in Rhetoric v. Reality!
Briefing reporters at the Pentagon, the official said the four returning divisions will be rated either C-3 or C-4, the Army's two lowest readiness categories...
If we were supposed to think that having 2 divisions unready to defend the US (even though they actually were ready) was bad back in 2000, then what are we supposed to think about having 4 divisions actually, certifiably unready to defend the US? Problably that it's fine, that there's nothing to worry about. Note that – in stark contrast to August of 2000 – the assertion about the readiness of the US military today comes not from a political partisan, but from the Army itself.
You can play Rhetoric v. Reality!, too. Just try matching up other specific examples of pre-election rhetoric with once-in-office reality. It's wholesome fun(*) for the whole family! (**)
Kash
(*) note: the term 'wholesome' not meant to be taken literally -- game not actually wholesome.
(**) note: game not suitable for children, people with heart conditions, or people susceptible to fits of rage in the face of breathtaking hypocrisy.
Loud Mouth Jackass
But you already knew that about Bill O'Reilly. But did you know that he's ignorant too, as SadlyNo! makes clear:
Bill "Shut Up!" O'Reilly displays his keen understanding of the economy in the latest edition of the Talking Points Memo:The conservative take is a supply side system, whereby consumers spend and jobs are created by the private sector, which profits from the spending, obviously.Jeebus Bill, what you described is obviously, demand-driven economic growth.
Keynes? Laffer? What's the difference?
AB
P.S. SadlyNo!'s post on Reagan is also a must-read for those who are unsure whether Reagan's face should replace FDR's on the dime.
Friday, December 05, 2003
Attack and Counter-Attack
On Thursday, the Club for Growth launched attack ads against Howard Dean in Iowa and New Hampshire. While I'm no Deaniac (though I may be some day), I am impressed by the speed and message of Dean's counter-ad. Skeptical Notion has the details.
AB
Weblog Awards
For those who like voting, winning, and losing (or rather, watching others win and lose), check out Wizbang's 2003 Weblog Awards. Angry Bear is not currently in the running, though should that change I'll provide a link.
AB
Louisiana Update
In a previous post, I referenced the troubles one young Louisiana student experienced after telling other students that his parents are gay. You can see the actual note the school made the student send to his parents, along with a teacher's explanatory note, here.
Never slow to adopt a really good idea, the White House press office has now adopted a similar policy for the press pool. Witness here the travails of one recalcitrant reporter (but be ready to laugh).
AB
Mixed Unemployment Report
The BLS reported this morning that the unemployment rate fell slightly, to 5.9%, and the number of jobs in the US increased by 57,000, which was less than most economists had expected. Job creation is better than job destruction, which is what we've mostly seen over the past couple of years, but it was still a rather disappointing report. Taking a look at the graph puts it in context.
The US economy has recovered from the worst part of the downturn in employment that we experienced during the spring and summer of 2003. Put another way, the labor market has almost (but not quite) clawed its way back to where it was throughout most of 2002. Unfortunately, the third quarter boom in the economy may well already be petering out.
Kash
Knowledge City
As Kash points out, the steel tariffs are being rescinded. If you watch The Daily Show then you know that Bush was in Pittsburgh on Wednesday, where he went to great lengths to avoid referencing the steel industry. How great were the lengths? I report, you decide:
"It's great to be back in Knowledge City, Pittsburgh, Pennsylvania," Bush said at a $2,000-a-plate luncheon at Westin Convention Center Hotel.
Ah yes, I remember the many tragic defeats my once-beloved Houston Oilers suffered at the ignominious hands of the Pittsburgh Knowledgers.
No word yet on whether the administration now plans to impose tariffs on knowledge.
AB
Food For Thought
Good stuff from Dwight Meredith at Wampum today. Dwight unintentionally makes a good case that Gary Aldrich should be on Pandagon's list of 2003's 20 Most Annoying Conservatives. Upon reflection, Aldrich is plenty annoying but too insignificant for the list. There's another great Daily Howler, too.
AB
Era of Big Government, Part Too Many to Count Anymore
In the pursuit of ever more massive deficits, this administration shall leave no stone unturned. Even if that stone is on the freakin' moon.
AB
UPDATE: I like this part:
One person consulted by the White House said some aides appear to relish the idea of a "Kennedy moment" for Bush, referring to the 1962 call by President John F. Kennedy for the nation to land a man on the moon and return him safely to Earth by the end of the decade.
Mother and Son
Why is the picture below not suitable for children in Louisiana schools? Click here to find out, but be prepared to be angry. Yet another installment in the "why I am Angry Bear" series.
AB
P.S. These days, it's particularly important to toss a few bones in the ACLU's direction if you can spare it.
Thursday, December 04, 2003
Something Odd
The spell-check utility available from blogger doesn't recognize the word "blogger" (it suggests "blocker"). I'm sure they use third party software for the spell check, but you'd think they'd want the company name in their own lexicon. [If Blogger has spell check software then why do you have so many typos? --ed. Shut up, Mickey.]
AB
Atrios in a Landslide
Congratulations! He's apparently as annoying to righties (scroll down) as Hesiod, Kos, and Marshall combined.
Most Annoying Left-Of-Center BloggerAB
2) Hesiod from Counterspin Central (24)
2) Kos from Daily Kos (24)
2) Joshusa Micah Marshall from Talking Points Memo (24)
1) Atrios from Eschaton (71)
It’s official: Bush Drops Steel Tariffs
Bush’s statement about why he dropped the steel tariffs was, shall we say, disingenuous. From his remarks today:
I took action to give the industry a chance to adjust to the surge in foreign imports and to give relief to the workers and communities that depend on steel for their jobs and livelihoods. These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances it is time to lift them.As Brad DeLong has so clearly pointed out recently, the change in the Bush administration rhetoric regarding the tariffs over the past 2 months (when they said that the tariffs had NOT yet achieved their purpose) has been nothing short of breathtaking. The real reason that the administration decided to drop the tariffs, of course, was the threat by the EU, Japan, China, and others to put tariffs on US goods. In the last couple of hours the EU has politely announced that they will drop their plans to impose tariffs on the US. The others will follow shortly, I'm sure.
Unsurprisingly, it seems that the Bush administration responds better to threats than to dialogue or economic reason.
Kash
Serious Anxiety about the Dollar... In Europe
Last night there were a few hours of near-panic in the currency markets as the result of a report that the EU was considering the imposition of capital controls to slow down the euro’s appreciation against the dollar. Capital controls in this case would presumably limit the amount of European assets (e.g. stocks, bonds, bank accounts) that non-EU citizens could purchase in any given month. Such a move would reduce the demand for euros, and thus help to keep the euro from rising further against the dollar. Such a move would also be totally shocking to the financial world, since they take for granted the perfect freedom that they currently have to move money in and out of Europe whenever they want.
I think that this rumor says something very interesting about the level of anxiety both in Brussels and in the currency markets about the dollar’s fall and euro’s rise. As this CBS Marketwatch report notes, it’s high.
LONDON (CBS.MW) - It says a lot about the current state of the foreign exchange market that a report Brussels is studying 1970s-style capital controls to stem the euro's rise received any attention at all on Thursday.The EU has vigorously denied that they will impose capital controls, and I believe them. However, this episode makes me wonder if they are worried enough about the rise of the euro to be considering some intervention in currency markets to try to prop up the dollar and keep the euro from getting stronger. I'm reminded of the possibility of the three-way currency contest that I discussed back in October. If the ECB is indeed considering such intervention, things could get very interesting indeed...
Europe can hardly lasso in the euro with exchange controls, and London currency analysts quickly dismissed the report in the Daily Telegraph. Yet the hullabaloo the report caused in overnight trading lingered. It may be signaling some unease with the relentless dollar selling.
The euro has struck a fresh all-time high against the dollar every day this week, outside of the slight decline Thursday. The common currency has been on a tear despite the stunning string of U.S. economic data for the third quarter...
[T]he fear among Europeans is that the euro is bearing the brunt of the great dollar correction underway because Asian nations - notably Japan - are intervening to force a more measured dollar decline against their own currencies. The pressure is bound to build on European policy makers to do something as the dollar continues to slide.
Kash
Wednesday, December 03, 2003
Controlling the Rules in Guantanamo
Today’s Guardian is running an interesting (and apparently exclusive) story about the legal defense of the prisoners held at Guantanamo Bay:
US Fires Guantanamo Defence TeamOne thing that the Bush administration understands – probably better than any other administration in recent memory – is how important the rules of the game are to ensuring the desired outcome. That’s why they have consistently devoted incredible attention to controlling the rules of the game in a host of different situations, from changing the congressional districts in Texas, to changing the rules on conference negotiation and on roll call procedures in Congress, to this. They know that if you can change the rules in the right way, then more often than not you can win perfectly legitimately – according to the rules.
A team of military lawyers recruited to defend alleged terrorists held by the US at Guantanamo Bay was dismissed by the Pentagon after some of its members rebelled against the unfair way the trials have been designed, the Guardian has learned.
And some members of the new legal defence team remain deeply unhappy with the trials - known as "military commissions" - believing them to be slanted towards the prosecution and an affront to modern US military justice.
Kash
Productivity and Capacity Puzzles
The BLS released its revised productivity numbers for the June – September quarter (Q3), which show that productivity leapt by 9.4% over that three month period. The strongest gains in productivity were in the durable goods manufacturing sector – i.e. producers of cars, washing machines, furniture, and capital equipment. That remarkable productivity growth came from two sources. First, those businesses produced more goods. Second, they used less labor to do it. In fact, they were able to squeeze 8% higher production out of their factories while using 6% fewer workers. It’s a pretty remarkable feat.
But I think that this adds to a puzzle that I’ve been thinking about for some time. Why is there still so much excess capacity in the economy? If productivity has been growing so rapidly, and factories are churning out more and more stuff using fewer workers, then presumably that means that businesses are getting better at using the resources that they have. So shouldn’t we see that the US is using more and more of its productive capacity, since its productivity has improved so much recently? Yet total capacity utilization in the US is still incredibly low (see graph here).
There’s another facet to this capacity puzzle. On the one hand, business spending grew at a very fast rate in the third quarter. Specifically, businesses increased spending on equipment and software by 18.4%, which alone accounted for 1.4% of the 8.2% increase in GDP in Q3. That’s the fastest rate of business purchases since 1998. But on the other hand, businesses have tons of spare capacity, as the graph illustrates.
So, to sum up:
- businesses have done an incredible job of squeezing more output out of fewer workers lately, presumably by more fully and more efficiently using the equipment that they have.Something here doesn’t fit together. I’m not quite sure what, but something odd is going on here.
- businesses still have tons of excess capacity, which means that they can produce far, far more than they actually are.
- businesses are currently buying new equipment at a remarkably fast rate.
Kash
Tuesday, December 02, 2003
Looks Like Nader Might Run
Via Talking Points Memo, I see that there is a Nader 2004 Presidential Exploratory Committee website now. Not wanting to criticize Nader without cause, I first thought that this might be a site made by someone urging Nader to run, similar to the various Draft Clark sites. So I did a quick whois domain registration search (*), which reveals that the person who registered the site hails from the domain votenader.org, which is registered to "Nader2000". I vaguely recall that Nader2000.org was the official campaign site of Nader in 2000, but it's no longer active. Fortunately, a quick search of archive.org reveals that Nader2000.org actually was a web site in 2000 and that it directs people to the "official" 2000 campaign site, votenader.org.
In a nutshell, the website is real, and Nader -- not some enthusiastic supporter -- does in fact have an exploratory committee. Allow me to suggest this as the official campaign slogan: "Four More Years". And no, this post is not another attack on the Greens, but rather an appeal to Greens to recognize that Nader running in 2004 is a bad idea. Every vote counts and taking any away from the eventual Democratic nominee is perilous, unless you want more energy bills, more regressive tax cuts, more war, and so on.
AB
(*) Ok, I was secretly hoping to find that the site is registered to the Republican National Committee. It's not.
UPDATE: Via TBogg, I see that Eric Alterman has a post on the subject. I have to endorse TBogg's take: "Whatever good that Ralph Nader did years ago is now gone. Vanished. Zero balance. If he runs again, he goes into the negative."
Tim Russert is Bob Somerby's Bi**h
There's not really any other way to read this installment of the Daily Howler.
AB
Monday, December 01, 2003
Bush to Repeal Steel Tariffs
The Washington Post is reporting that Bush has decided to repeal the steel tariffs. Given the growing crowd of countries that had recently announced that they would retaliate by putting tariffs on US products (as noted by AB in this post), I’m not surprised. As I argued in another earlier post, I think that the Bush administration will use the WTO ruling and the threat of retaliation by the US's trading partners as political cover to do something that many in the administration have been wanting to do anyway.
From the WaPost story:
The Bush administration has decided to repeal most of its 20-month-old tariffs on imported steel to head off a trade war that would have included foreign retaliation against products exported from politically crucial states, administration and industry sources said yesterday. The officials would not say when President Bush will announce the decision but said it is likely to be this week…I particularly liked this line in the story, though:
Bush advisers said they were aware the reversal could produce a backlash against him in several steel-producing states of the Rust Belt -- including Pennsylvania, West Virginia and Ohio. That arc of states has been hit severely by losses in manufacturing jobs and will be among the most closely contested in his reelection race.
The sources said that Bush's aides agonized over the options to present to the president and that they considered it one of the diciest political calculations of this term.Notice that it was a political calculation, not an economic one. Of course all presidents make decisions based on politics, but no administration that I can think of has made economic decisions so exclusively based on political calculus rather than economic concerns.
Kash
More Medicare
Part of the reason I made this graph of the just-passed Medicare Prescription drug benefit was to facilitate some clear thinking on the subject by commenters and other bloggers. In this post, Ruy Texiera points out that
[Seniors] will be hyper-aware of how much they will and will not be helped by the new bill. That’s why the concept that the GOP will be generally helped just because a bill with some sort of benefit for seniors–no matter how lousy!-- has been passed is so ridiculous. Seniors are going to be calculating how much–“to the penny”, as one senior put it in this article–their out-of-pocket drug costs are going to be under this new bill and they’re not going to be pleased. And they are going to know there’s nothing stopping drug prices from continuing to escalate rapidly and, therefore, their out-of-pocket costs as well.
In another post, Ruy T. gives some poll data to support his contention that the GOP may not gain much politically from this particular drug plan. Given the actual amount of non-catastrophic coverage is at most 48% (i.e., the government pays 48% of total drug costs and the senior pays the rest), and that even under catastrophic coverage the goverment only plays for more than 50% of drug costs when total drug costs exceed $8366, Ruy just might be on to something.
AB
Sunday, November 30, 2003
Era of Big Government, Cont'd.
John McCain sums it up nicely:
"Congress is now spending money like a drunken sailor," said McCain, a former Navy officer, "and I've never known a sailor, drunk or sober, with the imagination that this Congress has."[snip] "The administration originally supported an energy bill that would cost about $8 billion. This one is up to $24 billion, and the administration is still saying it's one of its highest priorities," McCain said. "I don't know how you rationalize that."
"Any economist will tell you cannot have this level of debt of increasing deficits without eventually it affecting interest rates and inflation," he said. "Those are the greatest enemies of middle-income Americans and retired Americans."
AB
Free Trade and Retaliation
Up to now, most of my arguments -- and Kash's -- in favor of free trade have been premised on the idea that access to inexpensive imports is good for U.S. consumers and also good for the countries selling the goods. A second line of argument is that when the imports being limited or having tariffs attached are inputs (like steel), the harm to industries that use those inputs outweighs the benefits to the protected domestic industry.
There is also another element to the argument for free trade: avoiding the imposition of retaliatory tariffs on U.S. exports. If the rest of the world responds to U.S. protectionism with more protectionism, then we really hit the trifecta of higher prices for consumer goods, lost jobs in import-consuming domestic industries, and lost jobs in export industries. And it looks like that's where we are heading:
The United States' growing trade dispute with Europe, Japan, and China over steel and textiles is sparking threats of retaliation that may slow global investment and hurt the sales of companies such as Boeing Co., Ford Motor Co. and AMF Bowling Worldwide Inc.
Japan and Norway has joined the European Union in saying they'll impose sanctions on US goods to strike back at the Bush administration for steel-import tariffs imposed last year.
... in March, the EU will begin phasing in $4 billion in duties on US products, from leather goods to nuclear reactors, to pressure American lawmakers to scrap a tax break that the WTO says violates export-subsidy rules.
... Products of AMF Bowling Products Inc., a unit of AMF Bowling Worldwide, are on the EU's retaliation list. The company estimates that as much as 30 percent of its $125 million in annual revenue comes from sales of bowling alley equipment in the EU. "I would view that business as being significantly at risk if these tariffs get passed," said company president John Walker. AMF may lose sales to Brunswick Corp., which has a factory in Hungary, and to Asian competitors, he said.
Tariffs are bad. Trade wars are really bad.
AB
Saturday, November 29, 2003
Are Faculty in the Humanities Liberal?
Yes, almost surely so. But Stanley Fish, Dean of the College of Liberal Arts and Sciences at the University of Illinois at Chicago, has what I think is the right response:
David Brooks is only the most recent sage to point out that, especially in the humanities and social sciences, a huge percentage of the faculty is self-identified as left of center. The result, says Brooks, a columnist for the Times, is a small brave band of conservative professors and students who are the victims of discrimination and can cope only if they "keep their views in the closet."
This is a mixture of nonsense and paranoia. In any institution I have ever taught at, conservative students are more vocal than their counterparts, especially when they are complaining loudly that their voices aren't being heard. And as for the assertion that "faculties skew overwhelmingly to the left," I would say first, that it is a supply-side problem -- if conservatives really want to spend their lives teaching modern poetry and Byzantine art, they should stop whining and do the dissertations and write the books, and they'll get the jobs -- and second, that it's not a problem.
It really would be that simple, but incessant whining is much easier than the hard work required to complete a dissertation in the humanities, endure years of meager pay as a post-doc, and then perhaps finally land a tenure-track position.
AB
Friday, November 28, 2003
Even the Pro-Free Trade Paul Krugman
Via Matt Yglesias, Paul Krugman offers some thoughts that I think a fair number of Angry Bear readers will agree with:
First and foremost, the promise of export-led growth has failed in too many places. In particular, Latin America has signally failed to replicate Asia's success: Latin nations have liberalized, privatized and deregulated, with results ranging from disappointing (Mexico) to catastrophic (Argentina). Open world markets, it seems, offer the possibility of economic development — but not an easy, universal recipe.
Meanwhile, competition from newly industrializing economies does hurt some workers in advanced countries. I could tell you how sensible government policies could minimize this cost, but since we don't have those policies and aren't about to get them, free trade is, in reality, a morally ambiguous issue. And someone in my situation has to acknowledge being in a particularly weak moral position, since they aren't yet having newspaper columns written in Bangalore.
AB
Thursday, November 27, 2003
More Reading For Your Thanksgiving Enjoyment
This one is suitable for children, but should be digusting to everyone. Bob Novack, in the Sun-Times:
On the House floor, Nick Smith was told business interests would give his son $100,000 in return for his father's vote. When he still declined, fellow Republican House members told him they would make sure Brad Smith never came to Congress. After Nick Smith voted no and the bill passed, Duke Cunningham of California and other Republicans taunted him that his son was dead meat.
Perhaps if they had hinted that, should Smith fail to vote for the package, the $100,000 would instead be used to take out a contract on his family, Smith would have caved.
Via Suburban Guerrilla.
AB
The Era of Big Government, Continued
In the NYT today: Broad Bills Stuffed With Lawmakers' Pet Items. Some highlights:
- "A provision benefiting a specific hospital in Tennessee was added to the Medicare bill at the last minute in an effort to get the vote of Representative Harold E. Ford Jr., Democrat of Tennessee ... Mr. Ford's father, a former congressman, is a lobbyist for the hospital." [Ford still voted against the bill; we'll see if they take out the provision in conference.]
- "The energy bill includes $1 billion for a new nuclear reactor in Idaho, $800 million in federal loan guarantees for a coal gasification plant in Minnesota and tens of millions of dollars in subsidies for timber companies to log national forests for energy production."
"The Medicare bill establishes a "special payment for brachytherapy," a procedure that uses radioactive "seeds" to treat a wide array of cancers. The bill stipulates that Medicare will pay for the seeds, in addition to the procedure required to implant them.
Two Georgia Republicans, Senator Saxby Chambliss and Representative Nathan Deal, proposed the new method of payment. Theragenics, which produces and sells seeds for use in brachytherapy, is based in Buford, Ga." [Won't the free market direct more resources to Theragenics if their seeds are truly useful?]
- "Congress also agreed to a proposal to help a Missouri company, Briggs & Stratton, one of the world's largest producers of gasoline engines for lawn mowers and other outdoor equipment."
- "The energy bill includes a section that would make it easier for a consortium of European and American companies, Louisiana Energy Services, to build a $1.2 billion uranium processing plant for nuclear energy near Hobbs, N.M."
Seriously, conservatives. This is big government at its worst, Sixties-Style but without the redeeming benefit of at least being targeted at the downtrodden.
AB
UPDATE: I just realized that I should have titled this "Have some pork with your turkey." Happy Thanksgiving!
In Case You Haven't Seen It Yet ...
... I offer you this exchange for your Thanksgiving amusement (warning: not suitable for children):
AB[Neil Bush's] ex-wife's attorney sounded skeptical. "Mr. [Neil] Bush, you have to admit it's a pretty remarkable thing for a man just to go to a hotel room door and open it and have a woman standing there and have sex with her," said Brown.
"It was very unusual," the errant husband replied.
Wednesday, November 26, 2003
Medicare Drug Benefit
The Washington Post has an impressively informative piece on the new Medicare drug benefit--they numbers are detailed and useful. In fact, I hereby nominate the authors, Edward Walsh and Bill Brubaker, for the Bush Budget Beat through at least the 2004 elections. Had work like this been common throughout 1999 and 2000, the election could well have turned out differently. It was known, but not covered, at the time that Bush's budget proposals didn't add up. But I digress. Based on the numbers in the Walsh and Brubaker piece, I came up with a chart comparing total drug costs (on the X-axis) to total out of pocket costs (Y-axis). Note that where the line is flatter the portion covered by the government is higher; where the line is steeper, the portion covered is lower.
First, a few comments. The chart below shows the benefit starting in 2006; the interim plan consists of, well, coupons basically. Second, click on the graph below to open up a larger graph with more details and explanation. I may have more to say about this soon, but at first sight, it seems like a decent plan for the somewhat sick (drug costs between $800 and $2500) and the extremely sick (drug costs well over $5000), but for the elderly who fall in between those extremes, the plan will only cover 36% of drug costs (for an enrollee with $3000 in drug costs) to 21% (for an enrollee with $5100 in drug costs).
Also, the plan in the chart is for the 27.5 million seniors making more than 150% of the poverty line. The 6 million seniors below the poverty line who previously had drug coverage under Medicaid will continue to have coverage ($1 generic and $3 branded). The 4.5 million seniors not eligible for Medicaid but earning less than 135% of the poverty line will receive generous coverage ($2 for generics and $5 for branded). The 2 million seniors earning between 135% and 150% of the poverty line will have a $50 deductible and pay 15% of their drug costs thereafter. Again, all of this is for 2006 and after. In the meantime, the plan is to give billions in subsidies to insurance companies in exchange for discount cards (the aforementioned "coupons").
AB
UPDATE: I plan to comment on this a bit more (it's boring but important), but in the meantime, Mark Kleiman has a good preliminary list here.
Why are Bond Yields Still so Low?
One of the fundamental conclusions of basic macroeconomics is that when the economy booms, interest rates should rise. That’s because when the economy is doing well, people and businesses borrow more money to finance their spending and investment. When the demand for borrowed money rises, we know that the cost of borrowing money will rise – i.e. interest rates will go up. And lately we’ve had a raft of data showing that the economy is recovering very nicely, thank you. GDP growth was revised up to 8.2% in the July-September quarter. Employment grew in September and October. Home construction is at record levels.
If the economy is improving so strongly, then why in the world have long-term interest rates fallen over the past two months?
The Economist’s Buttonwood column has this to say about it:
The simple explanation for this... is that investors sense a chill beneath the warm glow of the numbers. One cold wind blowing across this particular recovery is that Americans are up to their necks in debt. With short-term interest rates at a 45-year low, households are spending some 13% of their disposable income on servicing their debts—a higher number even than in the sharp recession of the early 1980s, when the Federal funds rate topped 13%. How much longer can they carry on spending at this rate, let alone increase it? If they don’t, then someone else will have to spend on their behalf.This echoes the concerns that I raised in this earlier post. But The Economist goes on to add that there’s a more fundamental problem that the US economy will be facing over the next several years: the economic leadership of George Bush. As Buttonwood puts it, “George Bush is a man who wants to get re-elected and seems prepared to sacrifice the long-term economic good—assuming (a big assumption) he knows how it is best served—to get back into the Oval Office.”
The government, perhaps? The Bush administration has turned a budget surplus of 2.4% of GDP into a deficit that official numbers say will amount to 4.3% of GDP next year. Not much room, in other words, to raise spending. Nor do American companies have oodles of money to play with. For all the talk of restructuring, they continue to increase their borrowing, though at least a slowdown in the rate at which they borrow and better profitability mean that their dreadful financial ratios are starting to look better than they were. Whether they will continue to do so is another matter.
Good point.
Kash
Reflections on Medicare and the Democratic Party
Take a look at this bit of fascinating analysis of the Medicare fight by the Washington Post:
For Democrats, A Wake-Up CallThe piece suggests that people in Washington are getting used to the idea of Republican dominance for the foreseeable future. I have to say, after this week, I’m starting to see why. This story reminds me of the Tory party in Great Britain – a party that, as the years have gone by since Tony Blair first defeated it, has gone from moderate losses to huge losses, from disorganization to utter disarray, and from being the party of the loyal opposition to being virtually irrelevant. Could the same fate be store for the Democratic party?
Democrats have owned the Medicare issue for nearly 40 years. But this week, the Republicans climbed into the driver's seat and mashed the gas pedal. In closed-door sessions that excluded nearly all Democrats, through rule-bending roll calls, dishing out goodies to friends and twisting arms of the recalcitrant, the Republicans passed $400 billion worth of changes. Democrats spent the day picking carpet fibers out of their hairdos and sorting out their reactions.
Should they be outraged or envious in the face of GOP audacity and discipline? Disheartened or energized by President Bush's latest victory? This inability to choose a voice, to stick to one path, was a worrisome sign for many Democrats -- especially after such a disorienting year for the party.
Longtime party strategist Harold Ickes was at a loss to see any upside to a Republican victory in an area Democrats have always owned. He said he was flabbergasted that key Democratic senators, led by John Breaux (La.) and Max Baucus (Mont.), went along with it... "We just don't have the discipline on our side that's needed."
Robert Borosage of the Campaign for America's Future blamed Senate Minority Leader Thomas A. Daschle (D-S.D.) for the collapse. In the House, he said, Minority Leader Nancy Pelosi (D-Calif.) held the line so effectively that Republicans had to hold open their middle-of-the-night vote for nearly three hours on Saturday -- the longest flouting of the 15-minute rule in House history -- just to eke out a win. After which the Democratic filibuster in the Senate swiftly collapsed.
"There's clearly an absence of forceful leadership at the top of the Senate," Borosage said. "In the Senate we saw the difference between the other side's discipline and our lack of it, and I think Democrats are disappointed in the extreme."
Kash
Tuesday, November 25, 2003
Corporate Responsibility
Nice move by Boeing:
Michael Sears, executive vice president and chief financial officer of Boeing Co., had the required pedigree and background to become the next chairman and chief executive of the Chicago-based company.
But on Monday, Sears, 56, a resident of Lake Forest, was fired from his $1.2 million-per-year job. His wife said he was unavailable for comment.
[snip]
Sears' undoing came in the wake of a scandal over an Air Force lease/purchase contract for 100 refueling tankers based on the Boeing 767 airliner.
The company said Sears, a member of Boeing's three-member Office of the Chairman and the second-ranking officer of Boeing, was fired for violating company policies by communicating with Darleen Druyun, then an Air Force purchasing official, about future employment, when she hadn't disqualified herself in matters involving Boeing.
The firing came shortly after Boeing said it learned of Sears' discussions with Druyun. Druyun also was fired.
AB
Era of Big Government, Continued
While the energy bill is down, Pork remains at an all time high. Via Calpundit, see the "Grand Old Porkers: Special Favor 'Earmarks' contained in Annual Labor-HHS-Education Appropriation Bills" report by the minority staff of the House Appropriations Committee. (Needless to say, Pork is up since Republicans took over. Way Up.)
AB
Nice Job
Except for you, Tom Ethanol Daschle:
Washington -- The White House and Republican leaders Monday abandoned a vigorous effort to try to revive a sweeping energy bill this year after a liability waiver for the makers of a gasoline additive stalled the measure last week.AB
Monday, November 24, 2003
Why does Kurtz Have a Job?
Here's Kurtz on Gephardt's criticism of Dean's willingness as governor to cut spending, including spending on social services, to balance Vermont's budget:
Does Gephardt really want to argue that balancing the budget (which states, by the way, are constitutionally required to do) is bad?
In case it's unclear, the parenthetic is Kurtz speaking. However, the parenthetic is false.(*) Many, in fact the majority of, state constitutions prohibit deficit spending (even those states use tricks to circumvent their constitution), but there is no constitutional requirement that all states balance their budgets. Admittedly, Kurtz claims to be a media critic, but when he wanders into politics, which is most of the time, he should make a small effort to know what he's talking about. On the other hand, his job security appears to be unrelated to the quality of his work, so why bother?
AB
(*) The U.S. Constitution, Article I, Section 10 says
No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.
The prohibition on "bills of credit" may make it appear that Kurtz is right (notwithstanding the factual counter-evidence: States do run deficits), but this is really a prohibition on states issuing currency. Tom DeLay helpfully defines the term for us: "bills of credit: A paper medium of exchange, intended to circulate between individuals and between government and individuals, whether or not the quality of legal tender is imparted to such paper."
The Era of Big Government, Continued
Yes, it was on hiatus for a bit in the 1990s, but it's back with a vengance. First, the energy bill. Now the Republicans are using the same pork belly tactics on all of their bills (DeLay to recalcitrant Republican Congressperson: "how many millions of taxpayer money would it take to get your vote?"):
As Congress rushes to conclude its 2003 session, Republican leaders are trying to garner votes for controversial legislation by loading the bills with billions of dollars in added costs that analysts said would expand the budget deficit for years to come. The year-end binge has alarmed analysts in Washington and on Wall Street, coming as it does after three years of presidential and congressional initiatives that have both substantially boosted government spending and shrunk its tax base."The U.S. budget is out of control," the Wall Street investment firm Goldman Sachs & Co. warned Friday in its weekly newsletter to clients.
As the post story recounts, massive amounts of pork are flowing into bills covering Energy, Medicare, Veterans Affairs, Forest-thinning projects, funding for Iraq, and I'm sure everywhere else.
I'll have to second Warren Rudman's take, which is tantamount to my earlier take, "It's your children's money. Quick! Take it!":
"The only thing I can tell you is evidently the word 'tomorrow' no longer exists in the vocabulary of otherwise responsible members of Congress," said Warren Rudman, a former New Hampshire Republican senator and long-standing budget hawk. "They are acting as if there is no tomorrow."And,
"It is puzzling, unless you take the most cynical political view of 'I've got to do what I've got to do, and whatever bad that's going to happen is not going to happen on my watch,' " he said, trying to explain lawmakers' motivations. "If that is what's happening, we are facing the Titanic of fiscal crises in eight to 10 years."
There's a lot more in the full story -- all disgusting. Democrats aren't blameless in this (witness Daschle's selling out for ethanol subsidies), but as the party in control of the House, Senate, and White House, this spending is certified 94% Republican (96% if you count Zell Miller as a Republican).
AB
Sunday, November 23, 2003
At Least we’re Popular in Northern Iraq…?
I thought that anti-American feelings in Iraq are confined to the Sunni triangle, as Bush and Co. tell us? Mosul is in northern Iraq, on the edge of Kurdistan… where the US is supposed to be popular.
MOSUL, Iraq - Gunmen killed two American soldiers driving through this northern Iraqi city Sunday, and then a crowd swarmed the scene, looting the soldiers' vehicle and pummeling their bodies, witnesses said. Another soldier was killed in a roadside bombing north of Baghdad.If one or two gunmen kill an American soldier, it doesn’t necessarily represent Iraqi opinion. But when a crowd of randomly selected individuals (i.e. those that were passing by at the time of the attack) decide to loot and mutilate the American soldiers, that says something very worrying about US popularity in a city that is supposed to be one of the most pro-American in Iraq.
Bahaa Jassim, a teenager, said the soldiers' vehicle crashed into a wall after the shooting. Several dozen passers-by then descended on the wreckage, looting the car of weapons and the soldiers' backpacks.
After the soldiers' bodies fell into the street, the crowd pummeled them with concrete blocks, Jassim said.
Kash
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