Kevin Drum

Let's Please Put the Myth of the Iron-Willed Putin to Rest Once and For All

| Sun Mar. 9, 2014 10:16 AM GMT

Here is Doyle McManus today:

When Barack Obama won the presidency in 2008, one of his selling points was the promise of a more modest foreign policy than that of his predecessor. And when Obama won reelection 16 months ago, he renewed that pledge....Mitt Romney warned at the time that Obama wasn't being tough enough on Vladimir Putin, but the president scoffed at the idea that Russia was a serious geopolitical threat.

It's not quite fair to accuse Obama of direct responsibility for Putin's occupation of Crimea, as Sen. John McCain (R-Ariz.) and other hawkish critics have. After all, Putin invaded Georgia in 2008, when George W. Bush was president, and no one accused Bush of excessive diffidence in defending American interests.

But it's still worth asking: Has Obama's downsizing of U.S. foreign policy gone too far?

This stuff is driving me crazy. Later in the piece, McManus mentions Obama's Middle East policy, and I suppose that's fair game: Obama really has downsized our military footprint there. Personally, I'm just fine with a president who conducts foreign policy in the interests of the United States, regardless of whether Israel and Saudi Arabia approve, but I suppose your mileage may vary. Feel free to argue about it.

But it's nuts to talk about Ukraine the same way. Putin didn't invade Crimea because the decadent West was aimlessly sunning itself on a warm beach somewhere. He invaded Crimea because America and the EU had been vigorously promoting their interests in a country with deep historical ties to Russia. He invaded because his hand-picked Ukrainian prime minister was losing, and the West was winning. He invaded because he felt that he had been outplayed by an aggressive geopolitical opponent and had run out of other options.

None of this justifies Putin's actions. But to suggest that he was motivated by weakness in US foreign policy is flatly crazy. He was motivated by fear; by shock over the speed of events in Kiev; by a sense of betrayal when the February 21 agreement collapsed; by nationalistic fervor; by domestic political considerations; by provocative actions from the new Ukrainian parliament; by an increasing insularity among his inner circle; and by just plain panic.

The one thing he wasn't motivated by was US weakness. Can we at least get that much straight?

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Obamacare Rate Shock Probably Affects Less Than 1 Percent of the Country

| Sat Mar. 8, 2014 3:11 PM GMT

Like most human beings, I love it when I turn out to be right. Or even when someone provides evidence that I might be right. So naturally I'm thrilled that a pair of researchers have confirmed my horseback estimate that 1-2 million people may have suffered from canceled policies and rate shock during the introduction of Obamacare.

How did they go about it? Well, it's really hard to use raw number crunching to figure out how many people in the individual health care market had their policies canceled. Clean data just doesn't exist. But there's a way to cut through this Gordian Knot: just ask people. In December 2013, the Health Reform Monitoring Survey did just that, and concluded that about 18.6 percent of those with individual health insurance reported that their policies were no longer being offered to them. The best estimate we have is that about 14 million people had individual policies last year, which means that 2.6 million people faced cancellation:

Many whose non-group policy was cancelled appear to be eligible for Marketplace subsidies or Medicaid....While our sample size of those with non-group health insurance who report that their plan was cancelled due to ACA compliance is small (N=123), we estimate that over half of this population is likely to be eligible for coverage assistance, mostly through Marketplace subsidies. Consistent with these findings, other work by Urban Institute researchers estimated that slightly more than half of adults with pre-reform nongroup coverage would be eligible for Marketplace subsidies or Medicaid.

So that means about 1.3 million people had their policies canceled and had to pay full freight for a new policy. Since the error bars on this estimate are fairly large, that comes out to somewhere in the neighborhood of 1-2 million people. In other words, less than 1 percent of the country, mostly made up of people with incomes that are higher than average.

You can decide for yourself if this is a lot or a little. My own take is that it's pretty modest given that Obamacare probably benefits about 20-30 million people. Any big new piece of policy is going to have winners and losers, and a ratio of 20:1 or so is about as good as it gets in the real world.

Sheriff's Deputies Confirm Newsweek's Bitcoin Quotes

| Fri Mar. 7, 2014 6:32 PM GMT

Newsweek's Leah McGrath Goodman claims that she's located the reclusive Bitcoin inventor "Satoshi Nakamoto." Earlier today, I suggested that (a) her primary piece of evidence was a brief conversation she had with Nakamoto in front of his home with sheriff's deputies present, and (b) this could be pretty easily checked. Sure enough:

The San Gabriel Valley suburb of Temple City  was inundated by reporters Thursday after Newsweek alleged resident Dorian Nakamoto was really "Satoshi Nakamoto," the man behind the virtual currency. In the Newsweek article he is quoted as telling the reporter "I'm no longer involved in that and I cannot discuss it" while deputies are present.

....Capt. Mike Parker said he has spoken to both deputies who responded to the suspicious persons call on Feb. 20. He said "one of the two deputies had heard of bitcoins but only knew vaguely about them" prior to the call. He said the reporters' statements and questions about Bitcoin prompted the conversation.


Count this as a very big piece of evidence that Goodman's reporting is accurate and that Temple City's Dorian Nakamoto really is the inventor of Bitcoin. It's not quite a smoking gun, but it's getting there.

Friday Cat Blogging - 7 March 2014

| Fri Mar. 7, 2014 1:05 PM GMT

Last weekend's rain has obviously traumatized Domino. Sunny skies may have returned to Southern California since then, but Domino has spent all week hiding in a blanket cave anyway, just in case the rain clouds return. Her humans failed her once, after all. There's no telling when we'll fail her again.

George Bush Lost an Entire Generation for the Republican Party

| Fri Mar. 7, 2014 12:45 PM GMT

Pew has released a new survey about the social and political attitudes of various generations, and it makes for interesting reading. The thing that strikes me the most is just how clear the trends are. Each successive generation is more politically independent; more religiously independent; less likely to be married in their 20s; less trusting of others; less likely to self-ID as patriotic; and less opposed to gay rights. There's virtually no overlap at all. It's just a smooth, straight progression.

But the single most interesting chart in the report is one that doesn't show this smooth progression. You've probably seen this before from other sources, but the chart on the right basically shows that for the past 40 years voting patterns haven't differed much by age. In fact, there's virtually no difference between generations at all until you get to the George Bush era. At that point, young voters suddenly leave the Republican Party en masse. Millennials may be far less likely than older generations to say there's a big difference between Republicans and Democrats, but their actual voting record belies that.

Whatever it was that Karl Rove and George Bush did—and there are plenty of possibilities, ranging from Iraq to gays to religion—they massively alienated an entire generation of voters. Sure, they managed to squeak out a couple of presidential victories, but they did it at the cost of losing millions of voters who will probably never fully return. This chart is their legacy in a nutshell.

Sanctions Against Putin Won't Do Much For Crimea, But We Should Impose Them Anyway

| Fri Mar. 7, 2014 12:00 PM GMT

Dan Drezner, after waiting an unconscionably long four or five days, has weighed in on the efficacy of economic sanctions against Russia:

Sorry, but the fact remains that sanctions will not force Russia out of the Crimea. This doesn't mean that they shouldn't be imposed. Indeed, there are two excellent reasons why the United States should orchestrate and then implement as tough as set of sanctions on Russia as it can muster.

First, this problem is going to crop up again. Vladimir Putin has now invaded two neighbors in six years to destabilize regimes perceived to be hostile to him. Post-Crimea, any new Ukraine government will continue to be hostile to the Russian Federation. There are other irredentist areas in the former Soviet Union — *cough* Transnistria *cough* — where Putin will be tempted to intervene over the next decade. At a minimum, he should be forced to factor in the cost of sanctions when calculating whether to meddle in his near abroad again. President Obama was correct to point out the "costs" to Putin for his behavior — now he has to follow through on that pledge.

Second, while sanctions cannot solve this problem on their own, they can be part of the solution. Over the long term, Russia does need to export energy to finance its government and fuel economic growth. Even if planned sanctions won't bite in the present, the anticipation of tougher economic coercion to come is a powerful lever in international bargaining. The closer the European Union moves towards joining the U.S. sanctioning effort, the more that Russia has to start thinking about the long-term implications of its actions. Any political settlement over the future of Ukraine will require compromise by the new Ukrainian government and its supporters in the West. Imposing sanctions now creates a bargaining chip that can be conceded in the future.

This mirrors my own judgment. Putin has very plainly decided that invading Crimea is worth the price, and it's improbable that economic sanctions—especially the scattershot variety that we're likely to put together in this case—will change that. Nevertheless, it needs to be clear that there really is a price. It also needs to be clear that face-saving compromises are still available to Putin that might lower that price.

For my money, the biggest price Putin is paying comes not from any possible sanctions, but from the very clear message he's now sent to bordering countries who have long been suspicious of him anyway. Yes, Putin has shown that he's not to be trifled with. At the same time, he's also shown every one of his neighbors that he can't be trusted. Two mini-invasions in less than a decade is plenty to ramp up their anti-Russian sentiment to a fever pitch.

Putin's invasion has already cost him a lot in flexibility and maneuvering room, and it's very unlikely that tighter control over Crimea really makes up for that. At this point, it's hardly a question of whether Putin has won or lost. It's only a question of just how big his losses will be.

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Divided Government Isn't Going Away Anytime Soon

| Fri Mar. 7, 2014 10:54 AM GMT

Ronald Brownstein pithily sums up our current electoral dilemma:

Republicans can't attract enough minorities to consistently capture the White House. Democrats can't win enough whites to consistently control Congress.

Neither party has a lock on any branch of government. But Republicans are getting weaker and weaker nationally, which makes it very difficult for them to capture the White House. Midterm elections, however, which feature lower turnouts and depend on state and district voting, pose a problem for Democrats.

Obviously details still count. Republicans have a good chance of taking the Senate this year because Democrats are defending a lot of weak seats. Conversely, Democrats have a good chance of taking the Senate in 2016 because Republicans will be defending a lot of weak seats. Nonetheless, we do seem to be entering an era in which Democrats have an ever stronger edge in presidential elections and Republicans have an ever stronger edge in congressional elections, especially midterms. Unless something changes, we can probably look forward to divided government for a long time.

Did Newsweek Dox the Wrong Satoshi Nakamoto?

| Fri Mar. 7, 2014 9:44 AM GMT

Is Dorian Satoshi Nakamoto of Temple City, California, the same "Satoshi Nakamoto" who invented Bitcoin? Newsweek's Leah McGrath Goodman says he is in a cover story here, and Felix Salmon does a good job of running through the evidence here. Matt Yglesias is skeptical:

Here's the question of Newsweek's Bitcoin "scoop," as I understand it—is the fact that a person is named "Satoshi Nakamoto" good evidence that the person in question is the originator of Bitcoin? If it is, then all of the other evidence regarding this particular Satoshi Nakamoto is telling....But absent the name, there is very little here.

I don't agree. The key evidence is this conversation that Goodman had with Nakamoto in front of his home:

Tacitly acknowledging his role in the Bitcoin project, he looks down, staring at the pavement and categorically refuses to answer questions.


Nakamoto says he was misunderstood. His English isn't great, and he was just referring to no longer being an engineer. Goodman, however, says this is nonsense. "I stand completely by my exchange with Mr. Nakamoto. There was no confusion whatsoever about the context of our conversation — and his acknowledgment of his involvement in bitcoin."

In any case, this is the key piece of evidence. If Goodman is right, then Nakamoto is now covering up after making a momentary slip. But if Goodman stretched the quote a bit to make it sound cleaner than it was in real life, then Nakamoto is very likely in the clear.

Last night there was some chatter on Twitter about whether Goodman's story sounded right. She made a mistake identifying LA County sheriff's deputies as "police officers from the Temple City, Calif., sheriff's department," for example, and some of her quotes seem a little too good to be true. Personally, I wasn't persuaded. The former is a minor error, and I didn't find the quotes all that hard to believe. What's more, Goodman was very transparent about how she tracked down this story and what her sources were. There's nothing obscure about any of it. It's a very, very public story and, thanks to Goodman's transparency, one that's pretty easy to check. If Goodman made any of it up, she sure chose a very spectacular way to commit career suicide.

All that said, Karl Smith has a piece at FT Alphaville that compares some of Dorian Nakamoto's writing to that of the Nakamoto who wrote the original Bitcoin proposal. He's pretty persuasive that they don't seem to match. This isn't a smoking gun or anything, but it definitely gives us fresh reason to be skeptical.

In any case, tracking down the real identity of "Satoshi Nakamoto" is hard, but I suspect that verifying whether Dorian Satoshi Nakamoto of Temple City is the same guy isn't. One way or another, I have a feeling that someone is going to clear this up definitively within a week or two. Maybe sooner.

Chart of the Day: Net New Jobs in February

| Fri Mar. 7, 2014 8:30 AM GMT

The American economy added 175,000 new jobs in January, but about 90,000 of those jobs were needed just to keep up with population growth, so net job growth clocked in at 85,000. If we accept the notion that bad weather has been holding back the economy, that's pretty good. If we don't, it's mediocre—but still better than the past couple of months of dismal job numbers.

The unemployment rate ticked up to 6.7 percent, caused almost entirely by an increase in the number of long-term unemployed. Since long-term unemployment isn't much affected by weekly variations in the weather, my guess is that our severe winter hasn't played a big role in the job picture. This is confirmed by the establishment data, which shows that construction employment is up while retail and IT employment are down. That's not bulletproof evidence or anything, but it's not the kind of thing you'd expect to see if weather were a big factor. It's what you'd expect to see if consumer spending is weak.

Bottom line: we continue to plod along. Things could be worse, but they still aren't very good.

Texas Turns Out to Be Not So Miraculous After All

| Thu Mar. 6, 2014 9:28 PM GMT

Over at the Washington Monthly, Phillip Longman rocks like it's 2012 and relitigates the question of whether Rick Perry's so-called Texas Miracle is fact or fiction. He concludes that it's mostly fiction, and he makes a good case. Not a bulletproof case, but a good one. What's more, to the extent that Texas really does have a strong economy, he says, it's largely due to fracking, immigration from across the border, and a high birth rate. It's not due to low taxes—at least, not for most Texans:



The chart below tells the tale (data here). Most Texans pay more in taxes than most Californians. But rich Texans pay a lot less. That's great for rich Texans, but not so much for everyone else. For the middle class, Texas isn't a low-tax/low-service state, and it's not a high-tax/high-service state either. It's the worst of all worlds: a high-tax/low-service state. Yee-haw!