Kevin Drum - November 2011

Chart of the Day: How Not to Create Jobs

| Wed Nov. 16, 2011 1:23 PM EST

Chuck Marr of CBPP notes that the CBO recently studied a laundry list of job creation proposals and concluded that higher unemployment benefits had the biggest bang for the buck. "That’s not surprising," he says, "given that jobless people are severely cash constrained and would quickly spend most of any incremental increase in cash and that, in turn, would lead to higher demand and job creation."

But which proposal came in last? You'll have to scroll wa-a-a-a-y down to the bottom of this chart to see it, but the answer is: a tax repatriation holiday for big multinational corporations. So riddle me this: What is Congress more likely to pass? A program that benefits the 99% and creates lots of jobs? Or a program that benefits the 1% and creates hardly any jobs at all? Hmmm....

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Deal? What Deal?

| Wed Nov. 16, 2011 12:20 PM EST

As the supercommittee slouches toward its inevitable doom, Republicans are setting the table to renege on the deal they signed up for this summer. If the committee fails to come up with a plan, and the automatic cuts to domestic and defense spending are triggered, well, they'll just have to go back to the table and eliminate the defense cuts. Dave Weigel explains the all-too-obvious next step:

This isn't how it's supposed to work. The cuts are supposed to be stupid. They're so stupid that everyone will be forced to the table, lest they be responsible for taking a Sam Raimi chainsaw to the defense budget and Medicaid. The correct answer to Kudlow etc is some version of "Well, we're not going to fail, because if we do we will have to pass these triggers." Instead, Republicans are talking about rejiggering the triggers, which would set up a fight on defense spending, which Democrats would be hard pressed to win when they don't control the House and when 21 of their senators are vulnerable to truth-remixing Crossroads GPS ads about how they literally pried guns out of the hands of soldiers. Best case scenario: This is a GOP negotiating tactic. Worst case scenario?

The trigger is supposed to be $600 billion in domestic cuts and $600 billion in defense cuts. But how many Democrats will be willing to stick to their guns and allow the Pentagon cuts to go forward if the supercommittee fails? Not enough, probably, and Republicans know it. What's more, they've always known it, which is why they've never taken the trigger seriously. Reneging on this summer's deal was baked into the cake from the day it was proposed.

This is, after all, a party that was willing to allow the United States to default on its debt in order to get its way. To a party like that, a deal is just a meaningless piece of paper. It's unlikely that Democrats have the spine to deal with that kind of attitude — they certainly haven't up to now — which means they'll probably give in on domestic spending.

Alternatively, Congress will do what it does best: it will resort to budget gimmicks, pat itself on the back, and head home for the holidays. Given the alternatives, that actually might be the best possible outcome.

Newt Gingrich's $300K Jackpot

| Tue Nov. 15, 2011 9:28 PM EST

When CNBC's John Harwood asked Newt Gingrich what he did to earn $300,000 consulting for Freddie Mac, he said that he offered them historical advice. This is so plainly implausible that there's not much point in wasting time pretending to take it seriously enough to debunk it, but Bloomberg reporters Clea Benson and Kristin Jensen took the time anyway. That's professionalism for you. And the real answer turns out to be sort of interesting in a way. Gingrich, we're told, didn't perform any lobbying:

Freddie Mac officials expected Gingrich to provide written material that could be circulated among conservatives on Capitol Hill and in outside organizations, said two former company executives familiar with Gingrich’s role at the firm. And executives looked to him to help them find innovative ways to address the problems confronting Freddie Mac, said an official familiar with the company’s internal dynamics.

The former speaker attended brainstorming sessions with Freddie Mac’s management. He didn’t produce a white paper or any other document the firm could use on its behalf.

Impressive! Gingrich was expected to provide written material, but whatever that was, it wasn't substantial enough to even be called a white paper. All he did, apparently, was shoot the breeze with company brass, schmooze donors to Freddie's PAC, and give a speech or two. For that he got paid $300,000.

That's some pretty lucrative historical advice, no? Where do I sign up for this kind of payday?

Deconstructing Newt

| Tue Nov. 15, 2011 6:46 PM EST

John McWhorter deconstructs the verbal tsunami that is Newt Gingrich:

Gingrich's patterns of speech are largely analytically acute, and sometimes aesthetically interesting, but substantively, they are very often lacking. Language is supposed to be a package that carries substance, but Gingrich is sometimes so pleased with his uninterrupted stream of words, that he mistakes it for an actual flow of ideas.

Fair enough. But I'd put it a little differently: Gingrich's favorite debate ploy is to avoid answering tough questions by immediately zooming out to a million-foot level and explaining imperiously how enormously complex everything is. It's all so impressive sounding that he seldom has to bother telling us just what he'd do about any of this enormously complex stuff. Here are a few examples from the most recent debate:

On negotiating with the Taliban:

Look, I think this is so much bigger and deeper a problem than we've talked about as a country that we don't have a clue how hard this is going to be. First of all, the Taliban survives for the very same reason that historically we said guerillas always survive, which is they have a sanctuary....So I think this has to be a much larger strategic discussion that starts with, frankly, Pakistan on the one end and Iran on the other, because Afghanistan is in between the two countries and is the least important of the three countries.

On cutting government:


On dealing with a loose nuke in Pakistan:

Well, look. This is a good example of the mess we've gotten ourselves into since the Church Committee so-called reforms in 1970s. We don't have a reliable intelligence service. We don't have independent intelligence in places like Pakistan....This is a very good example of scenarios people ought to look at seriously and say, "We had better overhaul everything from rules of engagement to how we run the intelligence community, because we are in a very dangerous world."

Gingrich is hardly the first blowhard in history to routinely talk this way, but he's certainly made it into a political art form. It all sounds very erudite, but mostly it just allows him to avoid concrete answers. And even when he does get concrete, he most often just ends up spouting buzz phrases like "Lean Six Sigma" and "human capital" and "Agenda 21."

This isn't because he has no concrete answers. When he wants to, he can be perfectly concrete. But when he doesn't feel like getting himself into a jam, he puts on his best world-weary expression, retreats to the million-foot level beloved of management consultants and tweedy professors, and then finishes off with a couple of trendy buzzwords. I often wonder just who he thinks he's kidding with this act, but it does have the virtue of baffling the masses with bullshit so that he can plausibly claim to be the most conservative guy on the stage without ever giving anyone an opening to prove otherwise.

TransCanada Agrees to Reroute Keystone XL Pipeline

| Tue Nov. 15, 2011 4:17 PM EST

The only thing that surprises me about this is that it didn't happen sooner:

The builders of the controversial Keystone XL tar sands pipeline agreed Monday to reroute it around Nebraska's ecologically fragile Sandhills in the hope the move would shorten any delay in the project, which has posed political complications for the Obama administration.

....The announcement came during a special session of the Nebraska Legislature and won immediate support from many lawmakers....Under the agreement with TransCanada, the Nebraska Department of Environmental Quality will join federal officials in preparing a supplemental environmental impact statement to study an alternative route around the Sandhills.

When the State Department issued its delaying order last week, its official position was that it needed more time to study the effect of the pipeline on the Ogallala aquifer, especially the Sandhills section where a rupture could easily seep pollutants into the water supply. So why did the Keystone folks refuse to consider rerouting in the first place? Why not spend a little bit more and take away the Obama administration's easy excuse for delay?

It is a mystery. I guess they thought they didn't need to. In any case, TransCanada's suggestion that maybe now the State Department will consider making a decision in a few months, instead of dragging things out for a year or more, is charming but clearly a nonstarter. It's pretty obvious that "12 to 18 months" means "sometime after November 6, 2012." If Obama wins reelection, I don't doubt for a second that he'll wait a decent interval and then approve the new routing. The victory of the environmental movement over Keystone XL was almost certainly just a temporary reprieve.

The Fate of Obamacare

| Tue Nov. 15, 2011 1:57 PM EST

The Supreme Court agreed yesterday to decide if Obamacare is constitutional, and in particular, whether the individual mandate is constitutional. One senator thinks it's all a big nothingburger:

Sen. Sheldon Whitehouse (D-R.I.), a former state attorney general who sits on the Judiciary Committee, said that the individual mandate might very well fall, but that the law’s defenders have gotten “overexcited” about it.

....“So the mandate falls? Big deal,” Whitehouse said. “I think a family able to keep their sick kids on insurance even though they have pre-existing conditions, kids out of college able to stay on their parents’ policies while they look for that first job with healthcare — things like that are what will stick. Irrespective of what the Supreme Court says, that’s the things people really care about and are counting on.”

In a way, he's right. If the mandate falls but the rest of the law remains intact, what happens? Here's Scenario #1: In the 2012 election, Republicans win the presidency and big majorities in both houses of Congress, which gives them the power to repeal the whole thing. But if that's the case, then who cares what the Supreme Court does? The whole thing is going to get repealed anyway.

But Scenario #2 is more likely: Republicans don't win such a sweeping victory, which means that Democrats will be able to prevent them from repealing the rest of the bill, either by veto or by filibuster. Then what? Democrats will want to replace the mandate with something else that requires everyone to buy health insurance — maybe something tax based — but Republicans will kill it. So both sides will be stymied.

So then what happens? Answer: insurance companies go ballistic. If they're required to insure all comers at the same price but healthy people aren't required to buy insurance, then prices spiral as sick people sign up for coverage and healthy people drop out. Eventually this death spiral will lead — as the name implies — to death for insurance companies, and at that point it becomes a staredown. Something has to be done, and either Democrats or Republicans will blink first. It may seem like a no-brainer that Democrats will be the ones to cave if this happens, but that's not clear. All it takes is 41 holdouts to filibuster the GOP, and as the insurance industry gets ever more desperate they'll start pushing hard on their Republican pals.

Obviously the outcome is unclear. But depending on where public opinion falls — and requiring insurance companies to insure everyone is pretty popular — Congress might end up reinstating the mandate in some form or another. It's genuinely a crapshoot.

But will it come to that? I just emailed a friend that I'm too much of a coward to publicly predict what I think the Supreme Court will do, but admitting that privately has galvanized me into action. So here it is: I think they'll uphold the individual mandate 7-2, with Scalia and Roberts joining the majority. Does that sound crazy? Yes it does! But I've never thought this was a Commerce Clause case. There's no question that, in general, Congress has the power to regulate healthcare under the Commerce Clause. The real question is whether the Necessary and Proper Clause allows them to legislate an individual mandate as a reasonable way of implementing their regulatory goals. In the end, I think the government will be able to persuade both Scalia and Roberts that the individual mandate falls well within the scope of McCullough v. Maryland: "Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional." The individual mandate may not be the only way to accomplish Congress's goals, but I think the facts of the case provide an extremely strong basis for concluding that it's appropriate and "plainly adapted" to those goals.

So there you have it. I'm now on record with my first Supreme Court prediction, one with a strong chance of turning out to be idiotic. But I'm sticking with it for now. Believe it or not, I think that the case for constitutionality is clear enough that, in the end, both Roberts and Scalia will do the right thing even though it's not ideologically what they'd prefer. Feel free to mock me in comments.

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Solyndra Finally Produces a Mouse!

| Tue Nov. 15, 2011 12:34 PM EST

On the cosmic scale of political malfeasance, this still doesn't exactly peg the meter or anything, but it looks like the Solyndra affair finally has its first whiff of genuine scandal. From the Washington Post:


....On Oct. 25, 2010, Solyndra chief executive officer Brian Harrison e-mailed the energy department’s loan staff to explain that Solyndra “has received some press inquiries about rumors of problems”....Harrison’s e-mail was forwarded to program director, Jonathan Silver, who then alerted White House climate change czar Carol Browner and Vice President Biden’s point person on stimulus, Ron Klain.

October 25 was a week before the November midterms. After the White House folks were notified, apparently word was sent back that a delay of a few days would be appreciated:

In an Oct. 30, 2010 e-mail, advisers to Solyndra’s primary investor, Argonaut Equity, explain that the Energy Department had strongly urged the company to put off the layoff announcement until Nov. 3....“DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet,” a Solyndra investor adviser wrote Oct. 30. “They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd — oddly they didn‘t give a reason for that date.”

How odd! I'm sure there's an explanation for this. I just doubt that it's going to be a very good one.

Breaking: Clock of Doom Still Ticking in Europe

| Tue Nov. 15, 2011 12:16 PM EST

Well, that was quick:

In Italy, the honeymoon for Mario Monti, an economist who became the country’s premier designate on Sunday, was quickly ending. Monti was holding intense meetings with Italy’s notoriously divided political parties on Tuesday to win backing for a new cabinet. But after an initial recovery in Italian bonds, investors again drove Italy’s borrowing rates above the unsustainable 7 percent mark.

The eurozone economy is flat; Germany's central banker announced in no uncertain terms yesterday that the ECB had better not provide liquidity to markets in any way, shape, or form; Angela Merkel told her own party that the answer to Europe's woes was more fiscal integration, something that obviously isn't going to happen anytime soon; and the fundamentals of the eurozone's problems haven't really changed a bit. Put all that together, and everything is unsurprisingly sliding right back into chaos. Tick tick tick.

Bloomberg to Occupy Wall Street: Drop Dead

| Tue Nov. 15, 2011 2:37 AM EST

It's late and there aren't many details yet, but apparently Mayor Bloomberg has decided it's time to end the Occupy Wall Street protest. This is from the New York Post:

From the Post story:

The NYPD has begun evicting the hundreds of Occupy Wall Street demonstrators that have been encamped in Zuccotti Park for almost two months....Hours before the massive operation commenced at around 1 a.m., Mayor Bloomberg, Police Commissioner Ray Kelly, Fire Commissioner Sal Cassano and other officials convened in secret at City Hall to greenlight the campaign to clear the park, sources said.

....Cops handed out flyers early this morning declaring that, "The city has determined that the continued occupation of Zuccotti Park poses an increasing health and fire safety hazard," to protesters as well as first responders, and ordered personal property removed.

The real motivation for Bloomberg's action appears to be OWS's announced plan to "Shut Down Wall Street" and "Occupy the Subways" on Tuesday. Check your Twitter feed for the latest. MoJo's @JoshHarkinson and @jameswest2010 are both tweeting live from Zuccotti Park.

Yet More on the GOP Clown Show

| Mon Nov. 14, 2011 8:29 PM EST

From Herman Cain, after an excruciating 60 seconds in which he wracked his brain to figure out what he thought about Libya:

Here's what I would have done. I would have done a better job of determining who the opposition is — and I'm sure that our intelligence people have some of that information. Based on who made up that opposition might have caused me to make some different decisions about how we participated.

So what's the best interpretation of this? That the intelligence community knew who the Libyan opposition was but withheld some of that information from President Obama, causing him to make a poor decision? Really, Herman?

Anyway, the official excuse for this is lack of sleep: "He was tired," said J.D. Gordon, Cain's spokesman and national security adviser. No doubt. During the same interview he also changed his position on collective bargaining rights, and that came right on the heels of GQ publishing an interview in which he revealed that a secret source has informed him that a majority of American Muslims are extremists.

But he's still up in the polls, so we have to continue to pretend to take him seriously. Sigh.