The American Conservative » The Senate Jumps the Shark

Senators aren’t asking tough questions, and Kagan isn’t providing penetrating answers. But who could have guessed how quickly the proceedings would devolve from mere theater into farce? After Kagan indicated she was a leading legal mind who apparently had no political views whatsoever, and not much more in the way of judicial philosophy, Senator Amy Klobuchar asked her to take a stand on the really contentious issue of our era: Team Edward or Team Jacob?

via amconmag.com

The question, by the way, came from Senator Klobuchar of Minnesota. I'll resist the urge to make a joke at the expense of our neighbors to the west and say that I can only surmise she feels the need to be jocular at hearings in order to keep up with the other Senator from Minnesota, Al Franken.

Posted via email from rhymeswithclown's posterous

This Time Will Be Different: PAYGO Edition

The Congressional Budget Office has released a new long term budget outlook which has elicited varied reactions, even among those who are supportive of President Obama and his policies. Here's Budget Director (for now) Peter Orszag:

The Congressional Budget Office today released its long-term budget outlook. Just like the long-term outlook in our own Budget, the CBO report concludes that we are on an unsustainable fiscal course. About this, there is no ambiguity.

But here's liberal blogger Matthew Yglesias, who appears to have found at least some ambiguity:

if congress sticks by current law the fiscal situation is more-or-less okay for the next 20-25 years. It’s also true that according to the CBO and most everyone you meet, Congress seems unlikely to do that. So the message here should be: “Congress! Don’t live up to your bad reputation! If you don’t want to enact scheduled tax increases and payment cuts to doctors, then you ought to pay for those moves.”

So basically we are on "an unsustainable fiscal course" but we are going to be OK as long as Congress sticks with the rules that are on the books, which include paying for additional spending and tax cuts. Those rules about spending are known as PAYGO, and they have simply not proven effective in the past, so why should this time be any different.

Here's Lakeshore Laments on Paygo:

The truth of the matter is, PAYGO is a giant smokescreen and always was; as pointed out by Appleton-native and one of D.C.'s smartest guys on the federal budget Brian Riedl points out in this Heritage Foundation web memo.

PAYGO has proven to be more of a talking point than an actual tool for budget discipline. During the 1991-2002 round of statutory PAYGO, Congress and the President still added more than $700 billion to the budget deficit and simply cancelled every single sequestration.[1] Since the 2007 creation of the PAYGO rule, Congress has waived it numerous times and added $600 billion to the deficit.

Creating a PAYGO law and then blocking its enforcement is inconsistent and hypocritical. And given their recent waiving of PAYGO to pass a $1.1 trillion stimulus bill, there is no reason to believe the current Congress and the President are any more likely to enforce PAYGO than their predecessors were. And even if it were enforced, PAYGO applies to only a small fraction of federal spending (new entitlements). Consequently, PAYGO is merely a distraction from real budget reforms that could rein in runaway spending and budget deficits.

Riedl goes on to point out the six problems with PAYGO.

1. PAYGO Would Not Decrease the Growth of Federal Spending.
2. PAYGO Exempts Discretionary Spending.
3. PAYGO Exempts Current Entitlement Benefits.
4. PAYGO Employs a Double Standard That Raises Taxes.
5. Previous PAYGO Statutes Were Never Enforced--Even Once.
6. Current PAYGO Rules Are Not Enforced.

It's usually those on the right who are charged with being immune to reality, but if the left is relying on PAYGO to save our fiscal fat from the fire, then I think the reality based community may have just lost another member.

Democratic Senator's Double Standard of Freedom

Senator Bob Menendez (D-NJ) “pledged Wednesday to block a House bill that would repeal the American travel ban to Cuba as well as boost U.S. farm exports to the island nation,” The Hill reports.

Here’s his full press release statement:

U.S. Senator Robert Menendez (D-NJ) released the following statement today on the House Agriculture Committee’s markup of legislation to lift the Cuba travel ban (H.R. 4645):

“The legislation being considered today in the House Agriculture Committee would enrich a regime that denies its own people basic human rights.

via senatus.wordpress.com

Maybe I'm off base here, but I would say a government prohibition on travel to a nearby country constitutes a "denial of basic human rights."

It's true the embargo hasn't yielded much in the way of results, but I'm sure that's only because the we were just getting started during the first fifty years. It's the sixth decade when results really start to show!

Posted via email from rhymeswithclown's posterous

TheMoneyIllusion » Double standards everywhere

Over the last 10 months I have become increasingly aggressive in my criticism of the current state of macroeconomics.  I talked about all of the double standards.  Fiscal policy is discussed in terms of whether it can create jobs.  Monetary policy is discussed in terms of its impact on inflation.  Which sounds better, jobs or inflation?  Obviously jobs.  Yet there is nothing in macro theory that would justify this dichotomy.  Indeed, if anything an AD shock driven by government spending would be expected to be more inflationary than equivalent shock created by monetary policy.  That’s because the private sector can usually spend money a bit more efficiently than the public sector.

If your intuition still tells you that monetary policy is more of an inflation threat than fiscal policy, you are probably right.  But that is because, and only because, you intuition is correctly telling you that monetary policy is a far more powerful tool for boosting NGDP.  Which begs the question of why so many economists support fiscal stimulus, and so few criticize the Fed.

via themoneyillusion.com

That's economist Scott Sumner. Someone who has long argued that our monetary policy response to this crisis isn't what it should be and isn't even what most people (including many economists) think that it is.

The recent debate over more fiscal stimulus has basically swamped any talk of additional monetary moves. While some would argue that there are no monetary moves left available due to incredibly low nominal interest rates, I'm not convinced that that is really the case.

Now the talk is are we repeating the mistakes of 1937 and not stimulating the economy enough. Perhaps it's the monetary policy mistakes of 1937 that we are repeating, and if we are, I'm doubtful those can be offset by further fiscal measures.

Posted via email from rhymeswithclown's posterous

Fmr. Congressional Candidate, Marc Trager, Dies - WBAY-TV Green Bay-Fox Cities-Northeast Wisconsin News

Sources tell Action 2 News Marc Trager, one of the people running for the 8th Congressional District seat until two weeks ago, shot and killed himself Tuesday afternoon at his Brown County home.

His wife apparently found him dead at their home on Belle Plaine Court in Howard.

Chief Deputy John Gossage of the Brown County Sheriff's Department says a call to Dr. Trager's home came at 12:04 P.M. Authorities say it appears he died of a self-inflicted gunshot wound. Foul play is not suspected.

"At this point there's still a lot of pieces of the puzzle to put together. We're going to be talking to neighbors, reviewing evidence around the scene, so it's going to be a long process," Gossage said.

The Trager home was surrounded by law enforcement Tuesday afternoon and filled with friends and family who came to show their support in the immediate wake of Trager's apparent suicide.

"We're working with all those individuals to make sure this is a painless process, if possible. As painless as possible for the family," Gossage said.

Trager, 64, dropped out of the Republican race for Congress exactly two weeks ago after campaigning for months. He cited health problems but wasn't specific.

"Unfortunately over the past several weeks I've developed some health issues which were totally unexpected and need my immediate attention," he said.

He only said he needed to drop out after consulting with his doctor.

via wbay.com

Sad and shocking. Please check the link for more information from WBAY,.

Posted via email from rhymeswithclown's posterous

Reid Ribble Wins FVI Straw Poll « Fox Valley Initiative

As you know, the Fox Valley Initiative conducted an online straw poll of its members last week to determine the level of support for the candidates in the 8th Congressional District race. The poll was conducted over a 3 day period. In order to ensure that no candidate or supporters of a candidate “stuffed” the ballot box, voters were required to submit their valid email address along with their vote. After email addresses of voters were cross checked against the Fox Valley Initiative’s membership list, we were able to validate the vote.

The results of this vote do not necessarily qualify as an endorsement of any particular candidate, but we can say that this is a certified representation of members of the FVI that voted. Candidates are free to use this information as they wish, but without claiming a formal endorsement. The Fox Valley Initiative will make a formal endorsement once the primaries have been decided and we are down to the candidates that will be on the ballot in November.

Here are the candidates and the percentage of vote that they won:

Reid Ribble : 56.4%

Roger Roth :  19.2%

Terri McCormick:  16.6%

Steve Kagen:  3.8%

Andy Williams:  2.5%

Marc Savard:  1.3%

Thanks to all of you that voted!

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via foxvalleyinitiative.net

Welcome news for Ribble no doubt, but obviously still a long way to go.

I'm curious as to what others think about where this ranks against endorsements. Is something like this more or less important?

Be sure to click through and read the comments as well.

Posted via email from rhymeswithclown's posterous

Marc Savard Announces Endorsement by Dr. John Lehman

Marc has secured the support of former Secretary of the Navy and 9/11 Commission member Dr. John Lehman.

Lehman issued the following statement on his endorsement of Marc Savard:
“I believe Congress needs folks like Marc to step up and serve when our Country’s citizens are searching for candidates with clear, realistic thinking about the threats our Nation faces both abroad and at our borders. Marc will bring that seriousness of purpose so needed in Washington today to deal with the difficulties our country faces.”

via savardforcongress.com

There's been some discussion lately about the value of endorsements by outside groups and figures. While I doubt these sway many voters, I suspect that they do constitute an important part of the process of building credibility and name recognition.

Posted via email from rhymeswithclown's posterous

Pro-Life Endorsement & WI Governor's Race

Over at Uppity Wisconsin Xoff today plays doctor and priest. Unfortunately, he does so with all the subtlety of a freight train. The endorsement of Scott Walker and Mark Neumann by Pro-Life Wisconsin prompts him to write:

Because hormonal birth control can prevent a fertilized egg from implanting in the wall of the uterus (hence the name "contraception",preventing conception), the group believes the pill, patch, shot, ring, all cause abortions

Without a careful reading, it's easy to miss the rhetorical trick of this statement. Xoff equates implantation with conception. This is a conceit that has confused many people and served groups like Planned Parenthood well for many years, but it's not entirely clear that what he is saying is accurate. Since neither of us is actually a medical doctor, maybe we should just try to apply some common sense reasoning to this question. Here is WebMD on conception:

Fertilization

If sperm does meet and penetrate a mature egg after ovulation, it will fertilize it. When the sperm penetrates the egg, changes occur in the protein coating around it to prevent other sperm from entering. At the moment of fertilization, your baby's genetic make-up is complete, including its sex. Since the mother can provide only X chromosomes (she's XX), if a Y sperm fertilizes the egg, your baby will be a boy (XY); if an X sperm fertilizes the egg, your baby will be a girl (XX).

Implantation

Within 24-hours after fertilization, the egg begins dividing rapidly into many cells. It remains in the fallopian tube for about three days. The fertilized egg (called a zygote) continues to divide as it passes slowly through the fallopian tube to the uterus where its next job is to attach to the endometrium (a process called implantation).

So it would seem that there are two distinct processes here, fertilization and implantation. As Xoff correctly states, one of the ways hormonal birth control works is by preventing implantation of a fertilized egg. An egg that, as WebMD notes, contains the complete genetic makeup of a new human being. I'd say it's more than possible, likely even, that some people would be taken aback by this idea. Some people who previously had been supportive of hormonal birth control without knowing this was one of the mechanisms it used. Too bad you won't get even a hint of any such thoughtful reflection from Xoff's post.

Aside from the fact that Xoff isn't doing his readers any favors by uncritically repeating the Planned Parenthood line, I'm not sure this even works as a political tactic. His argument, presumably, is to persuade centrist-minded voters that Walker and Neumann are too extreme to consider. But Xoff's preferred alternative, Democrat Tom Barrett, has a record of voting to allow partial birth abortion when he served as a congressman.

So undecided voters have a clear choice in this matter. On the one hand you have speculation about the attitude of Walker and Neumann on hormonal birth control. Speculation clearly intended to scare them away from these candidates. On the other hand, you have Tom Barrett with his public record of voting to support a procedure many Americans find morally abhorrent.

I think I can safely say that both Walker and Neumann would be happy to have this conversation with voters any and every time Xoff is willing to bring it up.

Magnus Antiincumbentsson

Last month, in the depressed aftermath of the country’s financial collapse, the Best Party emerged as the biggest winner in Reykjavik’s elections, with 34.7 percent of the vote, and Mr. Gnarr — who also promised a classroom of kindergartners he would build a Disneyland at the airport — is now the fourth mayor in four years of a city that is home to more than a third of the island’s 320,000 people.

In his acceptance speech he tried to calm the fears of the other 65.3 percent. “No one has to be afraid of the Best Party,” he said, “because it is the best party. If it wasn’t, it would be called the Worst Party or the Bad Party. We would never work with a party like that.”

With his party having won 6 of the City Council’s 15 seats, Mr. Gnarr needed a coalition partner, but ruled out any party whose members had not seen all five seasons of “The Wire.”

A sandy-haired 43-year-old, Mr. Gnarr is best known here for playing a television and film character named Georg Bjarnfredarson, a nasty, bald, middle-aged, Swedish-educated Marxist whose childhood was ruined by a militant feminist mother.

While his career may have given him visibility, few here doubt what actually propelled him into office. “It’s a protest vote,” said Gunnar Helgi Kristinsson, a political science professor at the University of Iceland.

via nytimes.com

Reykjavik Iceland has a new mayor. He knows Bjork!

Posted via email from rhymeswithclown's posterous

Cowen on Austerity and Hayek

even Professor Hayek favored welfare spending and social insurance, so those programs will not alone bring us to serfdom....

Finally, effective political ideas are those that can still do good in half-baked form. We have neglected this insight in designing financial reform, and it remains to be seen if we can apply it successfully to climate change.

And when it comes to the budget? Even if our real fiscal problems lie in the more distant future, it’s important to start worrying about them now, because we cannot count on a grand plan later to save the day.

via nytimes.com

That's professor Tyler Cowen on the general trend toward favoring austerity.

I included the line about Hayek because I think it underscores an important point about The Road To Serfdom that I don't think is widely understood by those who haven't read the book or have been exposed to it primarily through Glenn Beck or other sources.

Namely that it isn't the existence of a social welfare apparatus that would lead inevitably to enslavement, it was economic planning.

Once we cede power for economic decision making to a central authority, it is certain that some individuals will be deprived of liberty and, even more frightening, life, in pursuit of some national program. That is the real warning that Hayek issued in his famous book.

Posted via email from rhymeswithclown's posterous

The American Conservative » Doesn’t BP have enough corporate spokespersons?

It would seem then that BP is the very example of “crony capitalism” that many conservatives and libertarians have railed against in the past. Then why do such persons, whether they are Congressmen, or radio talk-show hosts, continue to believe that British Petroleum is the equivalent of the mom-and-pop grocery store which is being forced to move from its corner lot because of eminent domain for a new skyscraper after its owners refused to grease the local politician on the building commission? What if it were, instead of BP, Hugo Chavez’s Venezuelan oil company CITGO whose off-shore rig blew-up and began spilling oil in the Gulf, fouling beaches and destroying the livelihoods of thousands? Would  it still be considered a “shakedown”?

via amconmag.com

Posted via email from rhymeswithclown's posterous

The Limits of the Yield Curve

I'm not an economist, I don't even play one on this blog, but I am able to read. Here's Paul Krugman from December of 2008:

...I see that economists at the Cleveland Fed are taking some comfort from the positive slope of the yield curve. Long-term interest rates are higher than short-term rates, which is usually a sign that the economy will expand.

Not this time, I’m afraid. It’s all about the zero lower bound....

... the Fed can’t cut rates from here, because they’re already zero. It can, however, raise rates. So the long-term rate has to be above the short-term rate,...

So sad to say, the yield curve doesn’t offer any comfort. It’s only telling us what we already know: that conventional monetary policy has literally hit bottom.

I've been critical of Krugman at times, but this seems like a reasonable idea. It also makes me wonder if there aren't other times when long run interest rates don't mean what they normally mean.

Specifically, maybe the low long run interest rates on US debt we are experiencing right now are not the result of a positive outlook on the future fiscal picture. Perhaps they are just the result of very high demand for US debt during a flight to safety.

Answering this question, or at least thinking about it, is important since the low rates are used as evidence in the case for additional deficit spending now. Here's Brad DeLong:

Confidence in the safety and soundness of U.S. Treasury bonds is greater than--well, greater than it has ever been in my lifetime.

To which I would add, "probably because they are the last best hope of earth," if I was feeling wistful. But what it comes down to is that maybe our debt has such low rates because, right now, everything else just seems a lot riskier.

Brad DeLong Has Questions

Paul Krugman has answers:

Brad DeLong wonders how the proponents of tight budgets and tight money are prevailing in the midst of mass unemployment, low interest rates, and incipient deflation.

It’s actually not all that surprising. Horrifying, but not surprising.

The case for expansionary policies in the face of a slump is intellectually difficult; Keynes described the writing of the General Theory as a painful process of discovery, and so it is. The natural instinct of almost everyone is to think that tough times require tough measures, and that if the economy is suffering, the government should tighten its own belt. It would take a clear consensus from economists to overcome that natural bias.

But as I argued yesterday at Fox Politics.net, maybe there is another reason for stimulus skepticism: The government simply doesn't have a very good track record when it comes to spending money wisely. (I'll note that, unlike Krugman, I made my argument without calling anyone asinine.)

But wait you say, that's not a theory that's just anecdote. To which I can only respond with an emphatic you're right. I wouldn't dream of taking on Lord Keynes' General Theory, much less Krugman. I wasn't arguing that tough times call for tough measures. I was just making an empirical observation.

The federal government is the only entity with the authority to carry out the deficit spending called for by some on the left. If we are going to embark on a program of additional stimulus spending, we ought to take a look at the government's track record on spending. I'm just not convinced that this is sufficient to inspire anyone's confidence in further stimulus, no matter how many economists agree that it's a good idea.

I don't think I'm too far out on a limb with this. Here's Matthew Yglesias, a supporter of further stimulus, sounding a note of caution:

To throw a little bit of water on this idea, it seems to me that it matters what the money is spent on. We don’t have a huge quantity of unemployed doctors, so targeted spending aimed at increasing consumption of medical care would be inflationary. But by the same token, we have tons of unemployment associated with the housing/construction sector and printing money to employ those people on infrastructure projects should have no ill effects.

To those on the left that still think it doesn't matter what we spend government money on, please direct your attention to the new $100 million CIA contract with Blackwater (now Xe) for "protective services."

Guest Blogging at Fox Politics

Jo Egelhoff was kind enough to let me guest blog today at Fox Politics.net.

I'm banging the stimulus drum again, though not to a beat that Strupp likes to dance to. When it comes to stimulus skepticism......

There is another possibility: Perhaps folks simply aren't convinced the government is capable of carrying out efficient and effective spending programs.

Be sure to click through and read the whole thing and while you are there sign up for the Fox Politics daily email newsletter. It has links to news and views that you will find interesting regardless of your party affiliation.

Terri McCormick Endorsed by a Class Action Lawsuit

Terri McCormick, GOP candidate for Wisconsin's 8th congressional district today announced the following endorsement:

APPLETON, Wisconsin – The PeopleV.US has endorsed Terri McCormick in the Republican primary for the 8th Congressional District.

The principles and values that McCormick represents have attracted the attention and support of the PeopleV.US – a national constitutional group comprised of citizen leaders who are determined to hold lawmakers accountable to their words and actions.

On its website PeopleV.US is described as:

an organization set up by Attorneys, Political Consultants, and Marketing professionals. We have seen from the inside the destructive goals of those who lead this country. We are ready to put our jobs on the line, to defend our Country through court proceedings. The Constitution of the United States is our authority, and we will work diligently to remove from office ANYONE regardless of party that attempts any legislation in violation of the Constitution.

The main thrust of their activity appears to be a class action lawsuit against Obama's health reform, claiming that it violates "60% of the Bill of Rights."

I'm all for supporting the constitution and have serious doubts about the health reform, and I'm glad that Terri does too. I'm just not sure that an endorsement by a group without substantial ties to the district and whose main purpose is to oppose a single piece of legislation through a class action lawsuit is really all that meaningful.

Contrast this endorsement with a recent endorsement announced by rival candidate Reid Ribble:

Robert Keller, Chairman and CEO of J. J. Keller & Associates, endorsed Reid Ribble’s campaign for Congress today. Keller heads one of the largest safety and regulatory compliance firms in the nation. J. J. Keller & Associates, Inc. is based in Wisconsin.

While Bob Keller may not be a name well known to many in WI-8, an endorsement from a business owner with ties to the state seems more likely to have an impact than the one that McCormick is highlighting.

Scott Brown Follows Fidelity's Green Line

And I thought this guy was a novice. This does make me wonder whether it's government culture that encourages this type of behavior, or just attracts people prone to it, or both.

Via Open Congress:

If you look at which senators have been receiving the most finance industry money this electon cycle, the list starts off looking pretty much as expected. New York Senators Charles Schumer [D] and Kirsten Gillibrand [D], who literally represent Wall Street, are one and two...

Following Dodd on the list, in the fifth spot, is newly-elected Sen. Scott Brown [R, MA],who holds no official positions of power and is not a member of the Banking Committee with jurisdiction over financial reform legislation. As I wrote in April,“the typical story of Scott Brown’s election to the Senate in MA is that he was put there to kill health care reform. But all the money he’s getting from the finance industry indicates that they may be hoping he will also be the 41st Republican vote to kill financial regulatory reform, or at least parts of it.”

In May, Sen. Brown gave the Democrats the 60th vote they needed to overcome a Republican filibuster of their financial reform bill, but now as it’s going through the conference committee, he’s using his leverage as a crucial swing vote to fight for carve outs that would benefit the financial companies who have been funding him.
The New York Times reports:

Industry lobbyists — and sympathetic members of Congress — are pushing for provisions to undercut a central pillar of the legislation, known as the Volcker Rule, which would forbid banks from using their own money to make risky wagers on the market and would force them to sell off hedge funds and private equity units.

To secure the support needed for their bill, Senate negotiators are leaning toward creating a series of exemptions to the Volcker Rule that would allow banks to continue to operate these businesses as investment funds that hold only client money, according to several Congressional aides, industry officials and lawyers.

The three main changes under consideration would be a carve-out to exclude asset management and insurance companies outright, an exemption that would allow banks to continue to invest in hedge funds and private equity firms, and a long delay that would give banks up to seven years to enact the changes.

In particular, the provisions, sought by Senator Scott Brown, Republican of Massachusetts, and several other lawmakers, would benefit Boston-based money management giants like Fidelity Investments and State Street Corporation.

…Fidelity Investments is Brown’s all-time top campaign contributor. OpenSecrets lists “FMR Corp” in the #1 spot on Brown’s page of top contributors. “FMR” stands for “Fidelity Management and Research,” better known as Fidelity Investements, according to Yahoo Finance.

Dealbook adds: “To win Mr. Brown’s support and clear the way for Senate approval, Democratic leaders have pledged to support the carve-out for asset managers, according to officials familiar with the talks."

The Real GOP Base

What [columnist E.J.] Dionne and other conventional commentators present as a right-wing coalition that comes together under “successful conservative politicians such as Ronald Reagan (and George W. Bush in his first term)” but threatens to fracture into extremism when out of power is actually something else: a fairly stable party elite that employs a rhetorical strategy to sell Americans on liberty when the GOP needs to assemble enough votes to reclaim power, but that once in command again doles out privileges to favored interests and conceals the growth of government behind moralistic and nationalistic bombast. The words may change, but the speaker remains the same.

via amconmag.com

That's Daniel McCarthy at the @TAC blog. I'll note he offers this description in the course of dismissing the notion held by some on the left that the current surge in right wing populism is somehow different than past manifestations.

I'd also say that this analysis is incredibly cynical, but I fear that it is far too accurate for that.

Posted via web from rhymeswithclown's posterous

Reihan Salam on Ezra Klein on the "Doc Fix" (apologies to Brad DeLong)

Ezra continues:

When health-care reform started, Democrats made an admirable effort to end the shell game and just fix the system. But doing so cost almost $300 billion, and Republicans, who caused this mess in the first place, attacked the Democrats’ fix as if it was part of their health-care reform plan rather than part of the Balanced Budget Act that Republicans passed in 1997. So Democrats abandoned the effort and left the fix out of health-care reform.

This is a slightly problematic reading of what happened. An Economics 21 editorial published in February offers a different take:

The Administration and Congressional Democrats first got into trouble on this issue when they tried to pull a fast one, inserting higher physician payments into the early drafts of health care reform bills without offsetting the costs. The Congressional Budget Office (CBO) blew the whistle on this maneuver, finding that it would result in health care “reform” adding enormously to the federal government’s already-unsustainable deficits.

Proponents then tried what can only be described as a cynical gimmick: they simply split the bills into two parts: a “docfix” bill that would add to the deficit, and a separate health care bill that would be advertised as lowering the deficit. Taken together, it was always the case that the bills would worsen the fiscal outlook. But by pointing only to the “deficit-reducing” bill and ignoring the companion “docfix” bill moving through the Congress, disingenuous claims that health care reform would reduce the deficit continued to be made on both ends of Pennsylvania Avenue.

The House of Representatives played its dutiful role in this charade, separately passing both the health care legislation and the deficit-worsening docfix bill. The Senate, however, balked. When Senate Majority Leader Harry Reid attempted the same maneuver there, several Democrats as well as Republicans refused to play along with the game. Reid’s “docfix” bill – which would have added $247 billion to the debt over ten years – failed on a 47-53 cloture vote last October. No doubt the Senate was influenced by rising public concern about skyrocketing deficits and irresponsible budgeting. But the Senate vote didn’t end the “docfix” issue; it merely left it unresolved. Just how unresolved was revealed again this week with the release of the Administration’s budget.

This gives us a very different impression of how the debate unfolded.

Moreover, my sense is that the Balanced Budget Act of 1997 was not passed on a party line vote. The following is from Govtrack:

Jul 30, 1997: After passing both the Senate and House, a conference committee is created to work out differences between the Senate and House versions of the bill. A conference report resolving those differences passed in the House of Representatives, paving the way for enactment of the bill, by roll call vote. The totals were 346 Ayes, 85 Nays, 4 Present/Not Voting.

Suffice it to say, Republicans did not hold 346 seats in the House in 1996. PPACA is far more accurately described as partisan legislation than BBA.

I absolutely agree with Ezra on at least one point — we really do have to fix SGR.

via nationalreview.com

Why oh why can't we have a better press corp?

Posted via web from rhymeswithclown's posterous

Economic Known Unknowns

Stimulus is dangerous. The second-order costs of government spending are real, and we are very far from being able to understand or estimate them. Here are some second order costs:

1. Transfers of relative purchasing power from other citizens to the beneficiaries of government spending may call into question the legitimacy of the distribution of opportunity, wealth, and influence and of the government itself. Perceptions of make-work or corrupt contracting are deeply corrosive. Deficit spending commits government to future transfers that may come to seem undesirable or illegitimate.

2. Government spending choices may lead to lower quality uses of real resources than would have occurred if the government had not acted. Since economic activity is habit forming and temporary interventions become permanent, the cost of poor government choices can be high. It matters very much what work the government is paying for. Work must be well-tailored to the talents, interests, and future prospects of individuals. Employing people badly is much worse than just giving them money.

3. If funds are spent, directly or indirectly, on resources in scarce supply, prices may be harmfully propped or bid up. That might take the form of a general inflation, or a narrower effect on the prices of specific commodities or assets.

4. High levels of government debt may have a destabilizing effect on prices, increasing price volatility and impairing economic calculation even in the absence of a general inflation, or even in a deflation. Government obligations are liquid and hypothecable, and the availability of good collateral increases the degree to which subjective changes in relative valuation translate to changes in nominal pricing.

5. There exist theories of government solvency which suggest that the safety and value of currency is related to the indebtedness of the issuing government. Those theories may or may not be reasonable. They may or may not find support in the historical record. Regardless, to the degree they are widespread, they may be self-fulfilling. Whether sensible or sunspot, loss of confidence in a currency is possible. Currency crises represent a “tail risk” whose likelihood and cost are difficult to estimate.

There are second order benefits to stimulus as well as costs: multipliers, consumer confidence, etc. But these are also difficult to estimate.

via interfluidity.com

This is from an author who affirms there are things the government should be doing, and describes his own view as skewing "activist". Not exactly the un-thinking deficit-hawk that Krugman and others like to hold up for scrutiny just so they can knock them down.

Posted via web from rhymeswithclown's posterous

Matthew Yglesias » The Unavoidability of Long-Term Austerity

whether we make the short-term deficit smaller or larger we still need to tackle a serious longer term problem. And we would still need to tackle that problem even if the recession hadn’t happened. It’s a real problem. And a big one. But the shape of the problem is very simple and it looks like this:

1. The public sector has assumed responsibility for financing the health care of old people.

2. The cost of health care relative to the rest of the economy is rising.

3. The proportion of old people relative to the rest of the population is rising.

This trend bodes ill for our fiscal future. And thinking about solving it is enough to make one’s head hurt.

via yglesias.thinkprogress.org

I didn't even bother to change the title for this post since Yglesias is exactly right. The factors he cites are those most critical to unraveling our long run fiscal problems.

Note, if you will, that #3 is physically impossible to change in the short run. The other two, not so much. Expect any solution to this problem to affect items #1 & #2 disproportionately.

Posted via web from rhymeswithclown's posterous

Be fruitful and multiply. It won't cost you that much.

Father's Day is a time to reflect on whether you want to be a parent—or want to be a parent again. If you simply don't like kids, research has little to say to you. If however you're interested in kids, but scared of the sacrifices, research has two big lessons. First, parents' sacrifice is much smaller than it looks, and childless and single is far inferior to married with children. Second, parents' sacrifice is much larger than it has to be. Twin and adoption research shows that you don't have to go the extra mile to prepare your kids for the future. Instead of trying to mold your children into perfect adults, you can safely kick back, relax and enjoy your journey together—and seriously consider adding another passenger.

via online.wsj.com

That's economist Bryan Caplan on the costs and benefits of having more children.

For the record, I have six children and would be happy to have more.

Posted via web from rhymeswithclown's posterous

Sympathy for Scott Walker

Call me crazy, but I'm beginning to wonder if Walker isn't a candidate more sinned against than sinning. Only problem is, it's his supporters that are doing the heavy lifting against him.

First it was the ridiculous spectacle of the Scott for Gov blog.

Then it was the Jim Klauser open letter asking opponent Mark Neumann to return campaign contributions because of a perceived negative campaign against Walker. Mr. Klauser, I'm sorry that I wasn't around for your Thompson glory days, I was foolish enough to move to Wisconsin right before we embarked on Doyle train to nowhere, but the fact that you were for Neumann before you were against him makes you less than a credible source. Your letter strikes me as little more than a stunt and reflects poorly on you, and more to the point, on your now preferred candidate, Scott Walker. If you really want to see Walker elected, I suggest you stop making public statements in support of him.

Now it's the campaign against liberal blogger Capper. A campaign that has escaped the blogosphere and spilled over in to the real world.

Capper's got an anti-Walker fixation that comes perilously close to "he doth protest too much," and the best the Walker supporters can muster is sending the DA to confiscate the computer from his workplace at the county to make sure he wasn't blogging on county time?

I'm no forensic blog-ologist, but I sure hope the gang at CRG has some more evidence than a few time-stamped posts. You see, the magic of the google actually allows one to type those words at one point in time and schedule them for publication at a specified point in time in the future.

The fact of the matter is that if you have to resort to having the civil magistrate confiscate the computer of your rhetorical opponents, you have already lost. Can't the Walker camp come up with some smart folks to simply counter the pronouncements that Capper makes on his blog? Just read it for a while and it shouldn't be all that hard. Even I could, and I couldn't figure out that Capper and Chris Liebenthal were the same guy.

To make matters worse, some of Walker's supporters took to commenting on blog posts. Memo to arod: When it comes to snark + law you are not going to beat Tom Foley. I doubt that Sun Tzu ever had a blog, but if he did, he would have advised that by engaging your opponent via comments you have ceded the high ground and have brought defeat upon yourself.

If I had Walker's ear, and it's clear that I don't, I'd tell him that if he had any pull with these various folks that he should tell them to cool it. Otherwise, he should distance himself as quickly as possible and focus on an effort to campaign in a positive way.

I Feel Like Jerry (Seinfeld)

I always even out.

...so because of that, I will be once again shuttering Lakeshore Laments until after Election Day.

Fairly Conservative is back online sometime this weekend.

Update your google reader as necessary.

Retirement Advice

Everyone reading this should take 15 hard minutes to ruthlessly reassess the reality of the "new" final years of their future career. The finish line has become elusive; the goal posts have been pushed back. Based on your current skill set and competences, what do you think your workday will look like when you're 70? Are you comfortable with the probability that you will be managing employees younger than your grandchildren? Temperamentally, do you think you'll add more value as a mentor, a partner, or part-timer? More important, what will your (much) younger boss think?

via blogs.hbr.org

This tip might be just as valuable as the asset mix in your 401K. Go take a minute and read the whole thing.

Posted via web from rhymeswithclown's posterous

The AIG Bailout

The rescue of AIG distorted the marketplace by transforming highly risky derivatives bets into fully guaranteed payment obligations.  In the ordinary course of business, the costs of AIG’s inability to meet its derivative obligations would have been borne entirely by AIG’s shareholders and creditors.  But rather than sharing the pain among AIG’s creditors, the government instead shifted those costs in full onto taxpayers.  The result was the government backed up the entire derivatives market, as if high-profit, high-risk trading deserved the same taxpayer backstop as savings deposits and checking accounts. Every counterparty — from pension funds for retired workers and individual insurance policies, to sophisticated investors and other financial institutions — received exactly the same deal: a complete rescue at taxpayer expense.

via cop.senate.gov

That's just one item from the report on the AIG bailout by the Congressional Oversight Panel (the group set up to monitor the TARP). Go read the whole thing.

This phenomenon of government guarantees, both explicit and implicit, is at the heart of how we got ourselves to the brink of disaster in the fall of 2008.

It is a long-running story, perpetuated by members of both political parties across the years. Its effects are incredibly corrosive on the willingness of creditors to enforce discipline, and we are all the poorer for it.

Posted via web from rhymeswithclown's posterous

Not From The Onion

Congratulations to George Clooney, who, having already been named an Academy Award winner and the Sexiest Man Alive, just landed a coveted spot on ... the Council on Foreign Relations? Yup. Clooney is now a lifetime member of the think tank, thanks to his pontificating about the conflict in Darfur.

via slatest.slate.com

Well, CFR is off my list of secretive organizations engaged in plots to control the world.

On second thought, maybe this is just the type of stunt a secretive organization engaged in a plot to control the world would pull to lull me in to a false sense of security.

Now where did I put my tinfoil hat?

Posted via web from rhymeswithclown's posterous

Kagen's 25 Billion Dollar Distraction

Representative Steve Kagen (D) made some headlines this week with legislation he introduced to require BP to set aside $25 billion to pay for costs related to the oil spill.

Apparently, President Obama didn't get the memo that Kagen was going to use the tragedy in the Gulf in order to garner some free press. While Kagen was busy gathering 40 (!) co-sponsors for his bill, the President announced an agreement with BP to set aside $20 billion to address claims. A feat accomplished without the enactment of legislation.

Since this is the dairy state, I'm tempted to say that Kagen closed the barn door after cow got out, but he hasn't even closed the door yet.

So the question is why a congressman who represents a district on the opposite end of the country from the area affected by the spill would feel the need to take a leading role in making sure claims are paid by BP. Does he really think there is no problem that another act of congress can't fix? Did he see this as an opportunity to get his name in the news without meeting face to face with his constituents, something he seems to be reluctant to do of late?

Certainly as a member of congress and a congressional committee, Kagen has a responsibility to perform his duties, but his role as a champion of this cause is baffling to say the least. Baffling, and likely not going to have any noticeable results. Today's agreement with BP would, it seems to me, render this particular legislation superfluous.

With more action like this, it's Kagen himself that the voters will find superfluous.

Marc Trager Drops out of Race for WI-8CD

GOP candidate Marc Trager today announced he was leaving the race for Wisconsin's 8th congressional district seat due to health concerns and that he was endorsing candidate Roger Roth. From the press release:

After much deliberation and council from my family and physician, I have decided to withdraw from the 8th District Congressional race due to health concerns,” said Dr. Trager. “I am confident we would have been successful in November, but the physical strain of the campaign trail has caused me to step back and evaluate my priorities....

Over the past eight months, I have gotten to know Roger well, and I feel that his knowledge, character, and values are what the people of Northeast Wisconsin need,” said Dr. Trager

Trager was a serious candidate and had previously surprised me with some larger than expected fundraising numbers. Obviously, this is a boost to the Roth campaign.

By my count, this leaves five candidates remaining in the race: Ribble, Roth, Savard, McCormick, Williams.

Kerry Thomas confirmed to me in an email, he was no longer a candidate. He is a supporter of Terri McCormick.

I'm not sure how active Andy Williams' campaign is. The domain name for his campaign website appears to have switched to unrelated advertising, but he was still mentioned as a candidate on the WPR report I heard today.

DeLong Cites Structural Factors

Why aren’t more people being hired?... It looks increasingly likely that America’s labour market has developed structural problems that may explain why it is struggling to respond... certain industries, such as manufacturing and construction... geographic factors. Ten percentage points separate the states with the highest and lowest unemployment rates. But the property crash is making it much harder for Americans to move to where the jobs are. A quarter of mortgage borrowers owe more than their houses are worth. Many people are stuck in places with poor employment prospects, unable to leave for cities where their skills may be in demand. Although the economy is starting to create new and often highly remunerative jobs, they are out of reach to those who cannot move....

via delong.typepad.com

Now I'm really confused.

Economist Brad DeLong has argued vociferously that what we need is an increase in demand through government spending in order to offset unemployment related to the recession. Unemployment related to an economic downturn is cyclical unemployment and should diminish as economic activity increases.

In the passage above though, DeLong quotes (approvingly?) Ryan Avent who raises the specter of structural unemployment. Structural unemployment is not related the downturn itself, but to broader changes in the economy that mean some jobs are never coming back.

Often, citing structural factors as part of the cause for the recent downturn and continued high unemployment gets one labeled an Austrian (used as an epithet) or of being the heirs of Mellon (liquidate everything!). Certainly DeLong doesn't belong in either of these categories.

Either way, I agree there are structural factors at work in our continued economic problems and they are made ever more painful by the housing crash, which reduces mobility, traditionally a source of strength for the American economy.

As for DeLong's position, as I said, I'm confused. Maybe Strupp can explain it to me.

Posted via web from rhymeswithclown's posterous

The Gulf Oil Spill and Broken Windows

This is the latest example of the classic broken windows fallacy

Oil Spill May End Up Lifting GDP Slightly - Real Time Economics - WSJ

The continuing oil spill in the Gulf of Mexico could end up adding a bit of growth to the U.S. economy as the huge cleanup efforts in some ways outweigh negative factors, analysts at J.P. Morgan Chase said.

Let's say the cleanup of the oil spill eventually costs BP $40 billion.  This means that prior to the cleanup we had a clean Gulf of Mexico and BP had $40 billion.  Now with the cleanup, we have the Gulf restored, but no $40 billion to pay as dividends or to invest in future projects, so how, exactly, have we come out ahead?  The answer, of course, is we haven't.

The folks at the WSJ realize this, and note that what this really highlights is how GDP can be a poor measure of well being.  In case you are not familiar with the broken windows fallacy:

The Broken Window Fallacy Reapplied - Llewellyn H. Rockwell Jr. - Mises Daily

A kid throws a rock at a window and breaks it, and everyone standing around regrets the unfortunate state of affairs. But then up walks a man who purports to be wise and all knowing. He points out that this is not a bad thing after all. The man fixing the window will get money for doing so. This will then be spent on a new suit, and the tailor too will get money. The tailor will spend money on other items, and the circle of rising prosperity will expand without end.

What's wrong with this scenario? As Bastiat put it, "It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way which this accident has prevented."

You can see the absurdity of the position of the wise commentator when you take it to absurd extremes. If the broken window really produces wealth, why not break all windows up and down the whole city block? Indeed, why not break doors and walls? Why not tear down all houses so that they can be rebuilt? Why not bomb whole cities so construction firms can get busy rebuilding?

It is not a good thing to destroy wealth. Bastiat puts it this way: "Society loses the value of things which are uselessly destroyed."

Marc Trager Announcement for Tomorrow

**Updated 5/15 - Marc Trager drops out of race for WI-8CD. Endorses candidate Roger Roth.

The press release from my inbox informs me that Dr. Marc Trager, GOP candidate for WI 8 congressional district, has scheduled an announcement for tomorrow morning at the Rock Garden.

I don't have any idea what it will be, but it's billed as "major" and having the ability to "shake up" the race.

I guess we'll have to wait until tomorrow to see if the announcement lives up to the billing.

Negative Real Interest Rates and Recovery

The debate over a Keynesian response (or lack thereof) to the nation's unemployment problem continues, sometimes in the comments section of this blog.

I am not certain that the AD story pushed by Krugman & others is absolutely wrong, but I'm definitely skeptical. There are alternative views out there from mainstream respected economists. Disagreeing with Paul Krugman does not automatically qualify one as mentally unfit, though the reactions of his supporters to criticism of Professor Krugman may, at times, make it seem like that is the case.

Here's Professor Raghu Rajan:

Some commentators argue that demand is too low now, that we need a negative real interest rate. Another way of saying this, though, is that the profitability of investment is really low, and households’ desire to save is really high. A strongly negative real interest rate “works” by subsidizing investment (when you borrow to invest, savers pay you for taking their money) and by encouraging consumption and penalizing savings (you have to pay others for the pleasure for borrowing from you)....

So why are so many Americans unemployed ? How do we return the economy to sustained growth? Are strongly negative short term real rates part of the cure? Perhaps we should recognize that the recoveries from the last two recessions (1991 and 2001) have been jobless, despite substantial monetary stimulus. Indeed, the negative real rates during the recovery in 2002-2004 did not prompt substantially more corporate hiring, but created a debt-fueled real estate boom and consumption orgy that we have yet to recover from. The rates were not low enough to prompt corporations to invest (they had just been through an investment boom), but low enough to trigger off a housing boom and a consumption boom. The remedy this time around cannot lie in creating unsustainable growth again.

Why have recoveries been so slow in creating jobs? I don’t think we really
know. But given our limited knowledge and our recent experience, I think we have to be more cautious about advocating negative real rates as a cure-all.

Go read the whole thing for a discussion of why business is hesitant to invest and consumers are reluctant to spend. It includes a sobering ending last two paragraphs concerning the possibility that low rates can form the basis for another asset price bubble.

As with so much in economics, this is far from a settled question.

Successful Blogs Have Links

In case you hadn't heard, the big debate of late has been over whether or not we need more fiscal stimulus.

DeLong contra Cowen.

Cowen contra DeLong.

Red, red wine. Even when it's white.

In case you didn't click on the link. You really ought to read You Are Not So Smart.

The real pain caucus: The planned economy of North Korea.

Does Wikileaks really have the goods?

The Benefits of a Planned Economy

When the Korean Peninsula was divided in 1945, South Korea was poorer than its neighbor. Now its average worker earns 15 times as much as an average North Korean, according to cost-of-living-adjusted data. The number of defectors who make it through China to South Korea has steadily risen for a decade, hitting nearly 3,000 last year.

Infant and maternal mortality rates jumped at least 30 percent from 1993 to 2008, and life expectancy fell by three years to 69 during the same period, according to North Korean census figures and the United Nations Population Fund.

The United Nations World Food Program says one in three North Korean children under the age of 5 are malnourished.

via nytimes.com

Needs no further comment.

Posted via web from rhymeswithclown's posterous

The Demand for More Demand

Unfortunately, Washington, D.C. and many state legislatures seem determined to undermine any economic forward momentum for small business owners. And even though small business owners continue to plead their case for policies that will help foster economic growth, many lawmakers are unwilling to listen. Small business owners keep saying that poor sales (“It’s the consumer, stupid!”) is their most pressing problem and the reasons they aren’t interested in expanding are due to current economic conditions and the political climate. Unfortunately, Congress is fixated on credit and special favors for unionized firms, and that wont sustain or support faster growth.

As Avent says, “the problem is a lack of demand, not some imagined looming American debt crisis.”

via yglesias.thinkprogress.org

Even Yglesias would agree not all demand is lacking, right now we are seeing a high demand for money and its close substitute, U.S. debt instruments.

His response (and that of DeLong, Avent, and Krugman) is for the federal government to engage in deficit spending to increase demand.

I'm extremely skeptical that spending by the federal government will give small business owners the confidence to invest in expansion, including hiring. This skepticism is not a fringe view and is held by many mainstream economists, much to the consternation of the Keynesian crowd.

Posted via web from rhymeswithclown's posterous

Fighting with One Hand Out

Dana Milbank of the Washington Post reports this from the celebration surrounding Senator Blanche Lincoln's (D) victory in her Arkansas primary:

Sen. Chuck Schumer (N.Y.) held up two fists and said of her primary campaign: "Fighting Wall Street with one hand, unions with the other."

Most of the angst in the media has centered on a Democrat's perceived slight toward unions, but it's the "fighting Wall Street" part of that quote that caught my eye.

Here's Open Congress:

Sen. Chuck Schumer [D, NY] leads senators in financial industry contributions, receiving $17,507,031.

D/R-Party of Wall Street

When the bill was forwarded to the Senate from the House on May 28, it included a tough provision to raise taxes on hedge fund managers, who for years have been using a loophole in the tax code to pay lower income-tax rates than what their secretaries pay. But the hedge fund industry has been lobbying Democrats extremely hard for the past few years against this tax increase, and earlier this week, Senate Dems caved in and softened the provisions substantially.

via opencongress.org

I think the popular perception is that the GOP is generally more friendly to Wall Street interests than Democrats. While that may or may not be true, it certainly is true to say that Democrats are not UN-friendly to Wall Street interests. Even Democrats can't fight to tax hedge fund manager fees as ordinary income, which I think most people would agree they are.

Posted via web from rhymeswithclown's posterous

Debit Cards & Rent Seeking

The other day I received an "action alert" from my credit union telling me that congress was considering regulating interchange fees and that I should be concerned. Those are the fees retailers pay to the issuers of credit and debit cards, like my credit union. I should be concerned, they said, because those fees are what allow them to offer higher rates on deposits.

It was easy to dismiss this warning as too self-serving, but then I read this from Marginal Revolution and was reminded that just because something is self-serving that doesn't mean it is necessarily wrong:

There is a new paper by Todd Zywicki, which, due to my quick trip to Trento, I have not had time to read:

...Congress continues to deliberate...a set of new regulations for credit card companies. These proposals, offered in the name of consumer protection, seek to constrain the setting of “interchange fees” transaction charges integral to payment card systems—through a range of proposed political interventions. This article identifies both the theoretical and actual failings of such regulation. Payment cards are a secure, inexpensive, welfare-increasing payment mechanism largely unlike any other in history. Rather than increasing consumer welfare in any meaningful sense, interchange fee legislation represents an attempt by some merchants to shift costs away from their businesses and onto card issuing banks and cardholders. In particular, bank-issued credit cards offer a dramatic improvement in the efficiency and availability of consumer credit by shifting credit risk from merchants onto banks in exchange for the cost of the interchange fee—currently averaging less than 2% of purchase value. Merchants’ efforts to cabin these fees would harm not only consumers but also the merchants themselves as commerce would depend more heavily on less-efficient paperbased payment systems. The consequence of interchange fee legislation, as Australia’s experiment with such regulation demonstrates, would be reduced access to credit, higher interest rates for consumers, and the return of the much-loathed annual fee for credit cards. Interchange fee regulation threatens to constrain credit for consumers and small businesses as the American economy begins to convalesce from a serious “credit crunch,” and should be accordingly rejected.

Feingold Must Not Think Congress is Very Good at Its Job.

Via Senatus

Taking their lead from “President Obama’s recent proposal, a
bipartisan group of senators on Wednesday introduced a bill to empower
him and future presidents to get a quick vote in Congress on deleting
spending items from annual appropriations measures soon after they have
been signed into law,” the New York Times reports.

The concept, known as expedited rescissions authority, is designed as a constitutional alternative to a line-item veto, which the Supreme Court, in 1998, ruled violated Congress’s power of the purse.

Where else but Washington is correcting your own bad behavior known as leadership?

Wisconsin's own Russ Feingold is a lead sponsor of the legislation. First McCain Feingold and now an end run around the prohibition on the line item veto. One can't help but wonder about Feingold's commitment the the Constitution.

I'm shocked, shocked to find rent-seeking going on in here!

BP, the Progressive-Friendly Profiteer.

Lobbying records show that BP is no free-market crusader, but instead a close friend of big government whenever it serves the company’s bottom line.

While BP has resisted some government interventions, it has lobbied for tax hikes, greenhouse gas restraints, the stimulus bill, the Wall Street bailout, and subsidies for oil pipelines, solar panels, natural gas and biofuels.

via dad29.blogspot.com

Sad but true, it happens all the time.

Posted via web from rhymeswithclown's posterous

Kagen's High Priced Earmarks

Jo Egelhoff at Fox Politics gives us the rundown on campaign contributions and earmarks from two of Wisconsin's Democratic congressmen

Link: http://foxpolitics.net/ (sent via Shareaholic)

Obey’s total earmarks for fiscal year 2010 were $77.6M, Kagen’s, $17.8M. However, both men set aside $4.8M in earmarks that benefited an organization from which they received campaign contributions. That means of the earmarks each man successfully sponsored or co-sponsored, 6% of Obey’s went to campaign contributors and 27% of Kagen’s earmarks went to campaign contributors.

The total contributions received from corporations benefiting from the Obey and Kagen earmarks were $3,250 and $6,500 respectively.

Relative to Kagen, Obey earmarks were half price in 2010.  Sounds like price gouging to me.  

Seriously, if you live in NE Wiscsonsin, go read the whole thing.  There's an election in less than five months 

Posted via email from rhymeswithclown's posterous

The Left Still Doesn't Get Economics

Lakeshore Laments highlights a study showing that those identifying as liberal or progressive don't score well on questions of basic economics.

Nate Silver takes to his blog today to denounce the study as "junk science" for, among other things, poorly worded questions:

Finally, there are some questions about which there is considerable disagreement even within circles of academic economists -- as Klein should know, since he's commissioned several surveys of them. Economists are about evenly split, for instance, when it comes to the minimum wage. There is much closer to being a consensus on free trade, but there are an ample number of heterodox views [E.A.]

Far be it from me to quibble with Silver, whose reputation was made analyzing polling data. So let's stipulate that the survey is junk. Let's go further and just look at an area where even Silver acknowledges widespread agreement, free trade.

Here's economics professor Anthony Evans:

I think useful testing points are Greg Mankiw and Paul Krugman. Firstly, here's what Mankiw has said on this topic:

Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards. Smith’s insights are now standard fare in Econ 101.

Finally, Paul Krugman - have a look at Pop Internationalism, or his essay on "Ricardo's Difficult Idea" (note: I don't think the principle of comparative advantage is difficult). Despite his more recent NYT columns, if you look at the body of Krugman's academic work you find someone who uses the basic principle of trade theory, and accepts it. When Mankiw and Krugman agree , I'd say that's pretty close to a definition of consensus.

I'd say that's a powerful argument for the existence of a consensus that free trade is on net a positive. But that's hardly what you will hear from liberals and progressives today.

Virginia Democratic Congressman Tom Perriello was profiled on NPR yesterday and apparently, he doesn't agree that free trade and low prices benefit his contsituents:

And when the congressman sits down to talk with the workers, jobs are what's on everyone's mind.

Rep. PERRIELLO: I mean, I think part of what got us into this mess was we said to people we're going to take your job away but we're going to give you really cheap stuff at Wal-Mart. It's going to work out great for you, and it doesn't. People need a job. They need to be able to support their family and...

He's right of course, people do need jobs, but there's not even a whiff of the consensus on free trade in that sound bite. It's as if he can't recognize that his constituents are not only wage earners, but consumers as well. Elsewhere, Perriello denounces demagoguery in relation to death panels, but apparently he has no qualms about engaging in the same when it comes to Wal-Mart.

While liberal economists may call for additional fiscal and monetary stimulus to reduce unemployment, it appears liberal members of congress and many self-described liberals would prefer to turn back the clock and live in a world that includes jobs, but fewer goods at higher prices. Those that do, exhibit a startling lack of economic knowledge on a topic that even Mr. Silver notes there is a broad consensus.

I realize this is just an anecdote, but if you polled people on whether or not they agree with Mr. Perriello, I suspect you would find liberals and progressives agreeing with him by wide margins. Whether this particular study was in fact junk science or not, Mr. Silver is going to have to do a lot better to convince me that the majority of self-identified liberals and progressives really do understand even widely held economic concepts.