Politics « Insomniactive

What Am I Missing?

March 20, 2009

If employees of AIG violated civil statutes, the should pay money damages. If they committed crimes, they should go to jail. Congress should have nothing to do with any of it, at least not in their legislative capacity. They had their shot, which would have been to pin a ransom note to any bonus payment that preceded a nickel of TARP money changing hands. They didn’t do that, and do-overs are for children under five.

As Chris Dodd straightened his tie for the cameras with increasingly obvious haplessness, Treasury raised knotty questions. “Geithner here. I know I don’t have any..uh…staff or anything, but I think what you guys are proposing may be illegal. I have a catalytic converter supplier on Line 2, so I’ll have to get back to you.”

And so this truth-however inconveniently- defied its vanishing pont: a confiscatory tax which is purely an ass-covering and “signal sending” legislative gesture is almost certainly illegal. And shameful. And positively spineless. Why not just burn a symbolic derivatives trader at the stake? While the pain (and the stench) would be more concentrated, the spectacle would be mercifully shorter and roughly as productive.

It is tempting to identify as the “bigger issue” that our government has already focused far too much psychic energy on a level of lucre that is inconsequential in the grand scheme, and that the AIG bonuses are simply a vestige of financial deregulation run amok during the Bush regime. It is also tempting to utter the following heresies: that the bonus recipients at AIG were, quaintly, “ doing their jobs;” that they likely didn’t get out of bed in the morning hell-bent on destroying anything; and that at least a number of them were not hiding the Mark of the Beast beneath their $200 haircuts.

It’s tempting, because it’s all true. But this would miss the point. Because the bigger issue is actually, well , bigger: if we live in a nation where Congress can take money from people because Congresspeople are embarrassed, none of us should feel very safe. Because whether or not there is, there should be a lot of Congressional embarrassment to go around.

It is of course too obvious to point out that all Congressional salaries are “public money.” What say that anyone who voted in the majority on the 90% tax bill has his or her pay docked for that day?

Don’t bitch, Congresspeople. You’re getting off easy. And you might think twice before spending your paychecks. I have my eye on you.

3 Comments | Economics/Business, Politics | Permalink
Posted by johndthornton

How Radio Wrecks the Right

February 28, 2009

One of the more interesting reads of the week was John Derbyshire’s cover article in The American Conservative. In it, he bemoans the devlopment of “happy meal conservatism” (a phrase I love and which I predict will stick):

Gone are the intellectual tensions, the thought-provoking paradoxes, the ideological uneasiness that marked the early Right. But however much this dumbing down has damaged the conservative brand, it appeals to millions of Americans. McDonald’s profits rose 80 percent last year.

But of course, not even Happy Meals are free. He also argues that Rush Limbaugh’s 14-million listener, 20+ year reign at the top of the radio dial has impeded the development what he calls “middlebrow conservatism.” “I know,” Limbaugh told the Times, “that I have become the intellectual engine of the Republican.” Well, I’ll be darned. A self-proclaimed intellectual engine. That may just be a first.

1 Comment | Politics | Permalink
Posted by johndthornton

David Foster Wallace on Political Writing by Non-Political Writers

February 9, 2009

This came to me courtesy of my friends Greg Warmink and Paul Franz. The whole, 6-year-0ld interview with the tragically late writer of, among other things, Infinite Jest, is more than worth a read. But I found this bit particularly sharp and if anything, more relevant than it was at the time:

The reason why doing political writing is so hard right now is probably also the reason why more young (am I included in the range of this predicate anymore?) fiction writers ought to be doing it. As of 2003, the rhetoric of the enterprise is fucked. 95 percent of political commentary, whether spoken or written, is now polluted by the very politics it’s supposed to be about. Meaning it’s become totally ideological and reductive: The writer/speaker has certain political convictions or affiliations, and proceeds to filter all reality and spin all assertion according to those convictions and loyalties. Everybody’s pissed off and exasperated and impervious to argument from any other side. Opposing viewpoints are not just incorrect but contemptible, corrupt, evil. Conservative thinkers are balder about this kind of attitude: Limbaugh, Hannity, that horrific O’Reilly person. Coulter, Kristol, etc. But the Left’s been infected, too. Have you read this new Al Franken book? Parts of it are funny, but it’s totally venomous (like, what possible response can rightist pundits have to Franken’s broadsides but further rage and return-venom?). Or see also e.g. Lapham’s latest Harper’s columns, or most of the stuff in the Nation, or even Rolling Stone. It’s all become like Zinn and Chomsky but without the immense bodies of hard data these older guys use to back up their screeds. There’s no more complex, messy, community-wide argument (or “dialogue”); political discourse is now a formulaic matter of preaching to one’s own choir and demonizing the opposition. Everything’s relentlessly black-and-whitened. Since the truth is way, way more gray and complicated than any one ideology can capture, the whole thing seems to me not just stupid but stupefying. Watching O’Reilly v. Franken is watching bloodsport. How can any of this possibly help me, the average citizen, deliberate about whom to choose to decide my country’s macroeconomic policy, or how even to conceive for myself what that policy’s outlines should be, or how to minimize the chances of North Korea nuking the DMZ and pulling us into a ghastly foreign war, or how to balance domestic security concerns with civil liberties? Questions like these are all massively complicated, and much of the complication is not sexy, and well over 90 percent of political commentary now simply abets the uncomplicatedly sexy delusion that one side is Right and Just and the other Wrong and Dangerous. Which is of course a pleasant delusion, in a way—as is the belief that every last person you’re in conflict with is an asshole—but it’s childish, and totally unconducive to hard thought, give and take, compromise, or the ability of grown-ups to function as any kind of community.

My own belief, perhaps starry-eyed, is that since fictionists or literary-type writers are supposed to have some special interest in empathy, in trying to imagine what it’s like to be the other guy, they might have some useful part to play in a political conversation that’s having the problems ours is. Failing that, maybe at least we can help elevate some professional political journalists who are (1) polite, and (2) willing to entertain the possibility that intelligent, well-meaning people can disagree, and (3) able to countenance the fact that some problems are simply beyond the ability of a single ideology to represent accurately.

Implicit in this brief, shrill answer, though, is obviously the idea that at least some political writing should be Platonically disinterested, should rise above the fray, etc.; and in my own present case this is impossible (and so I am a hypocrite, an ideological opponent could say). In doing the McCain piece you mentioned, I saw some stuff (more accurately: I believe that I saw some stuff) about our current president, his inner circle, and the primary campaign they ran that prompted certain reactions inside me that make it impossible to rise above the fray. I am, at present, partisan. Worse than that: I feel such deep, visceral antipathy that I can’t seem to think or speak or write in any kind of fair or nuanced way about the current administration. Writing-wise, I think this kind of interior state is dangerous. It is when one feels most strongly, most personally, that it’s most tempting to speak up (“speak out” is the current verb phrase of choice, rhetorically freighted as it is). But it’s also when it’s the least productive, or at any rate it seems that way to me—there are plenty of writers and journalists “speaking out” and writing pieces about oligarchy and neofascism and mendacity and appalling short-sightedness in definitions of “national security” and “national interest,” etc., and very few of these writers seem to me to be generating helpful or powerful pieces, or really even being persuasive to anyone who doesn’t already share the writer’s views.

No Comments » | Books, Politics | Permalink
Posted by johndthornton

President Obama and a Collective Fiscal Conscience

January 22, 2009

I had little concern that the Wall Street Journal editorial page would go early into the tank for President Obama. Whether it would lend its voice to loyal opposition of long-term fiscal irresponsibility-or merely to screechy petulance born of recently turned political tables-remained another matter. Today, Holman Jenkins planted his first post-inaugural editorial flag in a hopefully helpful spot, although he led off rather curiously:

Barack Obama thus far has treated politics as a business of mobilization, not persuasion. That will now have to change.

I say “curiously” because I think Jenkins may have it backward. Not only is it difficult to imagine a movement sufficiently tectonic to produce a victory the size of President Obama’s without an enormously persuasive prime mover. But also, while the impressive “mobilization” of which Jenkins speaks largely ended on election day, Obama has since moved from 62% to 82% favorability ratings in the polls. He may have mobilized his way to victory, but he has earned a mandate-sized store of political capital by persuading the public of his competence during the transition.

Now, it’s back to mobilization for the President—and he should make it snappy if he is to make most effective use of that capital. Members of Congress know in their heart of hearts the difference between fiscal roads high and low. On the former, they make difficult choices which do not entirely alleviate the short-term pain of all their constituents. Of course, Mr. Obama’s own party tends to be less than rock-ribbed in this regard. But as Jenkins points out:

And yet, Mr. Obama’s goals are perfectly amenable to a genuinely reforming approach….End the tax preference for employer-provided health care. Make it up to workers with an income or payroll tax cut. This one step would move the economy towards consuming health care efficiently and designing insurance policies that actually insure rather than channel the privileged class’s health spending through a tax loophole….Nothing else would do more to improve the country’s fiscal prospects, or do more to lend practicality to Mr. Obama’s goal of universal coverage….

There’s a lesson here. Real reform is often deceptively simple, leading naturally to changes in behavior that are more far-reaching than any detailed government prescription could hope to achieve….

Mr. Obama has been handed an opportunity. He will put the welfare state on a path to solvency or he won’t….His stimulus spending plans will blow up in his face unless the bond markets (which will be called upon to finance them) are convinced the dollar will remain sound and the spending under control.

There’s obviously a lot in there for anyone to mull. But Jenkins’s point remains both simple and age-old: the low road of “avoid the pain, damn the consequences” is easy. The high road is hard, because it requires of a President both the conscience to explain economic tradeoffs honestly to the public, and the leadership to lean on legislators to do what they already know is right. Obama seems to have made some shrewd choices as his internal fiscal conscience keepers: Orszag proved his just-the-facts cred at CBO. Former Hamilton Project Director Furman learned at the feet of Bob Rubin who—despite his recent fall to earth—was the last public servant to act successfully as a President’s fiscal conscience. Summers has no problem speaking his mind, whether anyone asks or not. And even if Team Obama completely whiffs on its fiscal choices, Volcker’s status as an eco-tough legend seems secure.

But even with those fellas hanging about, a loyal opposition in the economic policy press is welcome and necessary. Hopefully, Holman Jenkins will continue to be a leader in fulfilling that role.

No Comments » | Economics/Business, Politics | Permalink
Posted by johndthornton

So Much for Ds’ Wishful Thinking

January 17, 2009

For Newsweek, Texas Monthly Puba Evan Smith ’splains why John King’s Magic Map will likely be obsolete before Texas Democrats ever light it up. As Evan says, “before a state can be in play at the Presidential level, it has to be in play at the state level.” And, without the Texas Ds’ answer to Mark Warner anywhere in sight, they (we) seem to be short of both candidates and money.

I’d like to believe that Evan’s “NFW” view of the Democrats’s state-wide chances may be a little extreme, potentially in the case of a Watson/McCaul race for Attorney General. But NFW is also the view held by Smith’s colleague Paul Burka. He writes in the upcoming issue of TM that the next Governor of Texas will be determined by the 600,000 or so Rs who typically turn out for the primary, plus-if Sen Hutchison runs-those who are moved to action by sheer drama of a primary which reflects the battle for the soul of the national party. A D could win a special election for Hutchison’s seat, but it seems more likely that Houston Mayor Bill White and former Comptroller John Sharp remind us the meaning of internecine. As if Texas Ds really need such a reminder.

These are both excellent pieces. Sort of the long and the short versions of the state of Texas politics.

No Comments » | Politics | Permalink
Posted by johndthornton

Huh?

January 10, 2009

In a sidebar to the NYT’s coverage of Gov. Paterson’s senatorial vetting process, we learn that Gov. Palin remains a media omnivore, just as her peeps assured the press she always had been in their post-Couric damage control drill. The bad news is that this woman is still with us; the good is that her circumlocutions are now are recorded 22 pages behind where they were only a couple of months ago. Here’s to upping that number:

“I’ve been interested to see how Caroline Kennedy will be handled and if wshe will be handled with kid gloves or if she will be under such a microscope…It’s going to be interesting to see how that plays out, and I think that as we watch that, we will perhaps be able to prove that there is a class issue here also that was such a factor in the scrutiny of my candidacy versus, say, the scrutiny of what her candidacy may be.”

And stuff.

1 Comment | Politics | Permalink
Posted by johndthornton

Dr. Leavitt’s Scary Diagnosis

January 1, 2009

George Will’s column with this title in today’s Washington Post sketches a valedictory warning from the man who has served as Director of HHS for the last four years. Leavitt could easily write the health care equivalent of An Inconvenient Truth for health care. But I’m not sure how much good he would do. For whatever reason, the American public seems to have been as anesthetized to the seriousness of the problems as they were numbed to the images of returning body bags at the end of the Vietnam war. None of Leavitt’s admonitions is new, but that doesn’t make them any less frightening.

At current course and speed, the percentage of average household income spent on health care will nearly double over the next two decades, from 23 to 41%;
The nation’s current economic difficulties will likely accelerate the expiration of the Medicare Part A Trust from 2019 to 2016;
23% of patients have five or more chronic conditions and consume 67% percent of Medicare expenses; a very high proportion of those are smokers;
And perhaps most tellingly, 30% of Medicare benefits are consumed in the last year of a typical patient’s life.

As someone who has typically let my eyes glaze over when the topic of health care reform is raised, I like to think of the 2008 as the year when I woke up and got at least remedial training in the fundamentals of the problem we face going forward. The punch line, by the way, is that American society will be forced to make health care rationing choices that are as much about fundamental morality as they are about dollars and cents. It is both good and bad news, I suppose, that other countries beat us to this conclusion decades ago.

If you’re looking for remedial reading on health care reform, I’d recommend this very manageable three-pack: Incoming HHS Director Tom Daschle’s Critical; incoming OMB Director Peter Orszag’s June Congressional Testimony;and Brownlee’s ’s Overtreated.

2 Comments | Economics/Business, Politics | Permalink
Posted by johndthornton

Peter Orszag and Health Care Reform

December 30, 2008

Back in early August, I copped to a mild man-crush on Peter Orszag, the director of the Congressional Budget Office, for his directness in Congressional testimony:

Future growth in spending per beneficiary for Medicare and Medicaid—the federal government’s major health care programs—will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation’s central long-term challenge in setting federal fiscal policy. The bulk of the projected increase in health care spending reflects higher costs per beneficiary rather than an increase in the number of beneficiaries associated with an aging population.

To my delight, Orszag will stay on the scene as Obama’s director of Office of Management and Budget.

If, like me, your vision of the OMB head is still the uber-partisan David Stockman being run over by a bicycle messenger; and if, like me, you couldn’t explain the difference between OMB and the Congressional Budget Office if a table at Rao’s hung in the balance, to our rescue now comes Ezra Klein writing in The American Prospect:

The OMB assesses the cost of all those items, giving each its Number, and makes recommendations to the president on which to choose. In that, it differs sharply from the CBO. The CBO’s influence on policy is indirect, as members of Congress work to understand its guessing formula and construct their bills accordingly. But the CBO never makes recommendations among competing options. A chairman cannot ask the director to identify the best path forward. Conversely, the OMB, and its director, offer explicit advice to the president. If the CBO is like using the software Quicken to better understand and manage your finances, the OMB is like a financial adviser who simply tells you what to do with your money. “Some OMB budget directors might meet every morning with the president,” says Reid Cramer, a former OMB analyst. “It’s a very inner-circle position.”

Which brings us back to the now very-inner circle Peter Orszag. What was fascinating about Orszag’s testimony last summer was not only the directness with which he tied the ability to shrink deficits almost exclusively to success on health care reform. Also, he could not have been more clear that without breaking the uniquely American addiction to adopting new medical technologies without regard to their efficacy, there would be no meaningful health care reform. Citing data from multiple studies between 1940 and 1990, Orszag estimated that the introduction of new technology accounted for 38-65% percent of the rise in health care costs for that 50-year period (See Table 4). This, in the office which supposedly playsa purely staff, “honest broker” role for Congress.

Klein asserts-with a lot to back him up-that Orszag will be Obama’s “secret weapon” in assuring the passage of real health care reform. To do so, Orszag will need to ally himself with newly appointed Health Care Czar Tom Daschle, who favors a Federal Reserve Board type structure for health care administration. And from what I’ve read, their perspectives seem conjunctive and their egos compatible. The tricky thing about a Orszag/Daschle axis, is that their worldview will require more short term spending-and probably a lot more-to erect the infrastructure necessary to collect outcomes data. That won’t excite members of either Congressional delegation who will be looking for a quick fix and howling about the loss of Congressional power Daschle is likely to propose. Any real proof of the efficacy of this approach won’t be available until well into Obama’s second term, at earliest. Let’s hope that this Administration-with Orszag and Daschle at the forefront-has both the will and political capital to turn this ballsy and necessary approach into policy.

No Comments » | Economics/Business, Politics | Tagged: daschle | Permalink
Posted by johndthornton

Disaster Waiting to Happen?

December 28, 2008

Surely Ms. Kennedy can do better than this, as reported by the NYT:

But when asked Saturday morning to describe the moment she decided to seek the Senate seat, Ms. Kennedy seemed irritated by the question and said she couldn’t recall.

“Have you guys ever thought about writing for, like, a woman’s magazine or something?” she asked the reporters. “I thought you were the crack political team.

If not, surely Gov. Paterson can do better than her.

UPDATE: It gets worse. I just saw a snippet of her first sit-down interview since she announced her intention to seek the Senate seat. All she could muster on the question of her qualifications was that she “has a lot of contacts” that she’d like to put to work for the people of New York. I mean, if that’s the key criterion, shouldn’t the concierge at the Four Seasons at least be in the running?

No Comments » | Politics | Permalink
Posted by johndthornton

Reader Comment on Wall St. Versus Detroit

December 12, 2008

In my post supporting Paul Krugman’s dim view of the proposed (and now imperiled) Congressional bailout of the Big Albeit Imploding Three (BAIT) auto makers, I posed questions which are likely destined for the ash can of the rhetorical:

How could the math of the bailout possibly make sense? If there are really 3 million jobs in jeopardy, how does $5k per job really get a horribly unprofitable and competitively disadvantaged industry out of trouble? Wouldn’t it make more sense to spend that (and regretfully, probably a lot more) on retraining displaced workers up and down the U.S. automotive supply chain; providing incentives to (or even investing in) startups like Better Place; and even providing supplemental, directed unemployment benefits? Isn’t that a better use than propping up a busted business model with no real game-changing plan for the future? Surely, holders of stock and debt in these enterprises should get up close and personal with the meanings of “common” and “unsecured, ” respectively, before the taxpayers start writing checks. Shouldn’t they?

Among my many omissions was my failure to explain why I supported the unfortunately named TARP while remaining willing to leave BAIT circling the Chapter 11 drain. John in Austin cut right to the error of my ways:

I’m sorry, but you need to travel to Michigan and take a look around. If these companies are allowed to collapse, the blight and disaster will cost far more than some kind of government-sponsored workout will cost now. I also find it interesting that you’re not offended by the far greater amount of $$ that the ex-GS crew at the US Treasury has thrown on their once and future workplace on Wall St with very few strings attached. Why is banking and trading any more important than making Cadillacs? Perhaps you’re on the far side of the class divide and figure that middle-class America should continue to live hand to mouth while the rich and powerful live the good life, and send the bill to future generations?

Well, where to start. First of all, I should probably take a look around in Michigan. That’s what I continually urged the Obama campaign to do this fall, warning that this would be a “people with problems election,” in which Michigan would be ground zero. Second, I’m embarrassed about the ham-handedness of Treasury’s execution of the TARP and the fire hose-full of alphabet soup which has followed. That said, Treasury and the Fed were dealing with a helluva mess metastasizing at dizzying speed, and I’m glad it was Paulson/Geithner/Bernanke standing in the breach rather than yours truly (or Barney Frank and Chris Dodd, for that matter). And third, I should explain what I see as the difference between saving Wall St. and saving BAIT.

To oversimplify the finanical crisis by about three orders of magnitude, our problem was and is that a whole stew of factors-a lack of regulation being prominient among them but by no means solo-left us with multiple single points of failure. In retrospect, the failure of Lehman-a rather minor player in the grand global scheme-nearly locked up world-wide liquidity in a manner that caused a Run On The Bank, writ large. Almost no one argues that the failure of AIG would not still still be rippling through global commerce-forget Wall Street-with tsunami-like force. What would happen if 40-ish% of insurance contracts were suddenly null and void? Nobody-whether in Washington, New York, London, or Hong Kong-nobody could even fathom it. That’s why Treasury and the Fed demanded and got unprecedented power and flexibility. The confluence of greed and underregulation produced a system of global finance with so many interdependencies that the whole system was vulnerable to failure if even one link in the hopelessly knotted chain broke.

And sure, it’s easy to be bitter that the guys (and they were almost all guys) who knotted the chain got really, really rich in the process. It’s easy-but it’s just not very relevant, especially since a lot of the $700 billion is going to go to bail out normal people who made abnormally stupid personal finance decisions.

We only have one global finance system, and it’s subject to the same Pottery Barn Rule which Colin Powell invoked to warn the Bush Administration before invading Iraq: “you break it, you buy it.” There was-and is-no substitute for the finance system’s ultimate product, which is the reliable flow of global commerce.

No so for BAIT. There are, as has been well chronicled, plenty of substitutes for its products. Those substitutes are generally better-designed, cheaper, and more attractive than the products BAIT produces. That has been true for a generation, at least.

“Well,” John might say, “you’re missing the point. BAIT supplies cars, sure, but they also supply 3 million jobs, if you include the entire automotive supply chain.” I doubt that’s true, but I’ll take it on faith for the sake of argument. And my argument is, no one-not the U.S. Government or the Almighty Himself-is going to save even a fraction of those jobs with a $15 billion injection-$5,000 per job, or something like 6-7% of a worker’s average annual salary. The United States automotive industry as currently configured is just dead. I’m sorry, it just is. And there’s not even a glimmer of hope for a miraculous resurrection. It’s tough to tell where BAIT is worse-positioned: in conventionally powered cars and trucks, or in the future market for ”next-generation” vehicles emphasizing fuel efficiency. The only question is when we pull the plug on the patient.

Pouring $15 billion into BAIT would truly help only the narrowest slice of the automotive workforce: those few who could make the leap to retirement before the last government nickel drops through the slot and BAIT is back at the brink of bankruptcy. And even then, there’s that nasty little problem of what “retirement” looks like, given the sorry state of BAIT’s pension assets.

No, if we really have 3 million workers who are dependent on the solvency of BAIT, the government should get really serious. I’m making up a number, but between directed-short term assistance, retraining, and pension assistance, isn’t the more likely amount needed more like $50k per job- $150 billion in total, an order of magnitude more than proposed? That certainly seems more realistic, as does the stipulation that none of this amount should go to fund the operating losses of a business broken beyond repair.

Oh, and by the way, John, this is where the inter-generational rubber seriously hits the road. We’ll be borrowing every cent of that $150 billion from your kids. Well, we’ll actually be borrowing it from China, but your children are far more likely to have to pay it back than we are. If you want an idea of how utterly lacking in a sense of humor your kids’ Chinese creditors will likely be by that time, check out James Fallows’s recent piece in The Atlantic.

And as for me being too far on the “other side of the class divide and figure that middle-class America should continue to live hand to mouth while the rich and powerful live the good life, and send the bill to future generations,” well, I suppose that’s a reasonable speculation. I cop to which side of the class divide I’m on, but I don’t know about the rest, and don’t think I argue my pocket book very often. And especially for somebody without kids, I think I stick up for future generations more than most people with a whole brood (see here, here, and here, and here.). But that’s obviously for readers to decide.

I hear you, John. But I still really hate the idea of a Big 3 bailout. Hate it, hate it, hate it.