Monthly Archive for July, 2011

The Debt Crisis: Bring Back Earmarks!

Posted by Jason Dobbins on July 29, 2011. 0 Comments

So John Boehner was unable to get his debt-ceiling bill through the House last night, due to defections on his own side. He’ll likely pass something today, after making some tweaks that will make the bill even more unpalatable to Senate Democrats and the president. Ezra Klein explains the wonderful Catch-22 at work here: “If Boehner is to have any chance of passing his bill through the House, he needs to make it completely unacceptable to the president and the Senate.” So, the only bill that he can get through the House is one that has no chance of ever becoming law. If it has a chance of becoming law, it won’t get passed, in which case it will never become law. Got it?

Boehner and his whip team were clearly struggling to bring the handful of Republican holdouts aboard. They’ve tried private coercion, using Ben Affleck movie clips to appeal to party loyalty violent tribalist instincts; they also tried pizza, lots and lots of pizza.

One thing they don’t have at their disposal is the ability to offer an earmark to buy the support of a stubborn member. House Republicans banned earmarks last year. There’s a good case to be made that though nobody liked defending the dreaded “pork-barrell spending” menace, the truth is that it never amounted to much money, and it could have provided the legislative lubricant necessary to actually get things done.

Nonetheless, some congressmen are cheering the haggle-free environment of the current debt negotiations:

Rep. Jeff Flake (R-Ariz.), one of the last holdouts and a candidate for the Senate in Arizona, spoke of how “refreshing” it was to see a lobbying effort bereft of the legislative grease that used to secure last-minute votes in the House. He said the vote-building would have “cost $20 billion” in the past.

Of course, without that “legislative grease” the entire engine of Congress has seized. Some members seemed to be wistful about the general dearth of inducements on offer: “I am trying to find a way to vote for this bill,” said Representative Bill Huizenga of Michigan. If this were the Tom Delay era, we’d do a quick cut to a few months later, with a smiling Huizenga cutting a ribbon at a groundbreaking for some bullshit project in his district, somehow having “found a way” to vote for the bill in question.

But as it stands, we watch as foundering Republicans look elsewhere for an answer:

“Where’s the chapel?” Rep. Tim Scott (R-S.C.) asked as he emerged from an arm-twisting session with Majority Leader Eric Cantor Thursday night. The freshman lawmaker explained that he wanted to “go to the divine source.”

In a room off the Capitol Rotunda, Scott joined a prayer session with fellow South Carolinian lawmakers. “I hope the Lord. . . gives men wisdom when they desperately need it,” Scott explained.

As it happens, the Lord gave Scott the wisdom to oppose Boehner. “I think divine inspiration already happened,” Scott said. “I was a ‘lean no’ and now I’m a ‘no.’” And he’s not much worried about default, saying: “I hope the Lord blesses our nation in a way that is measurable.”

Sure, no need to act like an adult and ponder the consequences of your actions, congressman! The Lord will handle this one for you! (also, I like the “in a way that is measurable” part. Don’t just bring us amorphous good tidings, Lord, we need hard numbers.)

Anyway, there might be some science to back up the idea of earmarks as a necessary legislative evil. Jonah Lehrer recently looked at some studies on the neuroscience of trust. The studies found that you start to trust someone not because they seem honest or friendly, but on the basis of expected reciprocity:

We trust them because they get us the good stuff, delivering what Montague refers to as the “social juice” of reciprocity. When we say we trust someone, what we’re really saying is that they’re a reliable source of what we want. I scratch your back, you scratch mine.

So trust is built on the idea of favor-trading and the distribution of rewards. Jonah notes that if you proscribe favor-trading in Congress, and limit the leadership’s ability to distribute rewards, you might be creating far more dysfunction than you are mitigating:

It’s easy to hate on Congressional pork and mock all those silly projects that get snuck into bills. But when we do without pork, we also deny our politicians a means of building trusting relationships across the aisle. In this sense, those bridges to nowhere are a sort of benevolent inefficiency, a form of waste that, just maybe, keeps us from becoming a banana republic.

It’s an interesting hypothesis, but I don’t really think lack of earmarks explains very much about our current political climate. First, even if Boehner were able to bring in some more votes with earmarks, we’d still have a crappy bill that was dead-on-arrival in the Senate. Earmarks might help Speakers keep their caucus in line but they don’t prevent legislative stalemate.

Second, for a lawmaker to be pursuadable with an earmark, he at least has to agree with the underlying goal of the legislation. That’s not the case here. Dave Weigel, whose reporting and analysis on this has been excellent, explains:

In other situations where a majority party needed to grind out a few final votes, it called on members who agreed with the concept of legislation but quibbled with the text. When Harry Reid needed to get to 60 votes for the health care law, he knew Joe Lieberman and Ben Nelson wanted to hand the president a victory, and wanted to expand health care coverage, but had a couple of concessions in mind. When Nancy Pelosi needed the final votes for the Senate’s health care bill, she could appeal to progressives like Dennis Kucinich and pro-life liberals like Bart Stupak, because they wanted a health care bill, too.

John Boehner and Eric Cantor couldn’t sell their Republicans in the same way. Their diehards never wanted to raise the debt limit.

Right. These “diehards” either think the dire consequences of default or delinquency are overblown or a mirage altogether, or they think such a catastrophic shock is somehow perversely desirable. Or else, we’re left with the bleak rationale offered by poor Rep. Scott: “I hope the Lord blesses our nation in a way that is measurable.” Boy are we screwed.

Winning the Future with More Women in Senior Positions

Posted by Jason Dobbins on July 26, 2011. 0 Comments

With high-profile women like Hillary Clinton, Susan Rice, and Michèle Flournoy roaming the halls of power, it’s easy to overlook the fact that women are still highly unrepresented in all foreign policy- and national security-related professions. In academia, think tanks, and in leadership positions at the Pentagon and the State Department, women do not crack 30% representation, and in the more explicitly “hard security” areas, the number is often in the teens.

Heather Hurlburt, head of the National Security Network, veteran think tanker, and former advisor and speechwriter to President Clinton and two Secretaries of State, wrote a piece in Foreign Policy wondering why this might be, what the practical costs are, and how to ameliorate the problem. Hurlburt is particularly concerned with the dwindling effect, with women at or near parity at the graduate school- and entry-level, but steadily disappearing at the higher echelons:

As the female head of a nonprofit with “National Security” in its title, I see a flood of talented young women as interns, job-seekers, and colleagues. No one has told them they’re not supposed to like “hard security.” They want to work on everything and climb the ladder as much as the men do. In fact, their confidence and assertiveness tends to unnerve my older male colleagues. The real question is, where do they go between the time they pour into the intern ranks at 22 and the time they are my peers and my mentors’ peers?

This same dwindling effect occurs in many traditionally male-dominated fields, including scientific and biomedical research. Women swell the ranks of grad students and young research fellows, but then abandon the academic track in droves as time goes by:

Women constitute approximately 45% of the postdoctoral fellows in the biomedical sciences at universities and research institutions in the USA, but a much lower percentage of women hold faculty positions. In the US National Institutes of Health (NIH; Bethesda, MD) Intramural Research Program, for example, women make up only 29% of the tenure-track investigators and hold just 19% of the tenured senior investigator appointments.

It is not just a delayed effect as we wait for all those young eager female students and postdocs to make their way up: in the last ten years the percentage of tenure-track or tenured women investigators at NIH has remained unchanged.

So why aren’t women sticking around to become leaders in fields like national security and scientific research? For her part, Hurlburt notes that part of the problem is a feedback loop that tells women at formative junctures of their career that such male-dominated professions are perhaps not “for” them. So, after studying and interning in “hard power” fields:

…many more women [eventually] find themselves in “soft power” policy areas. Does this happen because of something essentially feminine? No. About once every five years, starting in college, someone has told me that women “don’t like” hard security. Eventually, many women take the hint: If moving from defense to development buys you a more congenial workplace and bosses who seem to value you more, then it’s no wonder that the ranks of women in “hard security” dwindles along the way.

I think this is a big factor. A survey of NIH postdocs reveals that while two-thirds of male postdocs say they want to pursue a tenured PI position, only a half of women postdocs say the same. Like Hurlburt’s example, there is no essentialist feminine reason why women are more apt to drop out of the ranks at a higher rate than men. Part of the problem must be that just as in the national security establishment, from the early stages of graduate school and postdoctoral work, a large majority of one’s mentors, professors, department heads, field leaders, career role models, etc., have been men. Not only does that tend to set an adverse example to aspiring women, but it creates a boy’s club environment that naturally leads to various inequities of opportunity. Hurlburt notes:

[W]e must be honest that the core problem is that many men still turn first to other men — in hiring, but also in picking conference speakers, media spokespeople, and handing out assignments. If you don’t want to call it sexism, it is at least a bias toward comfort with what’s familiar.

The cumulative effect of this bias in the sciences is clear: a large reason woman postdocs do not want to pursue a PI position is that they do not feel they have a sufficient body of promising independent work to build upon: 67% of men, and only 48% of women, said they had a project that they could take with them when becoming a PI. I find that a devastating disparity. Not surprisingly then, men (59%) were far more confident than women (40%) that they would one day obtain a PI position. Likewise, women were more apt to stop pursuing a PI position if they failed in their initial attempt. 58% of men said they would just try again, and only 41% of women said the same.

Though there’s clearly more going on here, difference of views toward family and children are also a major factor in the choice of a scientific career. I don’t have detailed data for the national security fields, but children would seem to be less of an issue there, since it’s not obvious that a soft power/development career is any less demanding or more family-friendly than a hard power/security career.

Among NIH postdocs however, “more than 21% of women, but only 7% of men, said that plans to have children or to have more children were extremely important considerations in planning their career.” Overall, male postdocs were far less concerned with issues of time availability and potential child care and family responsibilities, and women reported being far more willing than men to make changes to accommodate their spouse’s career. All of this adds up to a steady abandonment of the tenure track by women.

It’s hard to know how to disentangle the cause and effect with all this data. Why are young female scientists less confident in their ability to become PIs? Is it because they know that they will bear the brunt of family and child responsibilities later on? Is it the adverse feedback of simply not encountering many senior female role models, which leads them to question the possibility of success at that level? Is there subtle bias in how their ubiquitous male supervisors (77% of women postdocs reported that both their current and previous mentor/supervisor were men) allocate work and encourage project development?

The biggest danger to not getting this right is what Heather Hurlburt calls a “straightforward loss in the ‘war for talent.’”

With American women now a majority of college graduates, receiving an ever-larger proportion of postgraduate degrees, and outperforming men academically, we’re missing brainpower if they don’t form a significant part of our national security infrastructure.

And likewise for our scientific research infrastructure. If left unaddressed, we’ll continue losing bright women to less demanding fields and sub-fields, and we’ll concede more scientific achievement to countries that have more generous public family support structures and more equitable norms. All of this is obviously way better than it was a few decades ago (here is a Bloggingheads episode of Heather discussing the issue with her mother, who graduated from the Fletcher School in 1961). But clearly there’s a lot to be done.

Grover Norquist: Just Don’t Look!

Posted by Jason Dobbins on July 22, 2011. 0 Comments

We all perhaps remember the Simpsons episode where giant advertising mascots come to life and start terrorizing and destroying the town. To save the day, Lisa figures out that since the monsters are really just advertising props, if nobody pays attention to them, they lose the source of their power and die. Paul Anka shows up and writes a catchy little ditty to educate the public on the new monster-slaying method:

Paul Anka: [singing] To stop those monsters, one-two-three,
Here’s a fresh new way that’s trouble-free.
It’s got Paul Anka’s guarantee…[winks]
Lisa: [singing] Guarantee void in Tennessee.
Together: [singing] Just don’t look. Just don’t look.
Just don’t look. Just don’t look.

Everybody starts looking away, the monsters collapse to the ground from neglect, and peace and order is restored to Springfield.

This is how I feel about Grover Norquist, head of Americans for Tax Reform, and peddler of the infamous Taxpayer Protection Pledge, whose signatories vow never to vote for any tax increase under any circumstances. Norquist has suckered 236 current members of the House of Representatives and 41 senators into signing this thing.

Now where does Norquist derive his power from? Is he some uniquely charismatic and fearsome individual? Don’t think so. His pledge is popular because his anti-tax message already reflects the mainstream view of the Republican party and its constituents. It seems to me that Republican officeholders already have plenty of incentive to hold the line on tax increases, as Republican voters would presumably punish them at the polls if they didn’t do so. This dynamic works without Grover Norquist. If Republican politicians just banded together and said, “You know what, screw Grover Norquist and his dopey pledge,” and then, per Paul Anka, just looked away, his lifeforce would evaporate and he’d just go back to being that sleazy guy who helped Jack Abramoff launder money to Ralph Reed. Just don’t look!

Alas, instead of taking cartoon-Paul Anka’s sensible advice, we are doing the exact opposite of “looking away” when it comes to Mr. Norquist. Today, we have handed Norquist the megaphone that is the New York Times op-ed page to discuss the role his pledge is playing in the current deficit/debt-ceiling impasse. In his piece, he warns that “fiscal conservatives must stick to their commitment to oppose tax increases and fight to reduce the size of the federal government.”

The problem to be solved is not the deficit; it is overspending….The issue, in other words, isn’t the pledge; it’s Washington’s inability to deal with its own overspending. There is only one fix for a spending problem: spend less.

He’s right, his pledge says nothing about deficits. But he’s very wrong to say that by committing to oppose tax increases, politicians have also committed to “fight to reduce the size of the federal government.” Norquist notes proudly that he’s been pushing this pledge since 1986. Let’s take a quick look at how successful Norquist has been at inducing his signatories to “reduce the size of the federal government.”

history

Well as we can see, once Norquist unleashed his inviolable pledge, the great machinery of the state bent its collective will to the task of cutting spending and “reducing the size of the federal government,” and here we are today with balanced budgets as far as the eye can see. Oh, wait, what’s that you say? Spending and debt have exploded since politicians started deciding to let Norquist bind them to a policy of never raising enough revenue to pay for the spending they do? Hmm.

It turns out that Republican politicians who break their oath to the Constitution by signing a superceding oath to Grover-freaking-Norquist don’t care at all about deficits and the size of the federal government. Look back at the debt chart. If Norquist himself was actually principally worried about overspending, then why didn’t he create a pledge that simply forces signatories to pay for all the spending they want to do? Merely asking people to stop raising revenue to pay for stuff accomplishes nothing; it’s a plan completely devoid of any corresponding policy objective. For Norquist, taxes being lower is the means and the end. It doesn’t reduce spending, doesn’t lower debt, doesn’t shrink the state; it’s marginally stimulative but then so is direct government spending. He just has an ideological aversion to the constitutional power of taxation, and he set up a little nonprofit to whine about that.

It’s certainly not Norquist’s fault that politicians like to spend borrowed money, but quite contray to his intent, his pledge enables this behavior. We could all do the teetering Republic a big favor by looking away from this charlatan and demagogue.

What’s in a Name

Posted by Jason Dobbins on July 20, 2011. 0 Comments

A literary digression today. Via the Browser, I came across this charming piece in Vanity Fair on Joseph Heller and the long genesis of his masterpiece Catch-22, which was published forty years ago this fall. The novel’s radical structure and tone made editing and marketing an arduous task; but as it turns out, not as arduous as finding a proper title for the thing:

And then one day Heller got an urgent call from [his editor] Gottlieb, who said the title Catch-18 would have to go. Leon Uris was preparing to release a novel called Mila 18, about the Nazi occupation of Poland. Uris was a well-known writer—Exodus had been a huge best-seller. Two novels with the number 18 in the title would clash in the marketplace, and Heller, the unknown, was bound to get the short end of the deal. The number had always been arbitrary, part of the joke about military rules. Still, Heller, Gottlieb, and Bourne had long thought of the book as Catch-18, and it was difficult to conceive of calling it anything else.

“We were all in despair,” Gottlieb recalled. In his office, he and Heller sat opposite each other, spitting out numbers like two spies speaking in code. They liked the sound of “Catch-11”: hard consonants followed by vowels, opening up the mouth. Ultimately, they decided it was too close to the new Frank Sinatra movie, Ocean’s Eleven. They agreed to sleep on the question of a title and try again later.

On January 29, 1961, Heller sent Gottlieb a note, bringing to bear all his adman persuasion: “The name of the book is now CATCH-14. (Forty-eight hours after you resign yourself to the change, you’ll find yourself almost preferring this new number. It has the same bland and nondescript significance of the original. It is far enough away from Uris for the book to establish an identity of its own, I believe, yet close enough to the original title to still benefit from the word of mouth publicity we have been giving it.)” Gottlieb wasn’t sold.

[Heller's agent] Candida Donadio would one day attempt to take credit for retitling the book with the name that eventually stuck. The number 22 was chosen as a substitute because October 22 was her birthday, she said. “Absolutely untrue,” Gottlieb said later. “I remember it totally, because it was in the middle of the night. I remember Joe came up with some number and I said, ‘No, it’s not funny,’ which is ridiculous, because no number is intrinsically funny. And then I was lying in bed worrying about it one night, and I suddenly had this revelation. And I called him the next morning and said, ‘I’ve got the perfect number. Twenty-two, it’s funnier than eighteen.’ I remember those words being spoken. He said, ‘Yes, it’s great, it’s great.’

Irrational as this is, it’s tough to imagine anyone sitting around forty years later marveling at the impact and accomplishment of that seminal anti-war novel CATCH-14.

Likewise, it’s worth contemplating whether high school students everywhere might have been saddled reading about Nick Carroway’s adventures with Daisy Buchanan in that great American novel…Trimalchio in West Egg. Or worse:

A month before publication, after a final review of the proofs, [Fitzgerald] asked if it would be possible to re-title it Trimalchio or Gold-Hatted Gatsby but Perkins advised against it. On March 19, Fitzgerald asked if the book could be renamed Under the Red, White and Blue but it was at that stage too late to change.

Hemingway famously looked to the bible, particularly Ecclesiastes, for all his book titles. In 1927 he wrote F. Scott Fitzgerald about his difficulties settling on a title for his novel Men Without Women:

So, I being up in Gstaad at the time went around to all the book stores trying to buy a bible in order to get a title. But all the sons of bitches had to sell were little carved brown wood bears. So for a time I thought of dubbing the book The Little Carved Wood Bear and then listening to the critics’ explanations. Fortunately there happened to be a church of England clergyman in town who was leaving the next day and Pauline borrowed a bible off him after promising to return it that night because it was the bible he was ordained with. Well, Fitz, I looked all through that bible, it was in very fine print and stumbling on that great book Ecclesiastics, read it aloud to all who would listen. Soon I was alone and began cursing the bloody bible because there were no titles in it—although I found the source of practically every good title you ever heard of. But the boys, principally Kipling, had been there before me and swiped all the good ones so I called the book Men Without Women hoping it would have a large sale among the fairies and old Vassar Girls.

PoliticsInVivo had a working title of Jason Bloggins for a while so be happy with what you’ve got I guess.

Debt Ceiling Blues

Posted by Jason Dobbins on July 14, 2011. 0 Comments

I didn’t want to get too far into this debt-ceiling negotiation business, but the level of dysfunction and absurdity is becoming really quite impressive. Two items stuck out at me today.

First, unique among all politicians past and present, Mitch McConnell continues to be incapable of hiding his true intentions or motivations. Just ask the guy what he’s thinking, and like an old-school supervillian he’ll just spill his whole nefarious plan:

In a radio interview on the Laura Ingraham Show, McConnell predicted that if Congress fails to act, Obama will argue "that Republicans are making the economy worse and try to convince the public, maybe with some merit, if people start not getting their Social Security checks and military families start getting letters saying their service people overseas don’t get paid."

"You know it’s an argument he has a good chance of winning, and all of a sudden we (Republicans) have co-ownership of a bad economy. That is a very bad positioning going into an election," he said.

So if no deal is reached, in the state of nature that follows after we cut federal spending by 44% in one month, with GDP plummeting 10% in that time, with the president choosing whether to pay for Medicare or Social Security or national defense or law enforcement or food stamps or student loans or food inspection or the salaries of 2 million federal employees; with interest rates spiking and our credit rating downgraded—Mitch McConnell will be in his Senate office very worried that this dystopic nightmare will be "very bad positioning going into an election." Bad positioning! 

McConnell said his first choice was to reach a good compromise with Obama.

Short of that, "my second obligation is to my party … to prevent them from being sucked into a horrible position politically that would allow the president probably to get re-elected because we didn’t handle this difficult situation correctly."

So again, if there is no deal, we’re only left wondering if mitigating the resulting suffering of the American people aligns with McConnell’s incentives on positioning his party for the presidential election. Let’s hope so! Because McConnell is happy to engineer an economic crisis so long as it doesn’t lead to Obama getting reelected. If that happens McConnell will really be kicking himself, not over the crisis of course, but over the reelection.

Do his constituents in Kentucky just not read this stuff? Or can they possibly share his concerns for political positioning at the expense of material economic conditions?

The next item comes from Eric Cantor, who really is the anti-McConnell in terms of his willingness to marry reflexive cynicism with outright mendacity:

"Currently, there is not a single debt limit proposal that can pass the House of Representatives," Cantor said in a written statement before Wednesday night’s meeting.

Cantor apparently expects us to interpret that statement as an indictment of the proposals, not of the House of Representatives. But let’s recap. There have been lots of proposals. There are very large spending cut proposals, not-so-large proposals, proposals with lots of revenue, proposals with not-so-much revenue, proposals slashing entitlements, proposals not. And of course there’s the non-proposal proposal: Congress can just do a standalone vote to raise the debt ceiling any time it likes, problem over. On the other side of this flood of proposals there’s been one obstinate Republican-controlled House. Is the main impediment here really the inadequacy of the proposals? I think not.  

The reason I don’t generally like obsessing over these Congressional dramatics is that there’s always a deal, and so all the media time spent following the inane pre-deal back-and-forth, fretting over scenarios, interpreting leaks from the negotiations, trying to predict the next twist: it’s all mostly a big waste of time, since once there’s a deal all that ex ante analysis becomes completely irrelevant.

But this time around I think there’s real utility in highlighting the dangerous level of dysfunction and paralysis that currently characterizes our legislative process. It really can’t continue, and maybe if this sort of insanity becomes high-profile enough, people like Eric Cantor’s constituents will begin to reassess where their own true best interests lie and force political elites to respond. I have no expectation that will actually happen but it’s still worth a go.

Saving vs. Creating Jobs

Posted by Jason Dobbins on July 13, 2011. 0 Comments

Commenter Economist noted yesterday: "I recall a rule of thumb that each job prevented from being lost is worth much more than a new job created in terms of economic growth."

He’s exactly right about that. Take it from the Germans, who are in way better shape than we are:

Last year the government subsidized employers, including Siemens (SI) and Volkswagen, so they would keep employees working at reduced hours rather than fire them. Almost half a million jobs were saved, a feat Chancellor Angela Merkel recently called a “minor miracle.”

Under the short-work, or Kurzarbeit, plan, companies can temporarily move employees onto shorter work schedules when demand is weak. The companies pay only for the hours worked, while the government provides up to 67 percent of the workers’ remaining wages. The program supported up to 1.5 million employees at some 63,000 companies, according to the Federal Labor Agency.

Why didn’t we think of that? Germany’s unemployment rate is 6.9% now. Ours is 9.2%. Yet we’re worried about long-term spending curves. Germany has a top marginal income tax rate of 45%. But somehow the fact that they "raise taxes on job creators" (Boehner’s favorite warning) doesn’t seem to be hurting them too much.

Now these short-work German employees are still taking a pretty rotten pay cut. But this scheme has several advantages: it was cheaper for the state than unemployment benefits (and in the U.S. it would have kept Medicaid rolls from swelling so much, since of course in this country we lose our health care with our job); the worker is still producing something rather than sitting at home; it saves families the immense emotional strain of having an out-of-work breadwinner; and this is just a guess but people are more apt to spend their (reduced and subsidized) wage than they are their unemployment benefits, because they’ve retained their job and things feel pretty normal, as opposed to sitting at home with an unemployment check wondering if they’ll ever find another job again.

Commenter Economist also adds: "A simple case could be made that if private sector jobs are growing and public sector jobs are shrinking it’s hard to see how spending cuts (which will largely put people like teachers and other public sector workers on the unemployment roles) make sense."

Yes it’s very hard to see indeed. From the standpoint of overall demand, a job is a job, and a lost job is a lost job, public or private. Republicans would have you believe that public sector job losses don’t really count, and are in fact good because it means government is shrinking. Now that may or may not be a desirable outcome during boom times; we could have that debate. But for total consumption during a historical recession, it’s simply a major disaster. The biggest Republican blind spot is assuming that their preferred lever of tax cuts/spending cuts is the solution to all economic problems across all scenarios all the time. There is no evidence whatsoever that this is the case, and much evidence to the contrary, and it’s frustrating that the electorate and the media let them peddle this stuff over and over again.

The Deficit is Not a Real Problem; and, a Note of Support for Keynesian Stimulus

Posted by Jason Dobbins on July 12, 2011. 1 Comment

In his column today, David Brooks sees an equivalence of hubris between Democrats and Republicans in how they approach economic policy. There’s the "Keynesian Democrats" who thought that "gigantic deficit spending" would create jobs and end the recession; and there’s Republicans who think tax cuts are the best and only way to spur economic growth and job creation.

These…groups…have one thing in common: They all believe they have identified the magic lever. They believe they can control their economic fate.

I don’t get the strenuous attempt at equivalence here between the Democratic approach and the Republican approach, particularly in light of Brooks’ big column last week slamming the Republican Party as no longer being a "normal party," but one that "has been infected by a faction that is more of a psychological protest than a practical, governing alternative." That’s a pretty apt description. So are Democratic attempts at Keynesian stimulus really just as fancifully "magical" as Republican tax cut theology? 

The spending [Democrats] began must have done some good to cushion the recession, but either through a failure of theory or a failure of implementation, their lever was not as powerful as they promised. Federal spending rose from 19.38 to 24.91 percent of gross domestic product, but the economy refused to rebound and the world is awash in oceans of debt.

Well let’s see the good that spending "must have done":

Job-Growth-Chart 

Now these are just private sector job gains, which as we saw with the dismal jobs report this week, are mostly wiped out by job losses in the public sector, leading basically to a net stagnation in the unemployment rate in 2011. This stagnation is a terrible thing, but it’s a bit odd to imply, as Brooks does, that the culprit is too much "Democratic Keynesian" spending, rather than far too little. You can see in the trend above that the front-loaded stimulus spending quickly led to a reversal of the jobs-shedding nightmare, and after a year we began to add jobs, albeit much too slowly. Now that the stimulus has wound down we are seeing increasing bad news on the employment front.

Brooks’ comparison of Democrats who want to deficit-spend like crazy and Republicans who want to cut taxes like crazy is specious and misleading. Thirty-seven percent of the $787 billion stimulus consisted of tax cuts. And in 2010 the Obama administration cut the payroll tax and extended the Bush income tax cuts for two years. That’s a whole lot of tax cutting.

And contra Brooks, the administration’s efforts to lift the crisis seemed specifically premised on the idea that there was no one "magic lever." Apart from all the tax cuts, another 18% of the stimulus went to state and local governments to keep them solvent after their revenue streams collapsed. Is there something wrong with the theory that states going bankrupt is a bad thing?

The majority of the rest of the money went to a variety of transportation and utility infrastructure projects, as well as an increase in scientific research funding and unemployment benefits. I am sure there were problems of implementation and some sub-optimal choices on projects to fund, but maybe rather than a failure of a whole robust economic theory, it was just a failure by the administration to realize how bad things really were, and so the resultant policy response was insufficient. This was indeed an error, but hardly one caused by Democrats thinking they had a secret single magic lever to control the entire economy. I’m not sure what Brooks is talking about here.

Here is a simple graph from Matt Yglesias that makes a pretty powerful case for Keynesian stimulus. It shows personal consumption spending since 2001, with periods of recession shaded gray:

As you can see, private spending has recovered from the low of late 2008, but we are still way below the previous trend line (in red), and we don’t seem to be closing the gap at all. Keynesianism says that during periods of slack private demand government steps in to help fill that gap and bring things back up to trend. That wide gap you see is really ruinous. If people aren’t spending money then businesses won’t expand, factories won’t run at full capacity, goods won’t be transported, services and equipment won’t be utilized, and hiring will remain anemic to non-existent. Policymakers need to have some idea as to how to close that gap. Our stimulative and tax-cut efforts thus far have reversed the consumption and employment freefall. That’s good. However, we need to be doing a lot more.

But instead we’re left with the enduring, infuriating mystery of why official Washington seems to think that this consumption gap is no longer a problem. And instead of dealing with the very real and visceral crisis of low demand and persistent unemployment, everyone has decided it’s a fine time to pivot to the fake crisis of the long-term deficit, which only exists on paper in some theoretical alternative out-year scenario. It’s nuts. If David Brooks can wrangle up a magic lever to end this collective psychosis that’d be great.

Lots of Migrant Workers Want to Go Home

Posted by Jason Dobbins on July 8, 2011. 0 Comments

A fascinating report from the NYT explains that the flow of illegal immigration from Mexico has basically grinded to a halt. There are many reasons for this: tougher U.S. enforcement; fewer employment opportunities in the States due to the recession; higher smuggling fees; the threat of border crime; more avenues for Mexicans to immigrate legally. But that’s not the real story:

Another important factor is Mexico itself. Over the past 15 years, this country once defined by poverty and beaches has progressed politically and economically in ways rarely acknowledged by Americans debating immigration. Even far from the coasts or the manufacturing sector at the border, democracy is better established, incomes have generally risen and poverty has declined. […]

[E]ducational and employment opportunities have greatly expanded in Mexico. Per capita gross domestic product and family income have each jumped more than 45 percent since 2000, according to one prominent economist.

The piece profiles one rural Mexican family’s history of migration across three generations. Grandfather migrated back and forth for work beginning in the 1920s, and father Antonio did the same in the 1960s. The extended family still lives on the land purchased from the money both men earned in the U.S. But now Antonio’s 18-year old son Angel is in technical school and has neither the need nor desire to try his luck north of the border:

“I’m not going to go to the States because I’m more concerned with my studies,” said Angel Orozco, 18. Indeed, at the new technological institute where he is earning a degree in industrial engineering, all the students in a recent class said they were better educated than their parents — and that they planned to stay in Mexico rather than go to the United States.

The biggest distortion injected into our immigration debate is the idea that there is a sea of people in Mexico who want to come illegally to the U.S. in order to consume our social services and not pay any taxes and not speak English. This makes no sense. As the piece shows, Angel’s father and grandfather didn’t want to abandon their families and friends and hometown and embark on a long arduous trip to a foreign country. Why on earth would they? But in the middle of the century their region in Mexico provided no opportunity for education, for literacy, and for employment. What were they to do? By migrating to the U.S. in the ’50s Angel’s father could expect a wage differential of 10:1. Any immigration scheme or idea of human nature that expects someone to ignore such an economic imperative is simply nuts.

And the important piece is that though at the time both men could travel back and forth across the border with relative ease, they returned to Mexico to raise their families. They had absolutely no desire to uproot everyone and permanently leave their homesteads, even apart from the tremendous risk and cost that would be involved. They made money up north and then went home.

This to me makes a lot of sense and I have a feeling it comports with lots of migrants’ views on the ideal arrangement. But the lack of viable means of legal migration—particularly in Central America—means people who come here illegally are afraid to leave for fear of never being able to return. If it was easier for them to come and go legally for work, you’d have to think a large percentage would prefer to return home just like Angel’s father and grandfather.

The wage disparity between the two countries was down to 3.7:1 by 2003, and it’s even smaller now. Since 2000 the number of people with bachelor’s degrees in Mexico has doubled. But of course a college education is still quite rare overall, which makes those who earn degrees highly sought-after, and able to command very competitive wages in professional fields. As the piece notes, Angel and his friends see the U.S. as a cultural draw—good for "fun and spending"—rather than as a salvation source of employment.

Despite the remarkable economic and social progress that has changed the calculus of the younger generation, there are still plenty of lower-skilled people who would like to contract out their labor to U.S. employers in exchange for money. And though some see that banal private economic arrangement as the death of freedom, it’s a pretty basic human right and a boon to both countries. If jobs get scarce up here—as they are currently—a generous guest worker scheme would allow people to leave, with the knowledge that they could return when demand picks up.

Reading stories like the Orozco’s, or the extraordinary story of Jose Antonio Vargas, it is so clear that this issue does not lend itself to simple dichotomies of legal and illegal, criminal and non-criminal, moral and immoral. That the debate in the U.S. is dominated by those who insist on reducing it to such makes figuring out a workable solution a lot harder.

Congress, What Would You Say…Ya Do Here?

Posted by Jason Dobbins on July 6, 2011. 0 Comments

When the GOP House majority banned earmarks last year, you may have logically thought that it signalled the end of Congressmen siphoning off federal dollars to fund pet projects in their district. You’d of course be wrong:

Rep. Stephen Fincher (R-Tenn.), a member of the freshmen Republican class of the House of Representatives whose district includes the [Cates Landing] port project, faced a predicament. Elected as a fiscal hawk, with pledges to get spending under control, he could either go to the mat for Cates Landing or make a philosophical, self-sacrificial statement.

He chose the former. On March 8, 2011, Gannett news service reported that the funding for Cates Landing was being targeted by lawmakers looking to slash the federal budget. The same day that report came out, Fincher spoke directly with Department of Transportation Secretary Ray LaHood about the funds. The next day, he wrote a follow-up letter seeking assistance in “obligating” the $13 million grant for the port.

Feel free to focus on the hypocrisy angle if you like: the piece I quoted is chock full of anecdotes of freshman Tea Party Republicans decrying the scourge of out-of-control spending on the House floor, voting to eviscerate national spending bills, but then quietly going about trying to secure and redirect as much federal money as possible back to their districts so they can take credit for the jobs created.

Risible as that is, I think the real story is what these Congressmen now have to do to get a hold of these federal funds:

Whereas in days past, lawmakers could earmark, meaning they tacked amendments onto bills that directed money toward provincial projects, today that practice is banned. As a result, lawmakers have forfeited a tremendous amount of power to the executive branch. Instead of being able to set aside funds for projects in their home states or districts, members are now reduced to lobbying federal agencies for unspent funds.

So instead of just voting on the damn earmarked bills, what Congress prefers is voting on bills to fund federal agencies, then quietly begging those federal agencies for any leftover money to fund district projects back home. Better that Ray LaHood have the authority to make the spending decisions, rather than our constitutionally elected representatives. This is crazy, and that Congress voted itself into this situation is all the more galling.

This deference to federal departments and agencies is in line with decades of Congress steadily ceding its power to the executive branch on a whole host of issues. Apart from the proliferation of independent agencies and commissions which allow Congress to abdicated and outsource their legislative responsibilities, even the powers it nominally keeps for itself it can’t manage to do very well. Take one of the most basic enumerated Congressional powers: to spend money to fund the government. The last time Congress passed all of its appropriations bills on time, without the need for a stopgap continuing resolution, was 1997. And they have only managed this feat four times since 1952.

Even this most fundamental of legislative functions has been increasingly passed off to the White House. It’s the president who was expected to cut the deals that kept government open last year. It’s the president who announces the legislative agreements to the public. And during these current debt-ceiling talks, Congressional Republicans have complained that the president remained aloof from the negotiations for too long. John Boehner implored the president to “show leadership” on the issue, and another House Republican complained, “We have three co-equal branches of the government here, and one of them is sitting and waiting to follow.”

Someone should remind him that the branches are co-equal but they’re also separate. Congress makes the laws. The House can coordinate and compromise with the Senate and pass debt-reduction legislation and appropriations bills any time it likes! Go crazy! No need for White House “leadership,” just do it!

That we see such a suggestion as impossibly naive just shows how deeply this distinction between the branches has been muddled in recent years. The president is now the legislator-in-chief; and not only does Congress not take offense at this clear encroachment on its responsibility, but they demand it publically!

And we all know the sad fate of another of Congress’s solemn constitutional dutes: that of declaring war, and of providing oversight of the executive’s military entanglements. Congress of course doesn’t declare war any more, but they at least authorize military action and vote to fund the operations.

However, it took Congress three months to express a collective opinion on the intervention in Libya, and when it came, that opinion was nonsensical: the House voted against authorizing the president’s military action, but then voted against cutting off funding for the military action they just condemned! The administration took this Congressional incoherence and cowardice as “an acknowledgement that what we’re doing [in Libya] is important and worth supporting.” Of course it did.

The current Congress is on pace to be one of the least productive in history—as measured by votes taken, bills made into laws, and nominees approved. Congress can’t raise enough revenue to pay its spending bills, it can’t fund the government on time, it doesn’t want oversight authority on military engagements, it outsources its legislative function to the executive branch whenever possible, and it insists on deferring to the White House’s “leadership” whenever something tough comes up.  It really forces one to ask: what is it these people DO here exactly?