Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
October 20, 2014

October 20, 2014

The Inflationistas’ Failed Economic Model

Jonathan Chait comments on the “inflationistas” failed predictions of looming inflation.

“The inflationistas failed to understand the nature of a liquidity trap, and what happens when interest rates hit zero in a severely depressed economy. They didn’t just predict the wrong team would win. They have a failed economic model.”

Inflationista Amity Shlaes’s “defense is interesting because, in addition to dodging the larger ideological problem, she seems to fail to come to grips with the whole tradeoff problem. It’s okay that conservatives wrongly warned of rising inflation, she argues, because rising inflation is a theoretical danger and somebody has to warn us about it.”

“The inflationistas got the balance of risk totally wrong — unemployment, while falling, has remained above target, while inflation has stayed below it. Shlaes’s defense is not just factually wrong, it’s conceptually bizarre. Somebody has to worry about bear attacks, yes. But if you demand that all children be kept home from school for the year to protect them against bear mauling, it’s not enough to point out that bears exist. You need to somehow engage with the idea of a tradeoff.”

Pension Funds Follow the Herd to Risky Investments

Michael McCarthy in the Washington Post states that “U.S. pension funds mimic Wall Street investment practices. In recent years, this led them to follow everyone else into the toxic sub-prime mortgage market.”

“Neither of the usual policy suspects, lack of regulatory oversight or poor enforcement, explains why pension funds are channeled into risky investments and don’t play a greater role in social investment. In fact, my research shows that the opposite is true. Tighter, not looser, regulations led to more speculative use of America’s retirement savings.”

McCarthy’s explanation: “Pension funds have mainly followed the herd. These funds were directed into real estate when prices were skyrocketing in the 1980s, then into increasingly speculative junk bonds in the 1990s and ultimately into the sub-prime mortgages that triggered the financial crisis.”

“Pension funds could have been a major source of social investment into infrastructure or other public goods. Instead they remain an untapped resource, guided solely by financial imperatives. But this was not due to any lack of regulation.  Not only did the regulations encourage risk, they eventually required it.”

What’s the Point of an Ebola Czar?

Sam Baker in the National Journal: “All right, we have an Ebola ‘czar’ now. Realistically, what can we expect from him, and from the U.S. response to the outbreak?”

“The response to domestic Ebola cases needs to get a whole lot better, and that was part of the White House’s rationale for tapping Democratic lawyer Ron Klain to coordinate the effort. Naming an Ebola ‘czar’ was also, in part, a public-relations effort to show action and reassure the public that the government is on top of the situation.”

“But two complicating factors are at work here: First, most Americans’ Ebola fears are unfounded or exaggerated. Even with the very real shortcomings in the initial response, the risk of infection in the U.S. is incredibly low. At the same time, even if Klain, the Centers for Disease Control and Prevention, and every American hospital do their jobs perfectly, there are limits to what they can accomplish.”

The bottom line: “There will be more Ebola patients in the U.S.—each new one shouldn’t necessarily be a call for alarm. Ebola is simply here now, and it will be until the West African outbreak is contained. Politicizing the tragedy and exaggerating the risks to Americans only make things worse.”

“Controlling it in Africa is the only way to prevent a global pandemic the U.S. could not possibly wall itself off from.”

Posted at 8:33 a.m.
Health

Voting in Texas: A Handgun License is OK, a Student ID is Not

Rebecca Leber: “Texans casting a ballot on Monday, when early voting begins, will need to show one of seven forms of photo ID. A concealed handgun license is okay, but a student ID isn’t. The Supreme Court on Saturday allowed Texas to go forward with this controversial voter ID.”

As Ian Millhiser argued at ThinkProgress: “If a confused voter brings an ID to the polls that they do not need to have, they will still get to cast a ballot. But if the same voter mistakenly forgets their ID (or fails to obtain one) because they were confused and believed that their state’s voter ID law was not in effect, then they will be disenfranchised.”

“Actual voter fraud, which is the problem that Republican legislation supposedly addresses, is difficult to find … The consequences of voter ID laws, on the other hand, are much easier to track … Existing ID requirements reduced turnout in some states during the last presidential election, particularly among young and black voters. Now, imagine the impact is even larger, because it is spread over the 33 states that now require some form of photo ID to vote. [And] costs of acquiring the needed ID ranged between $14.50 to $58.50 for 17 of the states.”

How Citizens United Puts Our Judicial System Up for Sale

Norm Ornstein warns that the impact of Citizens United on the American political system will be devastating.

Citizens United—and its progeny, SpeechNow and McCutcheon—are … about a new regime of campaign spending that dramatically enhances corruption in politics and government … It also gives added traction to extreme groups threatening lawmakers with primary devastation unless they toe the ideological line.”

But “the worst comes with judicial elections—and that worst could be worsened by a pending Supreme Court case that may allow sitting judges actively to solicit campaign funds for their own elections.”

“Here is the reality: If judges fear multimillion-dollar campaigns against them, they will have to raise millions themselves, or quietly engineer campaigns by others to do so. Who will contribute, or lead those efforts? Of course, those who practice in front of the judges will, creating an unhealthy dynamic of gratitude and dependency.”

“Worse, imagine what happens when judges are deciding cases in which the stakes are high, and well-heeled individuals or corporations will be helped or damaged by the rulings. The judges know that an adverse decision now will trigger a multimillion-dollar campaign against them the next time, both for retribution and to replace them with more friendly judges.”

 

The Distinction Between a Lawsuit and Extortion

Steven Rattner claims that a recent lawsuits by beneficiaries of the 2008 government bailout are “extortion” tactics, plain and simple.

AIG: “What’s relevant is that in 2008, no private capital would touch A.I.G., and without taxpayer money, A.I.G. would have collapsed, declared bankruptcy and liquidated itself. Mr. Greenberg would have received even less, i.e., nothing.”

Fannie Mae and Freddie Mac: “There’s the ultimate chutzpah: Some of the funds bought their shares after the agreement was amended in 2012 and still expect to reap a windfall at taxpayer expense.”

“Happily, none of the cases have gone well for the plaintiffs … [But] these two high-profile cases are not alone; there are at least a dozen related cases against Fannie and Freddie winding through the courts.”

“As a longtime denizen of Wall Street, I’m firmly on the side of investors trying to make money.”

“But in this case, Mr. Greenberg and the funds should consider how hard to press on this. Average Americans already feel distaste for Wall Street and rich people; bringing these rapacious lawsuits can only unnecessarily exacerbate class tensions.”

What did Janet Yellen Really Say About Inequality?

Neil Irwin notes that while Fed chair Janet Yellen’s speech Friday about income inequality was a departure from the cautious standards of her predecessors, she stopped short of offering prescriptive solutions.

“In particular, she stays away from the aspects of the inequality puzzle that have a close tie-in to the policies of the Federal Reserve.”

Irwin notes that quantitative easing “has contributed to an imbalanced form of growth in the United States.”

“If quantitative easing policies led to stronger overall growth that are the reason employers are adding more jobs, then the trickle-down benefits for ordinary workers are still meaningful. But Ms. Yellen did not address in her speech whether she agrees with the premise that a Fed-driven economic recovery has contributed to inequality, and if so what it implies for her agency.”

“It seems like Ms. Yellen offered this speech as a way to use her bully pulpit to cast public attention on an issue she cares about deeply, deliberately avoiding areas where inequality intersects with the policy areas under which she has direct control.”

“Perhaps in future appearances, Ms. Yellen will give us a sense not just of what is wrong with inequality, but what it might mean for the policies over which she has some control.”

October 17, 2014

Fox News Gets it Right About Ebola Hysteria

Everyone should watch this video of Shepard Smith:

Posted at 10:28 a.m.
Health

A Confoundingly Opaque Supreme Court

Limda Greenhouse comments on the new Supreme Court term that is “so confoundingly opaque.”

“In the space of eight days, the justices managed to touch on American society’s hottest of hot-button issues: same-sex marriage, access to the polls, and finally – inevitably – abortion, and all without actually issuing an opinion. Review denied, stays granted, stays lifted, news-making orders appearing randomly at odd hours from an institution usually so predictable in its schedule that you can set a clock by its yearly calendar. What on earth is the court doing and what – with saying hardly a word – is it telling us?”

“I can’t pretend to have come up with a grand theory to explain the court’s behavior. I actually doubt that there is a grand theory. Rather, I suspect that there’s something more prosaic going on: justices acting from different motivations and happening to coalesce around outcomes that serve a current purpose but that are in no one’s particular interest to explain. Explanations, after all, may bind. Silence keeps options open.”

Posted at 10:17 a.m.
Judiciary

Study Shows Natural Gas Won’t Slow Global Warming

Associated Press: A “new international study says an expansion of natural gas use by 2050 would also keep other energy-producing technologies like wind, solar and nuclear, from being used more. And those technologies are even better than natural gas for avoiding global warming.”

“Computer simulations show that emissions of heat-trapping gases to make electricity would not decline worldwide and could possibly go up, says the study, released Wednesday by the journal Nature.”

“Two computer models even found that when considering other factors like methane leaks, cheaper natural gas could lead to more trapping of heat by greenhouse gases.”

“The new results show it’s important to have a climate policy to go with cheap natural gas, said experts who weren’t part of the research.”

Posted at 7:29 a.m.
Energy & Environment

Does the Nation Really Need a Travel Ban?

Vox: “One of the popular remedies being floated to address Ebola fears is to isolate West Africa — the Ebola hot zone — and close America off to travelers from the region.”

“Now is the time when we need to check our irrational reactions to this horrible crisis and avoid policies that will divert scarce resources from actual remedies. And we know from past experience that airport screening and travel bans are more about quelling the public’s fears than offering any real boost to public health security.”

“Entry and exit screening was used during the 2003 SARS pandemic. A Canadian study of the public-health response following the outbreak found that airport screening was a waste of money and human resources: it didn’t detect a single case of the disease.”

“Another idea floating around these days is to just close off West Africa to the rest of the world. Allow Ebola to fester over there, and keep people safe over here.”

“In opposing this idea, public health experts unanimously agree: sealing borders will not stop Ebola spread and will only exacerbate the crisis in West Africa — and heighten the risk of a global pandemic.”

“Two people in the US have been stricken by Ebola; more than 8,000 have in West Africa. The best way to avoid more cases in America is by protecting West Africans.”

Posted at 7:16 a.m.
Health

October 16, 2014

The New Obamacare Strategy: Setting Low Expectations

Politico: “The Obama administration vastly oversold how well Obamacare was going to work last year. It’s not making the same mistake this year.”

“Sobered — and burned — by last fall’s meltdown of the federal website, the administration is setting expectations for the second Obamacare open enrollment period as low as possible.”

“Officials say the site won’t be perfect but will be improved. They refuse to pinpoint how many people they plan to enroll, instead describing general goals of reducing the number of uninsured and providing a positive ‘customer experience’ — not exactly metrics that can be immediately judged.”

“Yet there are signs that the technology could be appreciably better this time around.”

“And while there is another projection for this year — CBO expects that an average of 13 million people to be enrolled in the exchanges during 2015 — Burwell steered clear of the trap of embracing it for the open enrollment period.”

“She suggested that the law’s future success should be judged by the reduction in the nation’s uninsured figures, whether that’s accomplished through the exchanges, Medicaid or employer-sponsored care.”

Posted at 11:19 a.m.
Health

Ebola Fears Send Airline Stocks Tumbling

As reported in the Associated Press, “the odds of an Ebola-infected seatmate in the U.S. remain tiny, even after the news that a nurse coming down with the disease flew commercial across the Midwest this week.”

This fact, however, seems to have been lost among the panic over Ebola contagion. The Washington Post reports that “the specter of Ebola being spread in the skies has already helped send down the stocks of the country’s major airlines.”

“As of 2:50 pm on Wednesday, no doubt in response to the news, virtually every major air carrier had seen its stock drop. Shares of American Airlines had fallen nearly 1.5 percent (though they have since recovered, and closed half a percentage point up on the day), Delta had dropped by almost 2 percent, United Continental had dipped by more than 3.6 percent on the day, and Spirit Airlines had tumbled by roughly 3 percent.”

Since the beginning of October when the first Ebola concerns began, American Airlines’ stock, for example, has fallen by 15%.

 Ebola Fears Send Airline Stocks Tumbling

Posted at 10:25 a.m.
Economy, Health

America’s Hesitancy Over Assisted Suicide

On the issue of assisted suicide, Ross Douthat asks: “Why, in a society where individualism seems to be carrying the day, is the right [of assisted suicide] still confined to just a handful of states? Why has assisted suicide’s advance been slow, when on other social issues the landscape has shifted dramatically in a libertarian direction?”

“Twenty years ago, a much more rapid advance seemed likely. Some sort of right to suicide seemed like a potential extension of ‘the right to define one’s own concept of existence’ that the Supreme Court had invoked while upholding a woman’s constitutional right to abortion. Polls in the 1990s consistently showed more support — majority support, depending on the framing — for physician-assisted suicide than for what then seemed like the eccentric cause of same-sex marriage.”

“Yet the latter cause has triumphed sweepingly, while voluntary euthanasia has advanced only haltingly. Part of the explanation lies with the Supreme Court, which in 1997 ruled 9 to 0 that the Constitution does not include a right to suicide. But the court would not have ruled as it did absent a deeper reality: Many liberals seem considerably more uncomfortable with the idea of physician-assisted suicide than with other causes, from abortion to homosexuality, where claims about personal autonomy and liberty are at stake.”

Posted at 10:13 a.m.
Judiciary, Social Issues

Does the Fed Have a ‘Premature Extractulation’ Problem?

Ryan Cooper, of the Week, writes that “the Federal Reserve just can’t seem to get the job done. Since the financial crisis of 2008, America’s central bank has repeatedly tried to stop its unconventional stimulus program — and each time has proven premature.”

“That looks to be happening again today. Just last month, the Fed finally finished tapering off its last round of quantitative easing, and the economy immediately started to slide towards deflation.”

“Market expectations of future inflation have actually been crashing. Here are five-year inflation breakevens:”

breakevens omg Does the Fed Have a Premature Extractulation Problem?

“The weird thing about this most recent fall in expectations is that job growth has actually been pretty strong of late. Not nearly what most people would want, of course, but I would have thought it enough to keep inflation stable.”

“Regardless, it seems fairly clear after three rounds of what I’ll call ‘premature extractulation’ that the economy is going to be chronically vulnerable to deflationary forces unless something fundamental changes.”

“There are very good reasons to believe that all-out stimulus just might jolt the economy out of its weak, disinflationary sandpit … On the other hand, there are increasingly good reasons to believe that if they don’t, we could be having this same dang conversation in 2024 over QE11.”

 

Posted at 10:03 a.m.
Economy, Financial Markets

Why There’s No Need to Panic About the U.S. Economy

Danny Vinik writes that “Wednesday was an ugly day for the global economy,” but the U.S. economy “is well suited to withstand any global economic weakness.”

“Why aren’t [investors] gloomy about the U.S., too? The dollar has risen significantly over the past few months against the Euro, Pound and Yen. That makes it cheaper to take a vacation to Paris or Tokyo, while making U.S. products more expensive for Parisians or the Japanese to buy. That’s bound to hurt U.S. exports.”

“But global economic weakness also helps the U.S. One way is oil prices: Thanks to reduced demand, crude is more than 20 percent cheaper than it was at the end of July … Lower interest rates will also make it cheaper for businesses to invest and consumers to buy a home. The Federal Reserve may also wait longer until it first raises interest rates as well. ‘There are a lot of economic cross-currents,’ said [Moody's Mark] Zandi. ‘If you do the arithmetic, they all kind of wash.’”

“That doesn’t mean the current U.S. recovery is acceptable. Wage growth over the past year is just keeping up with inflation. But at the very least, the U.S. economy is prepared to weather a slowdown in other developed nations.”

Working Capital Review: The best performing CEOs in the world.

Why Americans Should be Scared of Ebola: Public Hysteria

Benedict Carey, in the New York Times, writes that “psychologists are increasingly concerned about another kind of contagion, whose symptoms range from heightened anxiety to avoidance of public places to full-blown hysteria.”

“Even before the announcement [of the second Ebola case], two-thirds of the respondents to a Washington Post-ABC News poll said they were concerned about a widespread epidemic of Ebola in this country.”

“The risk of Ebola infection remains vanishingly small in this country. The virus is not airborne, not able to travel in the way that, say, measles or the SARS virus can.”

“By contrast, in some years, the flu kills more than 30,000 people in the United States. Yet this causes little anxiety: Millions of people who could benefit from a flu shot do not get one.”

“The Ebola outbreak has many of the elements that could quickly stoke instinctual panic, experts note. It is invisible and deadly, a point graphically communicated in nonstop pictures and videos from Africa … It is a strange, exotic threat, and there is little that can be done personally to limit it.”

“These elements are precisely those that are most likely to cause contagious anxiety, researchers have found.”

Posted at 8:08 a.m.
Health

October 15, 2014

Racism and Voter ID Laws

Christopher Ingraham: “Sixty-seven percent of white Americans support voter ID laws, according to a new University of Delaware study of 1,436 U.S. adults. But when the voter ID question was accompanied by a photo of black people using a voting machine, white support for voter ID laws jumped to 73 percent.”

“Many white Americans think racism is basically over, and some believe that racism against whites is actually a bigger problem than racism against blacks. But results like these show that racism is still very much active at the subconscious level.”

 Racism and Voter ID Laws

 

Modest Obamacare Premium Hikes, But Not in Battleground States

David Nather of Politico writes that “Obamacare premiums aren’t rising everywhere. They just have a way of finding the states with the biggest Senate races. And that could be very bad timing for Democrats in two of the party’s key contests.”

“Double-digit rate hikes for individual health insurance plans have become an issue in the Louisiana and Iowa Senate races over the past week, where the Republican candidates are hammering their Democratic opponents for the steep premium increases on the way next year for some customers under the Affordable Care Act.”

“The attacks could easily give the impression that the health care law is causing premiums to go through the roof around the country. They’re not … But there are a few states that are facing more extreme premium increases from some insurers — and Louisiana and Iowa are two of them. Alaska, where Democratic Sen. Mark Begich is struggling to win a second term, is another one.”

“Why would the biggest rate hikes single out some of the hottest Senate races in the first place? There’s no conspiracy — it’s just the way the electoral math worked out. The states with the biggest increases are usually the ones where the political leaders have resisted the Affordable Care Act and haven’t done well at enrollment. And some of those states just happen to have the most competitive Senate races.”

Posted at 10:33 a.m.
Health

Are We a Nation of Bystanders?

E.J. Dionne contends “that structural changes in our politics are making campaigns more mean and personal than ever … Outside groups empowered by the Supreme Court’s Citizens United decision are using mass media in ways that turn off Americans to democracy, aggravate divisions between the political parties and heighten animosities among citizens of differing views.”

“There is far too much complacency about big money’s role in this year’s campaigns, on the grounds that both sides have plenty of it. This misses the point … A new report by the Brennan Center for Justice details how, at a relatively modest cost to themselves, a privileged few can change how government that is supposed to be nearest to the people is actually carried out.”

“Like everything else in our politics these days, Citizens United is usually debated along ideological lines. Progressives typically hate it. Conservatives usually defend it. But citizens of every persuasion should be worried about what this precedent-shattering decision has unleashed. More than ever, politics is the only profession that regularly advertises against itself. If voters feel cynical, the outside groups — on both sides — are doing all they can to encourage their disenchantment.”

“Thus the tragic irony: Citizens United is deepening our divisions and turning more citizens into bystanders. Our republic can do better.”

I Like My Member of Congress. I Hate Yours

Gallup: “In the U.S., the majority believes that most members of Congress are out of touch with average Americans, more focused on special interests than the needs of their constituents, and are corrupt. Americans are slightly more likely to say each of these things than they were in the past. At the same time, they are much less likely to say these descriptions fit their local member of Congress than to say they fit most members.”

“The majority of Americans might believe that their member is above average or the exception. Or, it could be that the average American perceives that systems and procedures in Washington need to be changed in fundamental ways that transcend the particular group of people who are elected to serve in Congress at any given time.”

“All in all, Americans’ relatively positive attitudes about their local representatives, spread out across 435 congressional elections, help explain why so many members of Congress return to Washington year after year — even while these same Americans so negatively assail the institution to which these members belong.”

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Republicans’ ‘Nutty’ Stand on Climate Change

Rebecca Leber questions why Mitch McConnell, who “often chides Obama for his lack of leadership” is now “willing to make an exception for climate change … McConnell said on Monday that he would rather the U.S. do less on climate change and let other countries take the lead.”

McConnell: “Well the president has been trying to take a leadership position, but of course nobody is interested in tying their hands behind their back and creating more problems for their people in pursuit of a goal they do not think we can achieve … My job is to look out for Kentucky’s coal miners.”

And Jonathan Chait contends that Paul Ryan is “a nut” for constantly dodging the question about the link between human activity and global warming.

“His ideological fantasies prevent him from accepting even basic scientific facts. He is, to be sure, a lucid nut, rather than a raving nut who accosts passersby on street corners. Ryan has spent his life imbibing the tenets of right-wing-movement thought, and he can apply the concepts he has learned to nearly any topic.”

“So while nuttery can be found on the left and right, it is not a bipartisan problem at the national level … If the Democrats let [Robert Kennedy Jr -- a Democratic 'nut' --] write their party-policy manifesto, or gave him a spot on their presidential ticket, it would be very, very alarming. But Ryan is in a party where this sort of thing barely even attracts attention.”

Posted at 8:55 a.m.
Energy & Environment

Supreme Court Blocks Texas Abortion Law

Adam Liptak: “The Supreme Court on Tuesday allowed more than a dozen Texas abortion clinics to reopen, blocking a state law that had imposed strict requirements on abortion providers. Had the law been allowed to stand, it would have caused all but eight of the state’s abortion clinics to close and would have required many women to travel more than 150 miles to the nearest abortion provider.”

“The Supreme Court’s order — five sentences long and with no explanation of the justices’ reasoning — represents an interim step in a legal fight that is far from over. But abortion rights advocates welcomed what they said was the enormous practical impact of the move. Had the clinics been forced to remain closed while appeals went forward, they said, they might never have reopened.”

Posted at 7:39 a.m.
Judiciary, Social Issues

October 14, 2014

Did Environmentalists Taint Obama Environmental Plan?

Jonathan Chait comments on recent Republican claims that the Obama administration’s climate agenda has been “improperly influenced by environmentalists.”

“The mere fact that it has become the subject of controversy exposes an import underlying fact about modern American politics. The Obama administration solicited feedback from industry as well as from environmental experts, and crafted a compromise plan designed to meet the administration’s emissions goals at the lowest possible cost while carrying out its legal mandate to regulate carbon.”

“It may not be a perfect plan, but it is surely a pluralistic one … In modern American politics, it describes policies within the Democratic Party, which draws support from business as well as labor, environmentalists, and consumer groups. The Republican Party’s economic coalition, by contrast, has a monolithic pro-business cast. Under the Bush administration, environmental policymaking was designed with input from business, especially the fossil fuel industry, with no significant input from environmentalists whatsoever.”

“Within the Republican Party, it has come to seem normal for environmental regulations to be crafted entirely along the lines demanded by business lobbyists. The existence of a significant lobbying role for environmentalists … seems to them scandalous.”

Immigration Surge as a Sign of Improving Economy?

Wall Street Journal: “A strengthening U.S. economy has spurred the largest pickup in immigration since before the recession, driven by Asian newcomers and a gain in Hispanic arrivals.”

“The number of foreign-born people in the U.S. grew by 523,400 last year, according to the Census Bureau. That beat the previous year’s net gain of roughly 446,800 and is the biggest official jump since 2006.”

NA CD039 IMMIG G 20141009170611 Immigration Surge as a Sign of Improving Economy?

“The census data show that six years after the recession began, America is restoring its reputation as an economic beacon among immigrants, even as other nations, including in Asia, become more attractive. If demand for high-skilled workers grows and Hispanic immigration revives, that could also mean U.S. businesses are feeling more bullish about the economy’s prospects.”

“’Some of the things limiting immigration in recent years—a bad job market, less demand for workers—is easing,’ said demographer William Frey of the Brookings Institution, who analyzed the census data.”

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