On the Complexity of Making Things Complicated


Hillary Clinton

Sometimes the key to politics is to make things complicated not so much by making them actually complicated, but by complicating things with additional layers and steps. Political discourse is something like the living, realtime inspiration for internet chatter; after two or three quick rounds it’s hard to tell what anyone is referring to, anymore.

But at the same time, it is not as if the rhetorical devices of American politics are especially complex. Consider, for instance, Paul Krugman:

This policy unity has been helped by the fact that Obama has had a moderate degree of success in achieving these goals. If he had had an easy time, the party might be divided between those wanting more radical action and those not in a hurry; if he had failed utterly, the party might be divided (as it was for much of the past three decades) between a liberal faction and a Republican-lite faction. As it is, however, Obama has managed to achieve a lot of what Democrats have sought for generations, but only with great difficulty against scorched-earth opposition. This means that the conflict between “the Democratic wing of the Democratic Party” — exemplified these days by Elizabeth Warren — and the more pro-big-business wing is relatively muted: the liberal wing knows that Obama has gotten most of what could be gotten, and the actual policies haven’t been the kind that would scare off the less liberal wing.

One would think this easy piece of political perspective would not be so rare in our discourse, but for some reason—perhaps a tendency toward equivocation for the sake of narrative simplification—it sometimes seems useful to take a moment and think about how it comes about.

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Republicans and Jobs


Brief notes worth remembering:

Paul Krugman, shortly after the midterm election:

Eric CantorSo what’s really motivating the G.O.P. attack on the Fed? Mr. Bernanke and his colleagues were clearly caught by surprise, but the budget expert Stan Collender predicted it all. Back in August, he warned Mr. Bernanke that “with Republican policy makers seeing economic hardship as the path to election glory,” they would be “opposed to any actions taken by the Federal Reserve that would make the economy better.” In short, their real fear is not that Fed actions will be harmful, it is that they might succeed.

Hence the axis of depression. No doubt some of Mr. Bernanke’s critics are motivated by sincere intellectual conviction, but the core reason for the attack on the Fed is self-interest, pure and simple. China and Germany want America to stay uncompetitive; Republicans want the economy to stay weak as long as there’s a Democrat in the White House.

GOP stalwart Bruce Bartlett, a veteran of the Reagan and Poppy Bush administrations, as well as former aide to Reps. Jack Kemp and Ron Paul:

Deficits and thh Economy During the Great DepressionIt is starting to look like 1937 all over again. As the table below indicates, the economy made a significant recovery after hitting bottom in 1932, when real gross domestic product fell 13 percent. The contraction moderated considerably in 1933, and in 1934 growth was robust, with real G.D.P. rising 11 percent. Growth was also strong in 1935 and 1936, which brought the unemployment rate down more than half from its peak and relieved the devastating deflation that was at the root of the economy’s problems.

By 1937, President Roosevelt and the Federal Reserve thought self-sustaining growth had been restored and began worrying about unwinding the fiscal and monetary stimulus, which they thought would become a drag on growth and a source of inflation. There was also a strong desire to return to normality, in both monetary and fiscal policy.

On the fiscal side, Roosevelt was under pressure from his Treasury secretary, Henry Morgenthau, to balance the budget. Like many conservatives today, Mr. Morgenthau worried obsessively about business confidence and was convinced that balancing the budget would be expansionary. In the words of the historian John Morton Blum, Mr. Morgenthau said he believed recovery “depended on the willingness of business to increase investments, and this in turn was a function of business confidence,” adding, “In his view only a balanced budget could sustain that confidence.”

Roosevelt ordered a very big cut in federal spending in early 1937, and it fell to $7.6 billion in 1937 and $6.8 billion in 1938 from $8.2 billion in 1936, a 17 percent reduction over two years.

At the same time, taxes increased sharply because of the introduction of the payroll tax. Federal revenues rose to $5.4 billion in 1937 and $6.7 billion in 1938, from $3.9 billion in 1936, an increase of 72 percent. As a consequence, the federal deficit fell from 5.5 percent of G.D.P. in 1936 to a mere 0.5 percent in 1938. The deficit was just $89 million in 1938.

At the same time, the Federal Reserve was alarmed by inflation rates that were high by historical standards, as well as by the large amount of reserves in the banking system, which could potentially fuel a further rise in inflation. Using powers recently granted by the Banking Act of 1935, the Fed doubled reserve requirements from August 1936 to May 1937. Higher reserve requirements restricted the amount of money banks could lend and caused them to tighten credit.

This combination of fiscal and monetary tightening – which conservatives advocate today – brought on a sharp recession beginning in May 1937 and ending in June 1938, according to the National Bureau of Economic Research. Real G.D.P. fell 3.4 percent in 1938, and the unemployment rate rose to 12.5 percent from 9.2 percent in 1937.

And then there is this, from John S. Irons of the Economic Policy Institute:

The agreement to raise the debt ceiling just announced by policymakers in Washington not only erodes funding for public investments and safety-net spending, but also misses an important opportunity to address the lack of jobs. The spending cuts in 2012 and the failure to continue two key supports to the economy (the payroll tax holiday and emergency unemployment benefits for the long term unemployed) could lead to roughly 1.8 million fewer jobs in 2012, relative to current budget policy.

Economic Policy Institute Debt Ceiling Jobs Outlook

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Hell, or, A Conversation with Brooks and Collins


This is your brain on drugs.I have a new vision of Hell, which is sitting around the “conversation pit” getting stoned with New York Times columnists David Brooks and Gail Collins. Apparently, the two get together and talk about issues for the newspaper’s Opinionator blog every Wednesday. To borrow a phrase from Supreme Court Nominee and current Solicitor General Elena Kagan, I wish they wouldn’t.

This week, the Dullard Duo took on one of the vital economic questions of the times: Deficit reduction or job creation?

Gail Collins: David, I was very interested in your column attacking the idea of a second stimulus. In fact, I was so interested that I almost put down my copy of this week’s New York Magazine, which has a big profile of you and your “charming, levelheaded optimism.” I agree totally with that assessment, although I part company with the author when it comes to your suits, which are certainly not shapeless.

The article also says that because of your book deadlines, you are only getting four hours of sleep a night. So I feel terrible asking you to converse about anything, let alone the economy.

David Brooks: My suits are absolutely shapeless. They are sartorial cumulus clouds. Given my body, shapeless is the best option, believe me. Other than that, I thought the profiler was admirably gentle and forgiving.

I’d like to say things could only get better from there, but … yeah. I’d also like to say it would be enlightening to hear an actual recording of this conversation in order to pick up some of the nuance, but, again … er … yeah. Continue reading

Notes On the Health Care Battle: Dust and Smoke


Only vague first impressions; it’s difficult to get any real perspective while so much dust and smoke hangs in the air after the conflagration.

Paul Krugman, before the vote:

Adam Zyglis via CagleSo what’s the reality of the proposed reform? Compared with the Platonic ideal of reform, Obamacare comes up short. If the votes were there, I would much prefer to see Medicare for all.

For a real piece of passable legislation, however, it looks very good. It wouldn’t transform our health care system; in fact, Americans whose jobs come with health coverage would see little effect. But it would make a huge difference to the less fortunate among us, even as it would do more to control costs than anything we’ve done before.

This is a reasonable, responsible plan. Don’t let anyone tell you otherwise.

Republican David Frum on the political fallout:

At the beginning of this process we made a strategic decision: unlike, say, Democrats in 2001 when President Bush proposed his first tax cut, we would make no deal with the administration. No negotiations, no compromise, nothing. We were going for all the marbles. This would be Obama’s Waterloo – just as healthcare was Clinton’s in 1994.

Only, the hardliners overlooked a few key facts: Obama was elected with 53% of the vote, not Clinton’s 42%. The liberal block within the Democratic congressional caucus is bigger and stronger than it was in 1993-94. And of course the Democrats also remember their history, and also remember the consequences of their 1994 failure.

This time, when we went for all the marbles, we ended with none.

Kirk Walters via CagleCould a deal have been reached? Who knows? But we do know that the gap between this plan and traditional Republican ideas is not very big. The Obama plan has a broad family resemblance to Mitt Romney’s Massachusetts plan. It builds on ideas developed at the Heritage Foundation in the early 1990s that formed the basis for Republican counter-proposals to Clintoncare in 1993-1994.

Barack Obama badly wanted Republican votes for his plan. Could we have leveraged his desire to align the plan more closely with conservative views? To finance it without redistributive taxes on productive enterprise – without weighing so heavily on small business – without expanding Medicaid? Too late now. They are all the law.

No illusions please: This bill will not be repealed. Even if Republicans scored a 1994 style landslide in November, how many votes could we muster to re-open the “doughnut hole” and charge seniors more for prescription drugs? How many votes to re-allow insurers to rescind policies when they discover a pre-existing condition? How many votes to banish 25 year olds from their parents’ insurance coverage? And even if the votes were there – would President Obama sign such a repeal?

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Serious People


Ladies and gentlemen, Paul Krugman:

I do have one qualm, though, which isn’t really about Bernanke, but rather about the broader symbolism of the reappointment — namely, it unfortunately seems to be a reaffirmation of Serious Person Syndrome, aka it’s better to have been conventionally wrong than unconventionally right.

Thus, you’re not considered serious on national security unless you bought the case for invading Iraq, even though the skeptics were completely right; you’re not considered a serious political commentator unless you dismissed all the things those reflexive anti-Bushists were saying, even though they all turn out to have been true; and you’re not considered serious about economic policy unless you dismissed warnings about a housing bubble and waved off worries about future crises.

All that while praising Bernanke’s reappointment as chairman of the Federal Reserve.

Still, though, he has a point about Serious Person Syndrome. That’s the important part. Come on, Bernanke nominated for another term? Was that somehow unexpected?

So, anyway, I looked up the phrase, and aside from Schott’s Vocab, where I picked this up, the phrase isn’t largely used. The rest of the Google result is dominated by “Stiff Person Syndrome”.

So now I want to call the Bernankes and such, the Serious Person Syndrome people, well, yeah.

Never mind.

The purpose of health care is to make lots of money


Paul Krugman on how insurance companies are gearing up to fight the Obama health plan even as they claim to want to be a part of it:

The Post has the storyboards for the ads, and they read just like the infamous Harry and Louise ads that helped kill health care reform in 1993. Troubled Americans are shown being denied their choice of doctor, or forced to wait months for appointments, by faceless government bureaucrats. It’s a scary image that might make some sense if private health insurance — which these days comes primarily via HMOs — offered all of us free choice of doctors, with no wait for medical procedures. But my health plan isn’t like that. Is yours?

“We can do a lot better than a government-run health care system,” says a voice-over in one of the ads. To which the obvious response is, if that’s true, why don’t you? Why deny Americans the chance to reject government insurance if it’s really that bad?

For none of the reform proposals currently on the table would force people into a government-run insurance plan. At most they would offer Americans the choice of buying into such a plan.

And the goal of the insurers is to deny Americans that choice. They fear that many people would prefer a government plan to dealing with private insurance companies that, in the real world as opposed to the world of their ads, are more bureaucratic than any government agency, routinely deny clients their choice of doctor, and often refuse to pay for care.

As we go forward in this critical and oft-complicated debate, I would simply ask people to keep a certain point in mind:

    The primary concern of the health care industry is profit.

What? It’s the way private enterprise works.

Obama and expectation


Economist and New York Times columnist Paul Krugman brings us, with his latest column, an assessment of Senator Barack Obama, considering the Democratic presidential candidate in the context of two other elections, those of 1980 and 1992:

It’s feeling a lot like 1992 right now. It’s also feeling a lot like 1980. But which parallel is closer? Is Barack Obama going to be a Ronald Reagan of the left, a president who fundamentally changes the country’s direction? Or will he be just another Bill Clinton? ….

…. Reagan, for better or worse — I’d say for worse, but that’s another discussion — brought a lot of change. He ran as an unabashed conservative, with a clear ideological agenda. And he had enormous success in getting that agenda implemented. He had his failures, most notably on Social Security, which he tried to dismantle but ended up strengthening. But America at the end of the Reagan years was not the same country it was when he took office.

Bill Clinton also ran as a candidate of change, but it was much less clear what kind of change he was offering. He portrayed himself as someone who transcended the traditional liberal-conservative divide, proposing “a government that offers more empowerment and less entitlement.” The economic plan he announced during the campaign was something of a hodgepodge: higher taxes on the rich, lower taxes for the middle class, public investment in things like high-speed rail, health care reform without specifics.

We all know what happened next. The Clinton administration achieved a number of significant successes, from the revitalization of veterans’ health care and federal emergency management to the expansion of the Earned Income Tax Credit and health insurance for children. But the big picture is summed up by the title of a new book by the historian Sean Wilentz: “The Age of Reagan: A history, 1974-2008.”

While there are also fundamental differences in the context of the circumstances under which the Reagan and Clinton presidencies occurred, Krugman—who during the primary often criticized Obama—is not without a valid point. Having achieved the nomination, Obama has followed a trend disturbing to American liberals, one that suggests a transformation of the candidate into a different kind of political creature. His withdrawal from public financing, while understandable in a political context, is disappointing, to say the least, for liberals hopeful of a president of principles. And his support of the recent FISA “compromise” ranges into the realm of the frustrating.
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