Brad DeLong

No, John Taylor's Piece Doesn't Say What Taylor Says It Says: Noah Smith to the Rescue! Weblogging

Noah Smith plays Three-Card Monte, and wins! Taylor has a model in which (a) interest rates can go negative, (b) the Federal Reserve is successfully stabilizing GDP, and (c) the damaging effects of taxation on work effort are so large that western Europe ought to be an impoverished hellhole.

Noahpinion: John Taylor's austerity model: [Y]our friendly neighborhood Noah is here to read and explain where Taylor is getting his arguments…. The "1970s" reference is pure conservative herp-derpery. People weren't trying to fight stagflation with fiscal policy in the 70s; deficits were quite low. "The 70s" is just a word that conservative writers throw into their pieces so that conservative old men who read the article will nod their snowy heads in sage agreement and mumble "Yes, the 70s. Carter. Stagflation. Mmm-hmm!"…

Why does Taylor think austerity will produce growth?… This is NOT the "Treasury View."… This is NOT the "Confidence Fairy."… Taylor's model has distortionary taxation in it, and the distortions are large…. [T]he GDP boost in Taylor's model doesn't come from reducing the deficit, it comes from cutting taxes…. Taylor assumes that the Fed… cancels out… positive demand shocks from stimulus. So it's hardly surprising that Taylor is not going to see government spending doing much good for the economy; he's assumed that 1) the Fed is… managing aggregate demand, and 2) the Fed will tighten to… counteract stimulus…. There is no Zero Lower Bound…. The "New Old Keynesians" such as Paul Krugman and Gauti Eggertsson, who advocate fiscal stimulus, explicitly make reference to the ZLB as the reason stimulus works. Taylor just ignores that idea…. In Taylor's model, if you cut government purchases, it throws the economy into a recession. Taylor's suggested austerity plan makes big spending cuts, but the cuts are almost entirely cuts in transfers…. Now as you should remember from Econ 102, government purchases make much more effective stimulus than transfers…. The reason he gets short-run benefits from spending cuts has everything to do with the fact that it's almost all transfers being cut….

Upshot: If you have no Zero Lower Bound, and if the Fed partially counteracts the demand-side effects of fiscal policy, and if people have forward-looking expectations, and if you don't cut government purchases much, and if taxes are very distortionary, then austerity works…. [T]he result… ignores the real Keynesian critique that… the Zero Lower Bound matters a lot… assumes… taxes are… more distortionary than they really are… overestimates the Republicans' real willingness to cut transfers… underestimates their willingness to cut government purchases… ignores distributional concerns, but that's pretty much par for the course…

J. Bradford Delong for Democracy Journal: Shrugging off Atlas

J. Bradford Delong for Democracy Journal: Shrugging off Atlas: Issue #28: Exactly how did once-respectable conservative economists get swept up in “moocher class” mania?

Review of Nicholas Eberstadt (2012), A Nation of Takers: America’s Entitlement Epidemic (Templeton Press) http://www.amazon.com/Nation-Takers-Americas-Entitlement-Epidemic/dp/1599474352.

If there was a single moment when Mitt Romney lost the 2012 presidential election, it was in May when he stood in front of the $50,000-a-plate audience at Sun Capital honcho Marc Leder’s home in Boca Raton and spoke his soon-to-be-infamous words:

There are 47 percent of the people who will vote for the President no matter what…. There are 47 percent who are with him, who are dependent upon government…who believe that government has a responsibility to care for them, who believe that they’re entitled to health care, to food, to housing, you name it…. These are people who pay no income tax…. My job is not to worry about those people—I’ll never convince them that they should take personal responsibility and care for their lives…

This is what Mark Schmitt of the Roosevelt Institute calls “the theory of the moocher class.” And Romney is all in with it. In July, after a poorly received speech at the NAACP convention, he boasted:

When I mentioned I am going to get rid of Obamacare, they weren’t happy…. But I hope people understand this… if they want more stuff from government tell them to go vote for the other guy—more free stuff.

Those of us who know the numbers, or who simply live in America and look around, know that the 47 percent who aren’t paying federal income taxes this year are by and large not “moochers.” About a fifth are elderly retired. About two-thirds are in households with incomes of less than $20,000 a year—definitely not living high. And nearly one-third owe no income taxes because of the earned-income and child tax credits, which both became law with bipartisan support.

As a group, the 47 percent who pay no income taxes do not lack work ethic. They do take personal responsibility for their lives. They may not pay federal income taxes this year, but they pay plenty of sales, property, and payroll taxes. For the most part, they do not constitute the Democratic base. More than half of the 47 percent are the elderly white and Southern white voters who voted for Romney by substantial margins.

So how does someone like Romney, along with his peers and all their staffs and everyone else in that Boca Raton room, become convinced that 47 percent of Americans are the moochers, the takers, dependent on “free gifts” from the government, lacking work ethic, lacking personal responsibility?

Enter Nicholas Eberstadt of the American Enterprise Institute (AEI), with his contribution to the think tank’s “New Threats to Freedom” series. We need venture no further into A Nation of Takers than the bottom of the second page…

The Real Underlying Source of Washington Gridlock: "The President Is a--CLANG!"

Greg Sargent:

Why We're at a Fiscal Impasse: 1. Obama can't sell entitlement cuts to his base, or indeed Democrats in general, without Republicans agreeing to new revenues, and has offered them a straightforward compromise -- one that would anger the base on both sides -- based on the premise that total victory for the GOP is not an acceptable or realistic outcome. 2. Republican leaders can't even begin to acknowledge that Obama has offered them a real compromise, because they can't sell their base on the idea that the President is being flexible, let alone get them to seriously entertain accepting any compromise with him, because the base sees total victory over Obama as the only acceptable outcome.

So why is it that the Republican base refuses to believe that Obama is not a Kenyan Muslim Socialist, and demands total victory over him?

Yes, CPAC Speakers Think the Big Problem with the Democrats Is That They Loathe Black People. Why Do You Ask?

Josh Marshall:

When The GOP Told Whitey I Aint Gonna Take It No More: Yesterday, a CPAC breakout session on reaching out to black voters broke down in shouting and acrimony as a handful of ‘disenfranchised whites’ attacked the premise of the session (along with black complaints about slaveholders), got into a verbal fight with a black female attendee and with all that managed to unite the crowd against the black woman as the one who somehow spoiled all the fun…. [T]he whole imbroglio ended with denunciations of the black woman who was the one person to go into freak out mode — pretty understandably — on hearing the merits of chattel slavery being argued in the 21st century at a panel on racial tolerance and outreach. (And I’m using ‘freak out mode’ here in the most positive sense.) And that, I think, goes to the heart of the enterprise, this panel, itself…. The panel (“Trump The Race Card: Are You Sick And Tired Of Being Called A Racist When You Know You’re Not One?”) was run by an African-American man named K. Carl Smith (founder of something called “Frederick Douglass Republicans”) whose schtick is to rant against Democrats as the party of the Confederacy and the Ku Klux Klan… preaching/ranting to a crowd of Republicans (an almost entirely lilly white party) against the racism, softness on paramilitary violence and Confederacy-love of the Democratic party (roughly half of which is made up of non-whites). There’s just too much denial, bad faith and comedy there under high pressure for the center to hold. And you can’t tempt the gods of farce on such an epic scale and not have a blow up.

Ezra Klein Points Out That the "House Progressive" Budget Would Actually Be Good for the Country

Ezra Klein:

Washington should be worrying about education, infrastructure and health care: Earlier today I tweeted, “If we got education, health care and infrastructure right, a lot of our other economic problems would take care of themselves.”… It’s a tall order, I admit. But Washington is spending all its time right now pursuing a “grand bargain” between the two parties, and that’s an even taller, and perhaps even impossible, order….

The partisan differences on education and infrastructure are smaller than they are on taxes and spending. As for health care, we’ve actually kept costs under control in recent years, we’ve already passed the Affordable Care Act, and we’re seeing movement among Republican governors to engage constructively with the law…. And it’s not as if emphasizing education, infrastructure and health care is some kind of second-best to another deficit-reduction deal. Another deficit-reduction deal is a distant second-best to improving the education system and infrastructure and bringing down health-care costs — all of which would both reduce the budget deficit and make people’s lives better.

And, for the record, I’d love to add energy legislation to this list…

Ezra Klein:

House Progressives have the best answer to Paul Ryan: The correct counterpart to the unbridled ambition of the Ryan budget isn’t the cautious plan released by the Senate Democrats. It’s the “Back to Work” budget released by the House Progressives. The “Back to Work” budget is about… putting Americans back to work…. The budget begins with a stimulus program that makes the American Recovery and Reinvestment Act look tepid. It includes $2.1 trillion in stimulus and investment from 2013-2015. The main policies there are a $425 billion infrastructure program, a $340 billion middle-class tax cut, a $450 billion public-works initiative, and $179 billion in state and local aid. This is a lot of stimulus. The liberal Economic Policy Institute estimates that would be sufficient to “boost gross domestic product (GDP) by 5.7 percent and employment by 6.9 million jobs at its peak level of effectiveness (within one year of implementation).”…

Investment on this scale will add trillions to the deficit. But the House Progressives have an answer for that: Higher taxes. About $4.2 trillion in higher taxes over the next decade, to be exact. The revenues come from raising marginal tax rates on high-income individuals and corporations, but also from closing a raft of deductions as well as adding a financial transactions tax and a carbon tax. They also set up a slew of super-high tax rates for the very rich, including a top rate of 49 percent on incomes over $1 billion…. [T]hese taxes aren’t just about reducing the deficit — though they do set debt-to-GDP on a declining path. They’re also about reducing inequality and cutting carbon emissions and slowing down the financial sector. They’re not just raising revenues, but trying to solve other problems….

As for the spending side, there’s more than $900 billion in defense cuts, as well as a public option that can bargain down prices alongside Medicare. But this budget isn’t about cutting spending. Indeed, the House Progressives add far more spending than they cut…

Why Should We Care?: Saturday Twentieth Century Economic History Weblogging

Why should you care about how our history and the history of our parents and grandparents and great-grandparents--the history of the long twentieth century, 1870-2010--will appear to people five and more centuries into the future?

First of all, it makes a very good story. And it makes an even better story because the story is real. We are gossiping animals—we have evolved to like to tell and hear stories about what is happening and has happened to our friends and not-friends. We like this so much. We like this so much that out of our time that is not spent hewing wood and drawing water we spend a very large chunk gossiping and listening to gossip about not our real friends and not-friends but about imaginary friends: there is no such person as Harry Potter, and so there is no strong reason to care about what happens to him or to Severus Snape, but we do.

And the best stories to tell and listen to are the real stories, about real people: they have a depth and an import that fiction cannot reach.

The Onion Is America's Finest News Source

GOP Senator Flips On Gay Marriage After Son Comes Out:

Sen. Rob Portman (R-OH), a leading conservative who was on Mitt Romney’s shortlist for vice president, announced the reversal of his longstanding position against same-sex marriage, saying he had a change of heart after his son came out to him two years ago. What do you think?

“Let’s hope his kid has a tough time finding affordable health care.”

Lee Swart – Wharf Worker

Did Stan Lebergott Implicitly Compare U.S. WPA Workers with Nazi German Labor Camp Inmates?

Sure looks like it…

Wow!

Eric Rauchway:

Louis Menand and New Deal Denialism in The New Yorker — Crooked Timber: Tyler, if you’d follow the link, you’d see, or possibly remember, that it’s Darby with whom I agree. It’s Lebergott to whose usage I object. I’ll quote him again here:

These estimates for the years prior to 1940 are intended to measure the number of persons who are totally unemployed, having no work at all. For the 1930′s this concept, however, does include one large group of persons who had both work and income from work—those on emergency work. In the United States we are concerned with measuring lack of regular work and do not minimize the total by excluding persons with made work or emergency jobs. This contrasts sharply, for example, with the German practice during the 1930′s when persons in the labor-force camps were classed as employed, and Soviet practice which includes employment in labor camps, if it includes it at all, as employment.

Yes, Cameron, Osborne, and Ryan Will Never Admit That Austerity Is Not Expansionary. Why Do You Ask?

Paul Krugman:

Night of the Living Alesina: Ah, remember the good old days of expansionary austerity?… [A]usterians seized on academic work by Alberto Alesina and Silvia Ardagna claiming that fiscal consolidation, if focused on spending cuts, would if anything lead to economic expansion…. Since then we’ve had what has to be one of the most decisive combinations of scholarly critique and real-world tests…. The IMF went about identifying austerity through an examination of actual policy, and A-A’s results were reversed. Critics showed that all of the alleged examples of expansion through austerity involved factors like currency depreciation or sharp falls in interest rates…. Osbornian policies in the UK led to stagnation; and in the euro area, well….

So you might have expected austerians to change their minds, or at least to come up with other justifications.

But no.

Both David Cameron and Paul Ryan are still preaching that old expansionary austerity religion, confidence fairy and all. This is, by the way, a fairly big deal for the Ryan budget, which… keeps the tax hikes that finance Obamacare while canceling the Medicaid expansion and exchange subsidies. The result would be a lot of fiscal drag in 2014 and 2015…. Luckily it isn’t going to happen. And a quick read of reactions suggests that the new Ryan plan is being greeted with derision rather than adulation. Is our pundits learning? A bit, maybe.

John Cassidy: Paul Ryan in Wonderland

John Cassidy:

Paul Ryan in Wonderland: Chapter 6: Having wandered back into writing about U.S. politics for the past eighteen months or so, I sometime wonder how the full-time Washington correspondents, the lifers, do it: cover the same old junk year after year. The key to career longevity and job satisfaction, I suppose, is to buy into the notion, assiduously promoted by the politicians and their flacks, that what they are doing is serious. Budgets, national security, energy policy, health policy—these things matter….

Sorry folks. After watching Representative Paul Ryan launch his much-anticipated budget for the fiscal year 2014, I can’t keep up the pretense. The plan is a joke… and nobody should pay much attention to it, except as another exhibit in the indictment of latter-day Republicanism. Ryan’s numbers don’t add up. His proposals—cutting domestic programs, converting Medicare to a voucher program, returning Medicaid to the states, reducing the top rate of income tax to twenty-five per cent—were roundly rejected by the voters just five months ago. And the philosophy his plan is based upon—trickle-down economics combined with an unbridled hostility toward government programs designed to correct market failures—is tattered and shop worn….

Martin Wolf: David Cameron and George Osborne in the Bunker

Martin Wolf:

Britain’s perilous austerity bunker: David Cameron’s “there is no alternative” speech last week on the UK economy has aroused much criticism. This is justified. The British prime minister’s arguments for sticking to the government’s programme of fiscal austerity were overwhelmingly wrong-headed….

How does one defend this record?…. Mr Cameron argues that those who think the government can borrow more “think there’s some magic money tree. Well, let me tell you a plain truth: there isn’t.” This is quite wrong. First, there is a money tree, called the Bank of England, which has created £375bn to finance its asset purchases. Second, like other solvent institutions, governments can borrow. Third, markets deem the government solvent, since they are willing to lend to it at the lowest rates in UK history. And, finally, markets are doing this because of the structural financial surpluses in the private and foreign sectors.

Budget Discussion Complete Dysfunction Weblogging

Ezra Klein:

Our deficits aren’t as bad as Washington thinks: On Tuesday, Rep. Paul Ryan presented the budget for House Republicans…. In honor of the season, Americans everywhere will wear traditional budget-season hats and eat the customary budget-season meals, which include, of course, a rich dessert that we assume will be offset by future weight loss.

Okay, that last part is just what we do in my house. Behind all these appendix-heavy documents lurks the specter of our budget deficits, which have emerged as pretty much the only problem in Washington that both parties can agree to focus on (sorry, millions of jobless Americans). But what kind of problem, exactly, do our budget deficits present? Here are three ways to think about them:

1. We’re experiencing severe and measurable economic drag from today’s deficits.

2. We’re not experiencing measurable economic drag from today’s deficits, but we’re worried about future deficits implied by today’s policies and demographic trends.

3. We’re not experiencing severe and measurable economic drag from today’s deficits, but we’re worried about future deficits implied by today’s policies and demographic trends, and we’re also concerned about the likelihood of additional budget-busting policies that some future Congress might pursue.

If you guessed No. 3, then congratulations! You get a double serving of budget-season cake. Delicious.

Nobody Has Any Business Supporting These Republicans! Nobody!: Yet More Paul Ryan Weblogging

Do you like magic tricks? Paul Ryan's budget is about $1 trillion MORE MAGICAL now. bit.ly/Z1oOqa

— Matt O'Brien (@ObsoleteDogma) March 13, 2013

Matt O'Brien:

Paul Ryan's Tax Math Just Became More Magical :

There's something breathtaking about any Paul Ryan budget. There are the savage cuts to healthcare and safety-net spending for the young and poor. The deep cuts to education, research, and infrastructure. The way current seniors are spared from any of this fiscal pain. The increased defense spending. And the tax cuts -- heavily tilted towards the rich, of course -- that will supposedly be paid for by eliminating loopholes….

Ryan wants to radically simplify the tax code… radically reduce rates…. Oh, and he wants revenue to average 18.8 percent of GDP for the next decade. The only way to do all of this is to radically cut tax expenditures too. But Ryan doesn't name a single expenditure he wants to cut. Instead, he bridges the gap with a magic tax reform asterisk. This isn't a new magic trick for Ryan. It's just a bigger one… his magic asterisk needs to be even more magic…. About a trillion dollars more….

You're not alone if you think magic is more fun than math. Paul Ryan certainly agrees.

The Chicago School's Intellectual Collapse Continued: Richard Posner Is Uranus: Wednesday Hoisted from the Archives from Three and a Half Years Ago Weblogging

Richard Posner never managed to find the guts to apologize to Christina Romer, or Larry Summers, or his readers…

Brad DeLong : The Chicago School's Intellectual Collapse Continued: Richard Posner Is Uranus...: When I was a child, one of my favorite stories was that of the discovery of the planet Neptune on September 23, 1846 by Johann Galle, Heinrich D'Arrest, and Urbain Le Verrier. The astronomers of the nineteenth century found an anomaly in the orbit of Uranus: it was not going where Newton's law of gravitation said that it ought to be going

I wasn't going to revisit this, but I finally had enough time to think about Menzie Chinn's and Justin Wolfers's very useful attempts to strike a blow in the long twilight struggle for rational economic analysis of the stimulus package, and it struck me that here Richard Posner really is Uranus.

Jonathan Portes Does the Intellectual Garbage Cleanup on David Cameron

Are there no conservative or lib-den members of parliament in Britain who love their country, and will vote no confidence tomorrow to end this disaster?

Jonathan Portes:

Not the Treasury view...: Believing in "miracles"? Self-defeating austerity and self-financing stimulus: Believing in "miracles"? The Prime Minister's speech on the economy on Thursday was, leaving the policy aside, notable for some of its analytical claims.  Simon Wren-Lewis's dissection is thorough and comprehensive; Danny Blanchflower and Adam Posen have a lengthy discussion here. In particular, much has already been written about the Prime Minister's misinterpretation of the OBR's position on the impact of fiscal consolidation on growth; for a thorough explanation, see Duncan Weldon.

Department of "HUH?!?!?!": I Really Do Not Understand Jeff Sachs These Days: Mark Thoma Tries to Explain Weblogging

Mark Thoma tries, but he fails. Either I am a bear of very little brain indeed, or Sachs is just not making any sense at all:

Economist's View: Crude Sachsism: On Twitter, [Sachs] goes a bit further:

@madarts13 @ktguru @joenbc @kdrum I don't. I think short-run stimulus has little effect on GDP. I want long-term growth strategy instead. — Jeffrey D. Sachs (@JeffDSachs) March 9, 2013

He can think whatever he wants, but the evidence says otherwise. In a severe recession government spending multipliers are much larger than in normal times. That's why this statement is so puzzling:

…First off, here is what I mean when I say that Krugman is a crude Keynesian... There are four elements of crude Keynesianism and, indeed, of Krugman's position: (1) The belief that multipliers on tax cuts and transfers are stable, predictable and large; (2) The belief that America's employment and growth problems are overwhelmingly cyclical, not structural, and therefore remediable by short-term aggregate demand management; (3) The belief that a growing debt burden is a minor nuisance as long as the economy is in recession; (4) The belief that for practical purposes, the most urgent need is to raise aggregate demand rather than to focus on the quality and type of public spending. I believe that all of these positions are misguided.

Again, he can believe whatever he wants, but the evidence is against him.

Paul Krugman: No, Our Deficit Is Not "Unsustainable"

Paul Krugman:

Gone Deficit Gone: So says the CBO, although not directly…. [W]hen the economy slumps, revenues fall and some kinds of expenditure, like unemployment benefits, rise. You want to take out these “automatic stabilizers” when assessing the underlying state of the budget…. [W]e don’t have to balance the budget to have a sustainable fiscal position; all we need is to ensure that debt grows more slowly than GDP. So CBO… estimates that in fiscal 2013 these stabilizers will amount to $422 billion, accounting for just about half of a projected $845 billion deficit…. [T]here’s about $11.5 trillion in federal debt in the hands of the public…. [N]ominal GDP will in future grow by [more than] 4 percent per year, half from real growth and half from inflation. This means that the sustainable deficit is 4 percent of $11.5 trillion, or $460 billion. Hey, we’re there! And next year the adjusted deficit is projected to be much smaller

Yes, late this decade deficits will start to rise again thanks to rising health costs and an aging population, yada yada. But I have yet to hear a coherent argument about why the long-term problem of paying for the benefits we want — which will eventually have to be resolved through a combination of cost savings and revenue increases — should constrain our fiscal policy right now, in the midst of what remains a terrible economic slump. And I would say that the figure above is, in fact, a portrait of deeply irresponsible fiscal policy — because it is just crazy that in this deeply depressed economy we are now pursuing a fiscal policy that is tighter than the policy we followed at the height of the housing bubble.

So let’s try to stop doing that. And everyone repeat with me: there is no deficit problem.

Somebody Has Been Feeding Jonathan Chait More than Wheaties: Criticizing Michael Boskin Department

Jonathan Chait:

World’s Wrongest Man Ventures Latest Prediction: Michael J. Boskin — former George W. Bush economic adviser, Hoover Institute fellow, and staunch advocate of conservative anti-tax doctrine — appears today, as is his wont, in The Wall Street Journal op-ed pages to warn that the Democratic president’s economic policies will lead us to misery…. Four years ago, Boskin penned a Journal op-ed whose thesis was captured in the headline, “Obama’s Radicalism Is Killing The Dow.” That was the signal for the Dow to go on a tear…. In 1993, Bill Clinton enacted an economic program centered around some public investment, coupled with deficit reduction with higher taxes on the rich. Boskin was very, very sure it would fail…. He made a series of predictions: “The new spending programs will grow more than projected, revenue growth will be disappointing, the economy will slow, and the program will reduce the deficit much less than expected.” Boskin repeated his prophecies of doom in a summerlong media blitz. Boskin labeled Clinton’s plan “clearly contractionary,” insisted the projected revenue would only raise 30 percent as much as forecast by dampening the incentive of the rich, insisted it would “take an economy that might have grown at 3 or 4 percent and cause it to grow more slowly,” and insisted anybody who believed in it would “Flunk Economics 101.” (The preceding pre-Internet quotes are all via a Lexis-Nexis search.) As it happened, literally every Boskin prediction turned out to be the opposite of reality….

Boskin decided to take his talents back to Washington. He had spotted a brilliant new economic mind in Texas governor George W. Bush. "These people were immensely impressed with him, how quick he was to pick stuff up," Boskin said. "His instincts were all very good, very much market-oriented; that created a very, very favorable impression." Boskin… did return to public punditry to insist that George W. Bush’s tax cuts would reduce revenue by far less than the official forecasts predicted….

Now, in defense of Boskin, he is probably suffering from a large dose of bad luck on top of a horrendously wrong ideology…. If you chained a thousand Boskins to a thousand keyboards for a thousand years, eventually one of them would make a correct prediction…. [I]n addition to being in thrall to a rigid and disproven ideology, Boskin suffers from unbelievably bad timing. Any investors who have actually put real money on the line after listening to him deserve the punishment they’ve received.

Nobody Has Any Business Working or Voting for or Supporting These Republicans: Jeb Bush Edition

Jeb Bush: I am really upset because Obama has not made some Americans into second-class citizens!

Benjy Sarlin on Jeb Bush (and Clinton Bolick):

Obamacare Is Bad Because Citizens Whose Parents Are Illegal Get Benefits: Here’s a surprise. Seemingly out of nowhere, Bush condemns the Affordable Care Act’s Medicaid expansion, recently accepted by Gov. Rick Scott (R-FL), for doling out “welfare” to the children of illegal immigrants.

This is why the Obama administration’s attempt to coerce states to adopt a major Medicaid expansion as part of its national health-care program had the effect of inflaming anti-immigration sentiment. Although the administration assured the states that illegal immigrants would not be eligible for Medicaid benefits, their children who are born in the United States are eligible because they are citizens…. Fortunately the US Supreme Court struck down the Medicaid expansion by a 7-2 vote as unduly coercive and therefore contrary to constitutional principles of federalism. The proposal should not be resurrected….

Bush isn’t even complaining about illegal immigrants getting Medicaid benefits, he’s complaining about American citizens who were born in the country…. [It] has nothing to do with Obamacare: the president didn’t invent Medicaid, and those kids were already free to apply, just as their citizenship lets them apply to myriad social programs.

It is true, as Bush notes, that more of these children will be eligible for Medicaid benefits in states like Florida now. That’s because more Floridians in general will be eligible for Medicaid under the Obamacare expansion….

The whole thing sounds an awful lot like something a Republican candidate for president might say in a primary debate.

Tuesday Ten Years Ago on the Internet: Glen Whitman on Marginal Terror Avoidance and George W. Bush

Glen Whitman:

Agoraphilia: Marginal Terror Avoidance: I didn’t watch the State of the Union address, so Thursday’s press conference was the first time I’d actually seen Bush speaking since – wow, maybe not since 9/11. And I noticed something interesting: he’s learned to speak like a real president. No, seriously. The accent is milder now (I grew up in Texas, and even I couldn’t stand the accent as it was before), he speaks carefully and earnestly, and the lurking smirk is gone. He actually exhibited, dare I say it, gravitas.

And that’s too bad, really, because much of what he had to say doesn’t bear much scrutiny. Will Wilkinson has some choice commentary on the evasiveness of Bush’s answer to a question about the cost of making war on Iraq. The basic gist: in response to a question about costs, the president talked about benefits instead.

Eric Rauchway: Louis Menand and New Deal Denialism in The New Yorker

Eric:

Louis Menand and New Deal Denialism in The New Yorker: In the current New Yorker, Louis Menand says there is a puzzle about how Franklin Roosevelt got reëlected:

When Roosevelt ran for reëlection in 1936, the unemployment rate was 16.9 per cent, almost twice what it had been in 1930. Yet he won five hundred and twenty-three electoral votes, and his opponent Alf Landon, eight. When Roosevelt ran for the unprecedented third term, unemployment was 14.6 per cent. He carried thirty-eight states; Wendell Willkie carried ten.

When Menand says unemployment was 16.9 and 14.6 percent when FDR ran for reëlection, he is counting federal relief workers as unemployed. According to the economist who constructed the series Menand is using, people working for the WPA were morally the same as concentration camp workers in Germany in the 1930s. If Menand realized that, the puzzle would go away: FDR and his New Deal were popular because they gave people jobs and sparked a rapid recovery.

Sessions Not Happy Being Called Wonk McCarthyite: Jonathan Chait Replies: Sessions Is Not Even a Wonk McCarthyite

Nobody has any business working for these Republicans. Nobody.

Jonathan Chait:

Sessions Not Happy Being Called Wonk McCarthyite: Last week, I wrote an item that made what can only be called a highly unflattering assessment of Alabama Senator Jeff Sessions. Sessions touted a study from the General Accounting Office that, he claimed, proved that Obamacare’s fiscal assumptions were lies and that the law would increase the deficit…. [T]he report showed no such thing…. I called Sessions a “Wonk McCarthyite,” and illustrated his fallacious reasoning with a tongue-in-cheek analogy to my asking the GAO to assume that Sessions were to acquire a nuclear weapon and detonate it in Manhattan, and then touting this report as finding that Sessions was going to murder 4 million people….

I have further explored the matter at length and determined that, in my haste, I treated Senator Sessions’s claims far too generously. Senator Sessions’s combination of ignorance and gross lack of intellectual standards turns out to be even more horrifying than I managed to initially communicate. Calling Sessions a "wonk McCarthyite" implies a level of policy understanding on his part that is wholly unsupported by the facts.

I would first like to concede one point of neglect. The Republican Senate staff objects that my item failed to include a hyperlink to a post by Aaron Carroll…. I apologize for the oversight. Sessions’s office further contends that Carroll, whom it correctly if incompletely characterizes as “a pediatrician,” is not a reliable source on matters of health-care finance. I replied that I consider Carroll, who is also director of the Center for Health Policy and Professionalism Research at Indiana University, and a co-author of the respected health economics blog the Incidental Economist, a reliable source on these matters. We agreed to disagree on this point.

In my haste I… failed to adequately capture the staggering dishonesty in Sessions’s public claims…. The GAO study does not find that the tax increases in Obamacare fail to cover its spending. The study, in fact, does not measure the tax increases at all…. The report assumed… that all the higher tax in the law disappeared after 2020. You may be wondering why the report did such an incredibly odd thing…. The Government Accounting Office is a kind of in-house think-tank for Congress… members of Congress can order up reports in order to advance their chosen agenda…. Congress can set the parameters of that analysis….

GAO agreed, in response [to Sessions], to publish a study that would measure the costs of Obamacare but not its net effect on the deficit…. Sessions falsely claimed the study concluded something completely at odds with its actual findings.

In sum, I apologize to my readers, the citizens of Alabama, budget fans, and other concerned citizens for failing in my original post to adequately convey the full paucity of the intellectual standards of the junior senator from Alabama.

I hope I have rectified my failure here.

Department of "Huh!?!?!?!?": Fiscal Policy Economists Look at Prices as Well as Quantities Edition

In my email inbox:

The latest from Rehn… Hat-tip to Ambrose of the Torygraf: Ambrose:

While the tone is changing, there is no sign yet of a retreat from fiscal belt-tightening:

Given that average debt exceeds 90pc of GDP in the EU, I don’t think there’s any room for manoeuvre to leave the path of budgetary consolidation

said EU economics chief Olli Rehn.

“We won’t solve our growth problems by piling new debt on top of our old debt,” he said. Defying his critics, Mr Rehn said John Maynard Keynes himself would not be a Keynesian today’s circumstances.

Economists believe that the market will tell you when things are expensive. It is expensive to issue government debt when nobody wants to hold it--when the expected real interest rate on government debt is high. Right now the expected deal interest rate on the government debt of credit worthy sovereigns like Japan, Britain, Germany, and the U.S. is extraordinarily low.

If you want to argue that the current interest rates on 10-year and 30-year bonds are fake--that they do not reflect marginal social values--then make that argument.

DO NOT PRETEND THAT MARKET SIGNALS ARE FLASHING "RED" ON ADDITIONAL GOVERNMENT DEBT ISSUE OVER AND ABOVE WHAT IS FORECAST IN THE BASELINE! THEY ARE NOT!!!!

Ezra Klein: This is why Obama can’t make a deal with Republicans

Ezra Klein:

This is why Obama can’t make a deal with Republicans: File this under “Jonathan Chait is right.”… [A] background briefing I attended with a respected Republican legislator who thought it would be a gamechanger for President Obama to say he’d be open to chained CPI — a policy that cuts Social Security benefits — as part of a budget deal. The only problem? Obama has said he’s open to chained CPI as part of a budget deal. And this isn’t one of those times where the admission was in private, and we’re going off of news reports. It’s right there on his Web site. It’s literally in bold type. But key GOP legislators have no idea Obama’s made that concession. The question my column left open was whether improving the lines of communication would actually change anything. Chait’s view is no, it wouldn’t. He begins by quoting Upton Sinclair’s famous line: “It is impossible to make a man understand something if his livelihood depends on not understanding it.” Chait continues:

If Obama could get hold of Klein’s mystery legislator and inform him of his budget offer, it almost certainly wouldn’t make a difference. He would come up with something – the cuts aren’t real, or the taxes are awful, or they can’t trust Obama to carry them out, or something.

What happened next on Twitter proved Chait’s point in every particular. Mike Murphy… has been a top strategist for Mitt Romney, John McCain, Jeb Bush, Arnold Schwarzenegger and many other Republicans. He’s also, as his client list would suggest, from the party’s more pragmatic, even moderate, wing…. On Feb. 13, Murphy wrote in Time that “six magic words can unlock the door to the votes inside the Republican fortress: Some beneficiaries pay more and chained CPI, budgetary code for slightly lowering benefit increases over time.” The only problem? Obama has said all these words, as John Harwood of the New York Times quickly pointed….

Murphy responded by suggesting that sure, Obama has called for more means-testing in Medicare, but he’s not put chained CPI — CCPI, if you’re hamstrung by Twitter’s 140-character limit — on the board…. [But he] endorsed it as part of a cliff deal, and he’s kept endorsing it, as his sequestration plan clearly says, since the cliff deal fell apart. This was quickly pointed out to Murphy on Twitter, at which point, he promptly proved Chait’s thesis correct….

So let’s back up. Murphy’s initial view was that to unlock GOP votes for a budget deal, Obama just needed to endorse chained CPI and more means-testing in Medicare. Then it was pointed out that Obama has endorsed means-testing in Medicare, so Murphy wondered why he didn’t endorse chained CPI as part of a deal. Then it was pointed out that Obama did endorse chained CPI, at which point Murphy called chained CPI “a gimmick,” and said Obama had to endorse raising the Medicare age, drop his demands for more revenue as part of a deal and earn back the GOP’s trust.

Recall what Chait said would happen if the Republican legislator in my column was forced to react to the fact that Obama has endorsed chained CPI: “He would come up with something – the cuts aren’t real, or the taxes are awful, or they can’t trust Obama to carry them out, or something.” Check, check, and check. Which is all to say that there’s no deal here….

The bottom line on American budgetary politics right now is that… there’s no deal to be had…. It’s what Hill Republicans have told me, it’s what the White House has told me, it what Hill Democrats have told me. The various camps disagree on whether Republicans are right to refuse a deal that includes further tax increases, but they all agree that that’s the key fact….

But it’s unpopular for Republicans to simply say they won’t agree to any compromise and there’s no deal to be had — particularly since taxing the wealthy is more popular than cutting entitlements, and so their position is less popular than Obama’s. That’s made it important for Republicans to prove that it’s the president who is somehow holding up a deal. This had led to a lot of Republicans fanning out to explain what the president should be offering if he was serious about making a deal. Then, when it turns out that the president did offer those items, there’s more furious hand-waving….

The interesting question is whether the possibility of a government shutdown, a debt-ceiling breach or simply the pressure of the sequester’s cuts will, in the coming months, break one side or the other. But as long as the GOP’s position is they won’t compromise, there’s not going to be a compromise.

Nobody Has Any Business Voting for These Republicans: Nino "I Want to Have a Constitutional Moment" Scalia Tudor-Dynasty Villian Weblogging

Josh Marshall:

Scalia, Top Democratic Plant?: Speaking for myself, it’s hard for me to read the sort of stuff Justice Scalia says these days without seeing red. As he’s aged, he’s tossed aside any pretense or desire to hide the fact that he sees himself as what originalists and advocates of judicial restraint are supposed to be against: namely, an appointed super legislator…. Hearing him rail about “racial entitlement” sounds more like you’re listening to some sort of talk radio blowhard than a Supreme Court Justice.

But who is he (and his fellow conservatives on the Court) helping at this point?… [T]he Republican drive to disenfranchise minority voters in 2012 backfired spectacularly… you piss off and activate more people than you gain by playing to racial animus, hostility to immigrants and attacks on voting rights. Yet the Supreme Court is still stuck in the 80s and 90s era of the judicial politics of racial grievance…. The Court now seems dead set on overturning Section 5 of the Voting Rights Act. After that we’ll have cases on marriage equality, voter ID, affirmative action. The judicial calendar is stuck in a feedback loop.

I don’t want to underestimate the real world damage that will be done by bad outcomes of these cases. It’s real. But the political valence of all these cases, the politics they generate, seems certain to keep the public mind focused on the politics of exclusion they embody and the political coalition that put them on the bench. And that’s real too.

Ezra Klein Gets One Wrong: He Thinks What We Have Is a Failure to Communicate

It isn't.

Republicans just don't want to hand Obama anything the press will perceive as a victory. Since anything other than complete surrender to the Republicans will be scored as a victory for bipartisan deal-making Obama, whatever concessions Obama offers will not be enough.

Failing to understand the White House negotiating position is not a bug, but a feature for them.

Ezra Klein:

What we have here is a failure to communicate: [S]ome of the gridlock in Washington is simply the result of poor information. Would it matter, one reporter asked the veteran [Republican] legislator, if the president were to put chained-CPI — a policy that reconfigures the way the government measures inflation and thus slows the growth of Social Security benefits — on the table? “Absolutely,” the legislator said. “That’s serious.” Another reporter jumped in. “But it is on the table! They tell us three times a day that they want to do chained-CPI.”

“Who wants to do it?” said the legislator.

“The president,” replied the reporter.

“I’d love to see it,” laughed the legislator.

You can see it. If you go to WhiteHouse.gov, the first thing you’ll see is an invitation to read the president’s plan to replace the sequester. That plan is only a page. “Savings from Superlative CPI” — another way of saying chained-CPI (consumer price index) — is one of the items in bold type. It saves $130 billion over the next decade, mostly by cutting Social Security benefits. And yet there are key Republican legislators — the very Republicans who say they want to strike a deal, and who the White House will need if it’s going to get a deal — who don’t know the president is even willing to consider it.

Now, one possibility is the legislator was simply lying. But I doubt it. Politicians don’t like to make themselves look uninformed in rooms full of reporters, and such cynical messaging would be out of character for this particular member of Congress. What we have here, rather, is a failure to communicate.

Chained-CPI isn’t the only policy concession the White House has made that seems to have escaped the notice of its negotiating partners…. McConnell… calls for “serious means-testing for high-income people” on Medicare…. Graham… meant "rraising the Medicare eligibility age, means-testing entitlements, etc."… But on page 34 of the White House’s most recent budget, President Obama proposes to do exactly that. Medicare, it’s important to note, is already a partially means-tested program, with richer seniors — about 5 percent of them — paying income-related premiums for their hospital and drug insurance. Obama would increase those premiums by 15 percent, and he’d freeze the threshold such that, over the next decade or two, 25 percent of seniors were paying part of the cost of their coverage….

That’s not to say that the White House necessarily goes as far as all Republicans would like…. But what shouldn’t be holding an agreement up is that top Republicans simply don’t know the compromises the White House is willing to make on Medicare and Social Security.

I Am Guest-Moderating Health Law II at UMKC on Friday Morning at 9 AM...

ONLINE Readings for Friday, March 1, 2013

Read Steven Brill’s 2/10/13 TIME cover story: “Bitter Pill: Why Medical Bills Are Killing Us” available at: http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

American Conservatism’s Crisis of Ideas: Project Syndicate Monarchy, Patriarchy, Orthodoxy Weblogging

Let me note three things:

1. Most of what I have to say is highly, highly derivative from Mike Konczal and Mark Schmitt (and others);
2. The problem is not just that today's crop of AEI-conservative ideas is not politically sustainable, but that it is simply wrong--Cahn and Carbone's Red Families, Blue Families has convinced me that contra Murray America's (Blue) families are actually in pretty good shape (Red families that try to keep their daughters ignorant about family planning not so much), my take on Eberstadt is coming out in Democracy Journal later this month; and
3. Arthur Brooks seems to me at bottom simply lamenting that Democratic policies work and make people's lives better--that Republicans are losing their campaign to try to make America a worse-off place does not strike me as a minus.

And we are live at Project Syndicate:

American Conservatism’s Crisis of Ideas: BERKELEY – On the back left corner of my desk right now are three recent books: Arthur Brooks’ The Battle, Charles Murray’s Coming Apart, and Nicholas Eberstadt’s A Nation of Takers. Together, they constitute an important intellectual movement, which also happens to be a large part of the reason that American conservatism today has little that is constructive to say about managing the economy – and little purchase on the center of the American electorate.

But let’s back up historically, to the founding of what we might call modern conservatism in early nineteenth-century Britain and France. There were some – Frédéric Bastiat and Jean-Baptiste Say come to mind – who believed that government should put the unemployed to work building infrastructure when markets or production were temporarily disrupted. But they were balanced by those like Nassau Senior, who spoke out against even famine relief: Although a million people would die in the Irish Potato Famine, “that would scarcely be enough.”

The main thrust of early conservatism was root-and-branch opposition to every form of social insurance: make the poor richer, and they would become more fertile. As a result, farm sizes would drop (as land was divided among ever more children), labor productivity would fall, and the poor would become even poorer. Social insurance was not just pointless; it was counterproductive.

The proper policy was to teach people to venerate the royal throne (so that they would respect property), the paternal hearth (so that they would not marry imprudently young), and the religious altar (so that they would fear pre-marital sex). Then, perhaps, with women chaste for half or more of their childbearing years, the surplus population would diminish and conditions for the poor would be as good as they could be.

Did Ben Bernanke Just Say He Agrees with DeLong and Summers (2012)?

If, as we argued, under current circumstances, fiscal expansion is self-financing, then austerity makes the debt burden worse. It looks like that is what Bernanke said yesterday…

John Cassidy:

Ben Bernanke Lectures Congress on Austerity Economics: “Given the still-moderate underlying pace of economic growth, this additional near-term burden on the recovery is significant,” Bernanke told his students, who included a number of right-wing Republican diehards, such as Senator Bob Corker, of Tennessee, and Patrick Toomey, of Pennsylvania. “Moreover, besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run.”

Yes, Thoughtful Economists Think Raising the Minimum Wage Right Now Is a Good Idea

I would point out that the EITC and the minimum wage have different weak points--too high a minimum wage will have a substantial disemployment effect, and too high an EITC does create incentives to pad your hours. A mixed strategy helps attenuate both these flaws.

Steve Roth:

Leading Economists Vote on Raising the Minimum Wage: I’m delighted to see the U Chicago IGM Forum ask a really useful, non-softball question.

The panelists are evenly split on whether an increase to $9 would make it “noticeably harder for low-skilled workers to find employment.”

A 4:1 majority thinks that weighing the costs and benefits, “this would be a desirable policy.”

I note how many who commented bring up the EITC, suggesting that an increase in that support might be better than a minimum-wage increase. I note further that they apparently haven’t read the very good reasoning and research suggesting that the two together very effectively address the problems of each. But Paul Krugman has. And his surprise helps explain why the others haven’t thought about this:

Second — and this is news to me — the usual notion that minimum wages and the Earned Income Tax Credit are competing ways to help low-wage workers is wrong. On the contrary, raising the minimum wage is a way to make the EITC work better, ensuring that its benefits go to workers rather than getting shared with employers. This actually is Econ 101, but done right.

Paul Krugman: The Fever Swamp of the Center

The Fever Swamp of the Center, Continued:

I love Jonathan Chait’s phrase “the fever swamp of the center”; it really is true that self-identified centrists are sounding crazier and crazier, as they try to reconcile their fanatical devotion to the proposition that both parties are equally at fault with the distressing reality that Obama actually advocates the policies they claim to want…. [T]oday’s WaPo editorial… a new pitch. The editorial admits that Obama is calling for exactly the polices the WaPo wants… but the piece is nonetheless written as a criticism of Obama, because:

Mr. Obama has presented entitlement reform as something he would do grudgingly, as a favor to the opposition, when he should be explaining to the American people — and to his party — why it is an urgent national need.

Oh, Barack, you’re telling me what I want to hear, but you don’t sound as if you mean it!… [I]t’s all there: hyperventilating about the deficit, together with an absolute determination to blame both sides equally no matter how unbalanced they really are. And as Chait, Greg Sargent, and others say, this refusal to hold the worse parties accountable is in itself an important source of our political dysfunction.

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

Yes, We May Well Have a Double Dip This Year. Why Do You Ask?

I cannot find anybody now forecasting that the employment-to-population ratio will be higher in a year than it is today…

Binyamin Applebaum:

As Budget Cuts Loom, Austerity Kills Off Government Jobs: The federal government, the nation’s largest consumer and investor, is cutting back at a pace exceeded in the last half-century only by the military demobilizations after the Vietnam War and the cold war. The reductions are designed to be indiscriminate, cutting everything from air traffic control to nursery schools. And the turn toward austerity is set to accelerate on Friday if the mandatory federal spending cuts known as sequestration start to take effect as scheduled. Those cuts would join an earlier round of deficit reduction measures passed in 2011 and the wind-down of wars in Iraq and Afghanistan that already have reduced the federal government’s contribution to the nation’s gross domestic product by almost 7 percent in the last two years…. Federal, state and local governments now employ 500,000 fewer workers than they did on the eve of the recession in 2007, the longest and deepest decline in total government employment since the aftermath of World War II.

And it happened at exactly the wrong time to cut back on government employment--at a time when the government needed to be spending more employing more people, not fewer.

Joe Weisenthal: To Save The British Economy, David Cameron Will Have To Do The Hardest Thing For Any Politician To Do

Joe Weisenthal:

To Save The British Economy, David Cameron Will Have To Do The Hardest Thing For Any Politician To Do: [I]t is a good time to take stock of the situation in the UK, which has not only been downgraded, it's also on the verge of a triple dip recession. When David Cameron came to power he won praise for pursuing an austerity agenda (unlike Obama) but it's flopped….

@barnejek….

I would like to thank the British government for conducting a massive social experiment, which will be used in decades to come as a proof that a tight fiscal/loose monetary policy mix does not work in an environment of a liquidity trap. We sort of knew that from the theory anyway but now we have plenty of data to base that on.

This idea that Britain has conducted a huge social experiment is not spoken loudly, since it's insensitive, but it's one that economists have talked about. People like that Britain has blown its recovery, because it shows that the theory behind austerity is bunk….

[H]e goes on to argue that the only hope now is that Britain take a "stop loss" on its austerity agenda, and spend more.

I do believe that Britain has finally cornered itself into a situation where there is overwhelming evidence that Mr Osborne should really start spending. He should also assume that Mr Carney will not let that spending lead to appreciation of Real Effective Exchange Rate (a bit more on that mechanism in one of my previous posts entitled “Be careful what you target or am I in the right church?“). That is to say that the Bank of England will keep nominal and real rates very low. In my opinion this is the only rational way of the situation that we’re currently in. Then again, I am assuming the impossible here, i.e. that the politicians know what the stop-loss is….

In the wake of a debt downgrade, David Cameron must spend more money. This is incredibly difficult, since prima facie, it would fly in the face of the downgrade. And more importantly, it would basically require him (and his finance minister George Osborne) to admit that they were totally wrong since the crisis. That's the really hard part. Perhaps even impossible. But that's what it will take.

Why Oh Why Can't We Have a Better Press Corps?: Bob Woodward of the Washington Post Writes Fishwrap Edition

Ezra Klein:

On the sequester, the American people ‘moved the goalposts’: I don’t agree with my colleague Bob Woodward, who says the Obama administration is “moving the goalposts” when they insist on a sequester replacement that includes revenues…. [I]n 2011… everyone was perfectly clear that Democrats were going to pursue tax increases in any sequester replacement, and Republicans were going to oppose tax increases in any sequester replacement. What no one knew was who would win….

The sequester was a punt. The point was to give both sides a face-saving way to raise the debt ceiling…. The hope was that… something would… change… the supercommittee…[would come] to a deal… [or] the 2012 election [would resolve things]….

[In 2012] the American people voted for the guy who wants to cut the deficit by increasing taxes…. They also voted for a Senate that would cut the deficit by increasing taxes. And then they voted for a House that would cut the deficit by increasing taxes, though due to the quirks of congressional districts, they didn’t get one….

[T]he goalposts in American politics aren’t set in backroom deals between politicians. They’re set in elections. And in the 2012 election, the American people were very clear on where they wanted the goalposts moved to.

Henry A. Wallace (1952) on the Ruthless Nature and Utter Evil of Soviet Communism: Cold-War Era God-That-Failed Weblogging

Henry A. Wallace (1952), "Where I Was Wrong", The Week Magazine (September 7):

Here are startling admissions from a former vice-president of the United States. For years a Russian apologist, he now tells "Where I Was Wrong", by Henry A. Wallace.

Wallace says his big mistake was not denouncing Red coup in Czechoslovakia.

Henry A. Wallace:

Many people have asked me how I reconcile my stand before Korea with my uncompromising anti-Communist attitude of the past two years The answer is simple.

Before 1949 I thought Russia really wanted and needed peace. After 1949 I became more and more disgusted with the Soviet methods and finally became convinced that the Politburo wanted the Cold War continued indefinitely, even at the peril of accidentally provoking a hot war.

In this article eI shall speak frankly of some of the circumstances which have caused me to revise my attitude.

Ezra Klein Smacks Down David Brooks: "Centrism" Weblogging

Unbelievable:

David Brooks: In my ideal world, the Obama administration would do something Clintonesque… a budget policy… like… Robert Rubin… and if the Republicans rejected that, moderates like me would say that’s awful…

Ezra Klein: I’ve read Robert Rubin’s tax plan. He wants $1.8 trillion in new revenues. The White House… is down to $1.2 trillion…. [T]he White House’s offer seems more centrist…. People say the White House should do something centrist like Simpson-Bowles, even though their plan has less in tax hikes and less in defense cuts…

At this point David Brooks has a choice: he can say "I am an idiot who does not know what I am talking about"; or he can change the subject.

Guess what he does?

David Brooks: My first reaction is I’m not a huge fan of Simpson-Bowles anymore; I used to be. Among others, you persuaded me the tax reform scheme in theirs is not the best. Simpson-Bowles just doesn’t do enough on entitlements…

If I were running the New York Times, I would look at this and immediately say: We need to get Brooks out of our pages yesterday if not before, and we need an Ezra Klein of our own very badly.

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

Paul Krugman: Paul De Grauwe and the Rehn of Terror

Paul Krugman: Paul De Grauwe and the Rehn of Terror:

Nobody has taught me as much about the euro crisis as Paul De Grauwe… self-fulfilling debt panics in countries that no longer have their own currencies. Now… De Grauwe and Li show is that the rush to austerity in Europe largely reflected the surge in sovereign debt spreads after Greece got in trouble; the bigger the spread, the harsher the austerity. But it turned out that the spreads didn’t reflect underlying fiscal fundamentals… [as shown by] spectacular decline in spreads once the ECB… remov[ed] fears of a self-fulfilling liquidity crisis. Meanwhile, all that austerity has taken a terrible toll….

They also show that countries pursuing austerity have by and large seen their debt positions worsen. But take heart. Olli Rehn of the European Commission, last heard declaring that the big problem with austerity isn’t that it doesn’t work, it’s the fact that economists keep publishing studies showing that it doesn’t work, says that the only thing we have to fear is fear itself:

Mr. Rehn insisted that Europe’s belt-tightening policies were working and would lay the groundwork for a recovery…. “We must stay the course of reform and avoid any loss of momentum, which could undermine the turnaround in confidence that is underway, delaying the needed upswing in growth and job creation,” he said in the statement.

Well, that’s all right, then.

Douglas Holtz-Eakin and Avik Roy: "You Know All That Stuff We Have Been Saying for Four Years? Nevermind!"

Via Andrew Sullivan, Don Taylor notices Doug Holtz-Eakin and Avik Roy effectively saying "we've been misleading you about ObamaCare for the past four years":

Obamacare Obstruction Begins To Crack II « The Dish: Holtz-Eakin and Roy’s piece was and is primarily political, and doesn’t really have much to do with any facts or policy. They both (and many others) have overstated the case against the ACA for quite a while in my mind; that doesn’t mean I don’t read their stuff. And Holtz-Eakin was Senator McCain’s chief health policy advisor and Avik was an advisor to Gov. Romney. Given all this, the main content of the piece was reform of Obamacare v. strident ideological language arguing against something without offering an alternative that has been the norm for most opponents of the law for the past 34 months. So, even though my first thought was “Switzerland! I thought you guys hated mandates” I am personally glad to welcome them down from the ledge.

Ann Marie Marciarille: Self-Insurance by Small Employers and the Possible Breakdown of Community Rating Under the ACA

Ann Marie Marciarille:

Missouri State of Mind: Self-Insurance by Small Employers Under the ACA: [S]elf-insurance in employer-sponsored health insurance is a riddle wrapped in a mystery inside an enigma… the explosive growth in self-insurance by employer sponsored health insurance plans is… under-discussed… the New York Times took it on…. explains… 59% of private sector workers with health coverage are enrolled in self-insured plans (up from 41% in 1998)… the exemption of self-insured plan from state health insurance regulation is not premised on any genuine absence from all insurance markets, the article explains about self-insured plans' participation in the stop-loss insurance market…. The stop-loss market responds by cherry picking among the new refugees on the basis of -- you guess it -- health status of the employee group, reintroducing underwriting by small group to places where it had been eliminated for individuals by the Affordable Care Act. 

The moral of the story? Whereever and whenever we have competing insurance products whose profitability is determined by calculating every health care payout as a loss, the insurance markets will respond accordingly -- ever inventing more methods, even if once or twice removed, to screen those who need health insurance out of the health insurance marketplace.

Maintaining the pooling equilibrium as health care costs increase is going to be really hard. If it turns out to be impossible--well, then, the ACA system will lurch toward pay-or-play and then single-payer.

Ann Marie Marciarille: California's Health Insurance Exchange Web Presence is Up and Running

Ann Marie Marciarille:

Missouri State of Mind: California's Health Insurance Exchange Web Presence is Up and Running: Lots of people ask me what a health insurance exchange will look like.  I've been telling them that they may visit the Massachusetts connector for one example and that California's site will be up soon.  Now I have to amend that: Covered California may be visited here: http://www.coveredca.com/

Now the harder question still remains unanswered: what will it be like to actually use the health insurance exchange to try to acquire health insurance? The conventional response seems to be that the exchanges will be modeled on Travelocity. I guess it all depends on your most recent experience with Travelocity and whether you think the kind of sophisticated value-driven computer-savvy consumers that use a site like Travelocity were the ones I am most worried about in the Exchanges.

I would add a worry: Travelocity needs to attract customers or its people will lose their jobs, the Director of Human Resources at a large company needs to have an HR website that does not get the CEO mad enough to fire them. The exchanges, by contrast, will work according to a less consumer-is-always-right more political-horse-trading logic. How will that work?

And the Odds of Renewed U.S. Recession in 2013 Are Rising...

Kick the can of the sequester down the road. Short-term austerity needs to wait until after economic recovery. Short-term recovery requires pulling spending forward into the present and pushing taxes back into the future.

Menzie Chinn:

Econbrowser: Macroeconomic Advisers on the Sequester's Impact: Estimated self-inflicted macro harm, from Macroeconomic Advisers today:

...we now put the odds of a sequestration at close to 50%, and rising.

• Our baseline forecast, which shows GDP growth of 2.6% in 2013 and 3.3% in 2014, does not include the sequestration.

• The sequestration would reduce our forecast of growth during 2013 by 0.6 percentage point (to 2.0%) but then, assuming investors expect the Federal Open Market Committee (FOMC) to delay raising the federal funds rate, boost growth by 0.1 percentage point (to 3.4%) in 2014.

• By the end of 2014, the sequestration would cost roughly 700,000 jobs (including reductions in armed forces), pushing the civilian unemployment rate up ¼ percentage point, to 7.4%. The higher unemployment would linger for several years.

The macroeconomic impact of the sequestration is not catastrophic. Nevertheless, the indiscriminate fiscal restraint would come on the heels of tax increases in the first quarter that total nearly $200 billion, with the economy still struggling to overcome the legacy of the Great Recession, and when the FOMC is constrained in its ability to offset the additional fiscal drag with a more accommodative monetary policy…

Mark Thoma Sends Us to Jonathan Chait: Scarborough and Friends 'Bug-Eyed, Table-Pounding Terror'

Mark Thoma:

After two relatively wonky posts, let's turn to Jon Chait for a bit of (serious) fun:

Scarborough and Friends Trying to Make ‘Debt Deniers’ Happen, by Jonathan Chait: The deficit scold cause has suffered significant intellectual erosion…. In the short run, the interest rate spike they keep insisting will happen keeps not happening. In the long run, the health-care-cost inflation that is at the root of the long-term fiscal predicament is growing markedly less dire. The case for prudent fiscal adjustment remains strong, but the case for bug-eyed, table-pounding terror is growing increasingly ridiculous. But bug-eyed, table-pounding terror is the stock-in-trade of the fiscal scold movement. And so they are striking back by labeling anybody with a calmer view of the deficit as a “debt denier.” Joe Scarborough… has a new op-ed in Politico brandishing the epithet….

Monday Hoisted from Comments: On Gene Steuerle's 2005 Social Security Reform Plan

Robert Waldmann:

Gene Steurle's article is excellent policy analysis but, as noted by Lancelot, DOA politically. Steurle writes from the point of view of a social planner with a budget contstraint. Policy is made by politicians under political constraints. I don't think that cutting middle class benefits is a way to have more money to help the poor. I tihnk that politicians can aid the poor only by linking aid to the poor to middle class benefits (I recall a heated discussion with you about this in the greenhouse cafe in the science center some decades ago).

A tinhat paranoid view is that somewhere there is a right of center advocate of directing benifits towards the poor who is just trying to trick progressives into implementing a good policy which is politically doomed so as to get to no social welfare state at all.

Now if you want to help the poor more someone has to lose. You can try to soak the middle class and you will get nowhere. If you try to soak the rich, there will be no problem.

Over on Twitter Jeet Heer Demands Some Calvin Coolidge Blogging...

Appropriately for Silent Cal, there ain't all that much to say. Coolidge did little, and what he did was largely harmful to America. Remember that for Calvin Coolidge America's biggest problem was that it had too many Jews, too many Italians, too many Slavs. Of all the disasters inflicted by American governmental policies on human welfare in the twentieth century, Calvin Coolidge's immigration policy seems to me to win the prize:

IMMIGRATION…. New arrivals should be limited to our capacity to absorb them into the ranks of good citizenship. America must be kept American. For this i purpose, it is necessary to continue a policy of restricted immigration…. I am convinced that our present economic and social conditions warrant a limitation of those to be admitted…. Those who do not want to be partakers of the American spirit ought not to settle in America

It is closely followed, perhaps, by his financial regulatory policy:

Frederick Lewis Allen: Only Yesterday: The bull party in Wall Street had been still further encouraged by the remarkable solicitude of President Coolidge and Secretary Mellon, who whenever confidence showed signs of waning came out with opportunely reassuring statements which at once sent prices upward again. In January 1928, the President had actually taken the altogether unprecedented step of publicly stating that he did not consider brokers' loans too high, thus apparently giving White House sponsorship to the very inflation which was worrying the sober minds of the financial community.

He was, at least, strongly in favor of the International Criminal Court.

A Somewhat Strange Piece from Nick Eberstadt: Motes and Beams! Weblogging

The usually-intelligent Nicholas Eberstadt writes:

What is the future of conservatism?: The “clear and present danger” for the United States today is domestic… subverting… the American way of life…. [T]he collapse of the nation’s family structure…. By 2010, a child was more likely to grow up in a broken home in America than in practically any other Western society, including the Scandinavian ones…. America’s… retirement from religion…. [O]ur citizenry’s steady slide into financial dependence on the government… healthy, able-bodied, and relatively well-to-do Americans plead[ing] “poverty” for the purpose of handouts from Uncle Sam. These powerful, deeply entwined trends are progressively degrading both our people and our polity… an ignominious end to American exceptionalism….

Wonkblog: No, Marco Rubio, "Government" Did Not Cause the Housing Crisis

Ezra Klein's Wonkblog continues its master class in how America works--and in the process continues its chronicle of the Republican War Against Reality.

Nobody has any business working for, contributing to, or voting for these clowns. Nobody:

Mike Konczal: No, Marco Rubio, government did not cause the housing crisis: said: “This idea – that our problems were caused by a government that was too small – it’s just not true. In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.”… [T]here’s precious little to back [this] up. The core claim… [is] the existence and affordability goals of Fannie Mae and Freddie Mac (the GSEs) and the Community Reinvestment Act (CRA) were a major reason we had a subprime-driven housing bubble and then a crash. The only problem?… [T]hat’s not true. Let’s go through some things we know.

Wednesday Hoisted from the Archives from Four Years Ago: Clive Crook Seems to Have It Slightly Off... Weblogging

Of all the weird things to happen over the past decade, one of the weirdest has been Clive Crook's transformation into the anti-Ezra Klein: someone who uses his knowledge of policy to cloud and confuse. More and more we find Clive Crook taking refuge in the position that:

• Barack Obama's policies are by and large sensible and centrist--in many cases, a bit right of center.
• The Republicans are blocking sensible and centrist policies--even those that are right of center, even Bill Clinton's tax policy, George H.W. Bush's foreign policy, John McCain's climate policy, Mitt Romney's health-care policy, and Ronald Reagan's immigration policy--because they want to make Barack Obama's presidency appear to be and be a failure.
• Barack Obama has been unable to overwhelm Republican obstruction, and has had substantial but limited success in implementing policies that are by and large sensible and centrist.
• It's Barack Obama's fault that the Republicans are being obstructionist. I don't like him.

This is not reality-based discourse here. The text makes no sense. What is the subtext that does?

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From four years ago: Brad DeLong : Clive Crook Seems to Have It Slightly Off...: The thoughtful and intelligent Clive Crook writes:

Obama’s lonely quest for consensus: For all its flaws, the stimulus bill that Congress passed last week and President Barack Obama will sign on Tuesday is better than no bill, and better than further delay. Action is already months late, held up by the election and the protracted White House transition...

Action is already months late, but not because of the election and the White House transition. The deal of an immediate stimulus--60% spending, 40% tax cuts, all focused on bang-for-buck--was there to be made the first Wednesday in November, and was offered. The Republicans decided... to oppose it. Action is delayed, yes, but not delayed by the institutional calendar--delayed by the Republican Party.

A Question About Julia Ioffe's Profile of Ezra Klein in The New New Republic...

At one point in her profile, Ezra Klein: The Wise Boy, Julia Ioffe writes:

David Weigel, Klein’s friend and fellow member of what came to be known as the Juicebox Mafia…

As I remember it, the term "Juicebox Mafia" was coined by either the Washington Times's Eli Lake or The New Republic's editor-in-chief Marty Peretz as part of an attempted ideological police action against Ezra and company for being insufficiently hawkish on the Middle East.

David, Ezra, Spencer, Matt, Dana, and company then dealt with this by picking up the label and running with it--saying: "we work hard, we're experts in what we cover, we're not afraid of being young."

None of this makes it into Julia Ioffe's profile. Why not?

Why Oh Why Can't We Have a Better Press Corps? Joe Scarborough Edition

Paul Krugman:

Hearsay Economics: Jonathan Chait is boggled by Joe Scarborough…. What’s really striking is Scarborough’s certainty that we’re experiencing “explosive” spending growth, which is very much not the case. How do JoScar and others like him come by such misconceptions? Well, I’ve gradually come to the realization that most of the commentariat doesn’t do what, say Martin Wolf or I do — grub around in published data, read reports, and all that. Instead, they rely on what they heard somebody say the facts are; hearsay economics…. And where do the reputable people get their information? Why, it’s what they heard somebody in their circle say. It’s hearsay economics all the way down…. It may seem hard to believe that this sort of petty small-group sociology exerts a vast influence on actual policy, and that it is actually responsible for millions of lost jobs. But the more I look at it, the more that seems to be right.

Paul Krugman: Against the Ignorance Caucus--the Republican Party

Paul Krugman:

The Ignorance Caucus: Last week Eric Cantor, the House majority leader, gave what his office told us would be a major policy speech. And we should be grateful for the heads-up about the speech’s majorness. Otherwise, a read of the speech might have suggested that he was offering nothing more than a meager, warmed-over selection of stale ideas…. [S]uch is the influence of what we might call the ignorance caucus that even when giving a speech intended to demonstrate his openness to new ideas, Mr. Cantor felt obliged to give that caucus a shout-out, calling for a complete end to federal funding of social science research. Because it’s surely a waste of money seeking to understand the society we’re trying to change.