The Texas Miracle, Or, It's The Denominator, Stupid

Advance apologies to my nice and numerous fellows in Texas - but this had to be said.

As Rick Perry barges helter-skelter into the Republican primaries, pundits everywhere are reflecting on the unusual durability of the Texan job market. Texas, they are quick to say, has created 40% of the nation's jobs since the start of the recession.

This brings me to a larger point that's not quite related to our usually superbly enjoyable partisan bashing. As the title of this post says, it's the denominator, stupid. Or rather, the jobs created are only half of the story.

Let me put it this way: Privately, I suggest that the single most common logical mistake made by the average person is confusing real and nominal values. They think that their home represents vast earning, when it's barely paced inflation. They think that prices are rising out of control when the real price level barely budges.

But perhaps the second most irritating, irrational error is to think that a numerator matters alone, when it only matters in context. It's not Texas' employment that's important. It's Texas' employment to population ratio.

And Texas' population has been expanding rapidly. So yes, Texas has created 40% of the nation's post recession jobs - but it's unemployment ratio is as high as New York's. Yes, Texas has created 40% of the nation's post recession jobs - but the percent of it's population employed is actually falling. Yes, Texas has created 40% of the nation's post recession jobs - but only through similarly massive immigration.

This isn't to nitpick on Texas. Rather, it's to point out that so far Texas has succeeded in creating enough jobs to barely pace it's population growth while keeping it's unemployment rate around about the national average. That's fine, but it doesn't count as a unique victory.

And as Krugman rightly points out, even that model doesn't help much. People can move from everywhere else to Texas, but they can't move from everywhere, to everywhere, all at once. Unless Rick Perry is arguing for open borders and higher immigration. Something tells me to doubt it.

Schwaa?

Things like this get our blood a-boilin':

We had these big interconnected undercapitalized things that were mandated by federal policy to keep expanding the amount of paper they bought or backed, which meant inevitably they were going to reach the point where the paper they were backing was too risky, and the GSE’s mandated growth necessarily called for them to issue more paper of their own to do that..And then you had Basel II and its US application that made GSE paper Tier I capital to support maximum loan growth in private sector banks. No wonder credit dried up when the GSEs were taken over in Sept 08. But you never see the Rortys and Mins speak to this perspective.

Damn. Thanks for beating the shit out of that strawman, esteemed commentator on Tyler Cowen's blog. Because I can't think of a serious leftwing economist who takes this position. Of course the GSEs where behemoth securitizing entities. Of course they provided liquidity in a market gripped by a bubble. Of course they were pro-cyclical. Of course they should be wound down. But that's not the argument. Because this whole thing kicked off with the question, "Did the GSEs cause the housing bubble?"

Even the most inveterate Kenyan-colonial socialists among us admit that privatising the GSEs was, in retrospect, a pretty significant fuck up. They were pro-cyclical entities backed with a government guarantee, and that's never going to be stabilizing. But that's a contributing, not a causual, factor. They did not cause the crisis; they enabled the other actors in the crisis through a combination of market making and liquidity.

Hating the GSEs is a lot of fun, but saying, "Lookee, it's all their fault" involves ignoring pretty much the entire behaviour of the private-label mortgage originators during the crisis, or the fate of their loan portfolios (yes, compared directly to Fannie and Freddie) after the crisis. The GSEs subprime originations look pretty damn terrible - PLS subprime portfolio performance looks like a goddamn catastrophe.

What we have here are two sets of people talking past each other. One set says, "The GSEs caused the crisis." The other replies, "No, they didn't, because they didn't start the subprime movement, they lost significant market share during the bubble, and even their eventual subprime market offerings fared better than PLS paper. But yeah, they were a pretty terrible idea." And then the other replies, "The GSEs were a terrible idea, why can't you just admit that?" And then the other replies back, "We just did, and what the fuck happened to your original question?"

Really, it just gives us a headache.

In Which We Scratch Our Heads At Niall Ferguson

It's a well known fact that Niall Ferguson is in highly competitive race to become the Dumbest Man Alive. Whether it's his seminal Newsweek article "Please Obama, Talk More Harshly To The Egyptians, As Though They Could Give A Flying Fuck," or his deeply entertaining follow-up "The Real Problem With Obama Is That He Lacks The Delicate Political Touch Of Richard Nixon" Ferguson has been on a one-man quest to roll back the last shreds of his dignified reputation as a historian.

But these all pale in front of his latest effort, which ran in the June 6 Newsweek. In it, Ferguson excoriates Paul Krugman (the one with the Nobel Prize in economics) for focusing on how darn bad fiscal austerity has been for Ireland, Greece, Portugal, and now Britain.

Sure, Ferguson says. As these countries have cut budgets in the midst of a staggering recession, their economies have stagnated and fallen deeper behind. But no need to worry! Things are fucking cheesy in Switzerland, in spite of some modest budget cuts. So austerity is actually expansionary!

Let us dwell on that for a second.

Switzerland is an incredibly well-educated, export oriented economy that (surprise!) controls it's own currency. Personally, if I were in that situation, I would drive my interest rates to near zero and engage in a coordinated expansion of my monetary base. Plus, I'd let everyone know that since exports are FTW and my currency is a bit on the strong side, I'm planning on keeping them there for as long as I damn well felt like it. But I'm sure Switzerland has done nothing of the sort.

But of course, that's the whole point. Switzerland is nothing like the PIIGS. It's a one-off. More than that, it's not very much like us, either. So after trolling the world economies of 2008-2011, Ferguson has come up with one example where austerity has proven sort-of successful, and asked us to politely ignore Britain, Ireland, Greece, and Portugal.

What's really galling is that Ferguson plainly ignores the rest of Europe. If economics is such a morality tale, then why not look at Spain? Spain was the bees knees, budgetarily speaking. They had slashed their deficit and paid down their debts by half, but it sure didn't help them when the recession came calling. It's almost like the recession had nothing to do with deficits and everything to do with a worldwide collapse in aggregate demand precipitated by a financial crisis and exacerbated by household deleveraging. Funny, that.

So shorter Niall Ferguson: Ignore Britain, Spain, Ireland, Portugal, Italy, Greece, the counterexample of Iceland, the devaulation of the Canadian dollar in the 90s, the Japanese lost decade, and the effect of fiscal stimulus in China. It worked for Switzerland. Ferguson says so.

I have a headache.

Moral Culpability And The Crisis: Our Least Sexy Title Ever

Ever since we experienced the highly enjoyable financial panic of 2008, people have been casting about for someone to blame. And why not? Every great crisis needs an equally great bad guy. It's fun, and it increases the chance that your abject misery will eventually get optioned into movie rights.

But there's one bad guy that's proving surprisingly popular: The homebuyers themselves. Why not? They were the irresponsible borrowers who took on too much debt, far too soon, and sent the economy into crisis. This is America, after all. If you have to hate someone, you might as well hate the common man.

We're probably behind the ball on this one, seeing as how the recession ended while we were suffering a particularly bad hangover during the entire month of June, 2009, so we should probably let this one go. But we're immodest fellows here at the Strawman Blogger, so late or not, we're going to put this myth to rest.

Don't worry. You can thank us later.

First, let's get a few things out of the way. Homeowners assumed too much debt in the crisis. That much is obvious:

And it also had very predictable consequences:

But participating in a crisis doesn't make you culpable for it. When you buy a home, you work with a team of people: Real estate agents who help you shop for a home, lenders who finance it, and industry experts who provide advice and perspective along the way. Each one earns money when you buy a home. And each one earns more money the more home you buy.

And, during the worst housing bubble in American history, each one argued that a bubble wasn't possible.

Realtors fed that delusion. In 2005, David Lereah, Chief Economist and Senior VP for the National Association of Realtors (NAR), argued that, "[t]here is virtually no risk of a national housing price bubble based on the fundamental demand for housing." In 2006, he predicted a "soft landing for the housing markets." Even as late as October, 2007, the NAR continued to peddle the line that, "[t]he speculative excesses have been removed from the market and home sales are returning to fundamentally health levels."

Nor were they alone. On August 18, 2007, celebrity columnist Ben Stein appeared on Cavuto on Business to state that, "[t]he credit crunch is way overblown ... The subprime problem is a problem, but it's a tiny problem in the context of this economy ... It's a buying opportunity, especially for the financials, maybe like I've never seen before in my entire life.

Financial firms were not immune to the excess. Abetted by the ratings agencies, which catastrophically failed to recognize the growing risks in the mortgage market, large investment banks were net long in housing until the bitter end. Even the previously responsible JPMorgan Chase, which had long avoided the collateralized debt obligation business, was eventually burned by the infamous Magnetar trade, losing $880 million on the Squared CDO alone.

But perhaps the most memorable remark came from then-Fed Chairman Alan Greenspan, who stated, "Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets ... Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications."

Homeowners took on too much debt. More than they could afford. But they didn't do it alone. They did it on the advice of their realtors, who assured them that housing was a good investment. They did it with loans from their banks, who were eager to finance mortgages in any way possible. They did so with liquidity provided by Wall Street, who's addiction to mortgage securitization fueled the crisis. And they did it on the advice and encouragement of financial experts and the Federal Reserve itself.

Each of these actors were experts in their own field. Should home buyers have ignored their advice? Perhaps. But arguing that means admitting that the entire mortgage industry was engaged in an exercise of bad faith - providing bad advice to good people, in hopes of turning a profit.

So who was at fault, you ask? Everyone. And no one. That's the trouble with bubbles. They work because they're so damn convincing. If no one believed in them, they wouldn't happen in the first place.

Well. That, and the bankers, of course.

We Could Do Something Stupider Than This, But We Wouldn't Want To Try

So even reasonable and adult Americans have lately been making sounds about refusing to raise the debt ceiling. Not at least without some smidgen of compromise, which will no doubt involve putting poor people in ankle shackles and driving them through the streets.

Honestly, this is so monumentally stupid that we actually be surprised, if we weren't such a cynical and worldly fellow. Let us be utterly clear on this point. Refusing to raise the debt ceiling doesn't change a single thing about our prolifigate, irresponsible, and altogether ill-considered spending. It just means that we refuse to pay the bills.

To put it another way: If the United States of America was you, refusing to raise the debt ceiling would be like refusing to pay your mortgage. I wonder how that would turn out?

Why is it that nominally intelligent people can't grasp this? If you want to do something about spending, cut spending. If you want to raise more in taxes, raise taxes. What you should NOT do, under any circumstances, is willingly default on the national debt simply because you want Medicare benefits issued in chickens.

This is not a bloody game. In 2008, led by a serious mispricing of extant market risk, the mortgage securities market suffered a massive panic and commisserate flight to safety, which crushed security prices and drove down Treasury yields. The inability of the market to supply a co-equal supply of new safe assets led to a collapse in aggregate demand that, along with global deleverging, threw the economy into a massive recession.

That's what happens when investors doubt the safety of MBSs and CDOs. Imagine what happens when the United States regularly, and for no reason other than it's simple bloodymindedness, starts defaulting on it's debt.

Better Than We Expected, Obama, But Can't Anyone Really Play This Game?

So we're pleased to announce that Obama's budget proposal was better than expected. But that was mostly because we expected him to put Harry Reid in shackles and throw him into a pool filled with live sharks. Really, this is the type of stone-cold bargaining you get from the 44th President of the United States.

Really, negotiating with Obama is easier than beating a sackful of kittens, provided you're a Republican. It's a simple two step process. Start by abandoning your position. Then, shift your views just to the right of Attila the Hun. Then wait! Obama will inevitably assume your old position, meaning that you get the triple benefit of a) seeing your original plan passed, b) getting to push the American political debate to the far right, and c) being able to excoriate the President as a socialist for having the temerity of trying to pass a plan your originally supported.^{1 2}

Success!

We can't blame Republicans, though. It only worked 1,293,939 times before Obama showed signs of catching on. And today he did, with a plan that  was only tilted 3:1 in favor of spending cuts over tax increases, as opposed to the plan Paul Ryan favors, which involves striking the American middle class on the head with a large cartoon mallet before giving out tax breaks to super-rich bankers.

Still, while 3:1 is a marginal improvement compared to a plan that is actively insane, we feel we could do one better. So with no further ado, we present the Strawman Blogger Guide To Fixing America's Budget. You can thank us later.

The Strawman Blogger Guide To Fixing America's Budget: The Short Version

"Dear Americans. What a stupid fucking debate we are having. Truly, I can think of nothing more productive than slashing spending in the middle of an anemic recovery after a crushing recession. Real GDP growth is being revised downward, from 1.9% to about 1.5%. Shit, I thought the first number was bad. It’s like we’re actually scared of returning to full employment."

"Still, much like a crank addict after a four-day dry spell, you demand more of what's killin' ya. So far be it for me to complain. What follows is my edifying and entirely reasonable plan for fixing the budget."

"Our long term deficit is caused by nothing more than Medicare. Luckily, the Affordable Care Act had many promising cost controls that even Ryan recognized and kept in his plan, so I plan to defend and promote that act to help correct the path of the Medicare cost curve.”

“Our medium term deficit is exacerbated by the irresponsibility of the unfunded Bush tax breaks, many for the richest Americans. In this time of shared sacrifice, I’ll let those expire. Social Security, on the other hand, is fundamentally sound. Its minor budget problems can almost entirely solved by lifting the payroll tax cap, so I’ll veto any bill that cuts benefits and puts retirees at further risk of poverty. The non-defense discretionary budget is not the driver of our long term deficit, so while I welcome reforms, accountability, and the right priorities, I won’t accept cuts to the social programs that assist the needy and promote the well being of the our country, like Pell Grants, child nutrition, or funds for scientific research.”

“Finally, our short term budget deficit it caused by the collapsing tax revenues due to this recession. As good, honest, hard working Americans struggle to find jobs, they have more need of programs like unemployment insurance and pay less in taxes. Solving this problem means putting America back to work. So I will follow with plans for short term deficit spending to increase demand, spur jobs, and make it easier for business to hire. I also believe that the Federal Reserve is staffed by of a bunch of arrogant white mincing venal ex-investment bankers who’s minds have long ago been wasted away by the furious pace of their socially damaging rent-seeking, and as a result are too childish, close minded, and blinded by epistemic closure to notice that their slavish ignorance of 8.9% unemployment and below-average inflation is destroying the country. So here are my list of nominations for all vacant Fed chairs.”

“While Republicans may have you believe that we can afford our society, but not accept the adult responsibility of paying for it, I know that Americans are mature enough to believe differently. What we pay for our government has not changed substantially over the last fifty years. Outside of health, the cost of our government has not changed substantially in forty years. But our taxes have changed. We pay less today than at any other time in modern history. Most of all the rich, who have appropriated the fruits of this country's labor while advocating the ridiculous notion that they have no responsibility to pay for its care. That is got to change.”

Then I’d have graphs. I fucking love me a graph.

¹Great example of this: The Affordable Care Act, which we prefer to call the Dole/Daschle Health Care Care Plan Of Awesomeness.
²Another great example of this: The 2011 budget fight, which played out like this. REPUBLICANS: We demand 33 billion in cuts! DEMOCRATS: Never! REPUBLICANS: Then we demand 70 billion in cuts! DEMOCRATS: How about 38 billion? REPUBLICANS: Socialists! But ok.

Thoughts That Still Mystify Us, Part 2

Our entire medium-term deficit problem can be solved by repealing the Bush-era tax cuts, which fans of deficit spending will be pleased to recall were entirely financed on the nation's credit card. Not that we're complaining! It takes really committed ignorance to reduce taxes to their lowest levels in modern history.

Thoughts That Still Mystify Us, Part 1

The exchanges in Paul Ryan's Plan are almost entirely indistinguishable from the exchanges in the Affordable Care Act. What the hell, people? Is no one going to talk about this?<sup>1

1</sup>Also, he keeps the Medicare cuts that sent seniors everywhere flocking to their fainting couches. And that he called unsustainable. Bless.

On Our Plan For Despair, Eh, Prosperity. Whatever.

Regular readers will note that we've so far been mum on the Ryan budget, truly the news of the past week. This has not been a mistake! In the past, we've rushed willy-nilly into the political fray whenever the mood struck us, making all types of regrettable factual errors along the way, along with assorted logical mistakes and embarrassing missteps that frankly we'd all like to forget.

So we've decided to be a cleverer, more patient Strawman Blogger. We're no longer trying to crest the wave of high-frequency snark, but instead follow behind with our pithy insight and vast wisdom.

In that spirit, we've decided to make a quick list of the major points of contention with Ryan's budget. Why a list, you ask? Truly we despair over lists, being as they are tools of weak minds desperate for easy page hits, but in this case we had to relent. If we picked a single topic for each blog post on the budget, the Strawman Blogger front page would quickly stretch into infinity.

That's right. The Ryan Budget: A plan so stupid that a single blog post cannot contain it. Well done all around.

Without further ado, our late (but somewhat more refined) thoughts:

1) The Great Risk Shift

If you care about the deficit, you care about health care. No factor is important to the growth of our long run debt except for the grinding, implacably rising costs of health service. So naturally, if you want to fix the debt problem, your only concern is in changing the trend curve of health care costs.

Fix, you see, is the key word here.

Ryan doesn't fix anything. To his immense credit, he doesn't even try. He doesn't establish new payment practices, doesn't delve deeper into the efficacy of care, and doesn't bother to address the many deficiencies in our current system. He simply ends Medicare. If you turn 65 in 2022, you won't enroll in Medicare. You'll get a voucher which you can use to purchase private insurance.

Vouchers? Well. Premium support payments, in his remarkable lexicon.

As we discuss below, these vouchers grow far slower than your cost of care. So over time your vouchers will be worth less and less and you'll purchase less and less care with them.

Medicare costs are not sustainable over 50 years. But shifting this deficit from the government to the individual doesn't fix health care costs. It just dumps them off the ledger. Seniors will still lack care, will still be indebted far past their ability to pay - but with Ryan's deep cuts and without the support of a strong bargaining position, their suffering will be much more acute. According to the CBO, Ryan's plan will double the out-of-pocket cost of health care. Forget insurance. Over 68% of seniors health care insurance premiums will be paid by seniors themselves.

This isn't problem-solving. This is willful childish ignorance. Apparently, Ryan attended the Hear, See, and Speak No Evil school of policy design.

2) CPI-U And The Rate Of Inflation

When Ryan first teased hints of his plan, the general thought among the intelligentsia was that he would tie the value of his vouchers to GDP+1%. They also declared that this formula was totally unsustainable. Health care costs grow at some 5% per annum, so anyone holding a voucher will be able to buy less and less in care as the years tick by.

It turns out, however, that even that ambitious stupidity wasn't enough for Ryan. He linked his vouchers to the CPI-U – the rate of general inflation.

To put this in perspective, you can think of the growth in GDP to be the growth in productivity added to the rate of inflation (thanks to Ezra Klein for the breakdown). Ryan has taken a formula that's already too harsh for seniors (Voucher Growth = Production + Inflation + 1%) and made it far, far worse (Vg = I).

Why did he do this? God knows. Klein posits, correctly we think, that when he plugged GDP+1% into his formula he couldn't get it to spit out the savings he wanted.

3) In Which The Heritage Foundation Embarrasses Themselves Somewhat More Than Usual

Once Ryan had put the polish on his plan, he took it over to the fine folks at the Heritage Foundation to have them model the macroeconomic effects¹. Not that you could call it modelling, mind. Math like this is why people don't trust economists.

First, it's important to note that the Heritage Foundation projections aren't needed for the plan to work. Ryan's plan makes deep cuts, and those cuts will be effective quite apart from the Heritage analysis. It's worth stating as there's been some confusion on that point.

However, taking the hammer to the social safety net without providing any actual benefits is considered bad form, so Ryan asked the folks at Heritage to break out the trumpet divine and bring the good news. And they did! Sort of.

Heritage found the plan so impressive, so remarkably magical, that they predicted that just enacting it would reduce unemployment to 6.4% by the end of the year. Sweet God, man! That's some powerful stuff.

Not only that, but they posit that unemployment will hit 2.5% in 2020.

Yes. We meant to write that.
...

2.5%.

Let's put that in perspective. Unemployment has only been below 4% once in the last thirty years, and that was immediately followed by a Fed rate hike. It's important to understand why. It takes time for people to find a job. It takes more time to find a job that's right for them. If you imagined a world with 0% unemployment, those unlucky fellows who are fired would be hired the very second they walked out the door.

This, of course, is unlikely.

So any economy has a natural non-zero rate of unemployment. For reasons to lengthy to discuss here, any attempt to drive unemployment below that rate will cause inflation to pick up. To whit, it's commonly called the Non-Accelerating Inflation Rate of Unemployment (NAIRU). Once unemployment hits the NAIRU, inflation ticks up and the Fed steps in with a timely rate hike.

The NAIRU can change, but it's generally between 4-5% in a healthy economy. So to the profound merriment of assorted spectators, the Heritage Foundation declared that Ryan's Roadmap was so powerful that it would actually rewrite the basic rules of macroeconomics.

And you know what? It gets better.

After several days of highly enjoyable mockery, the Heritage Foundation deleted the offending table from their website. This was a mistake for reasons three. 1) It is 2011 and, thanks to the timely invention of the PrntScn key, the original table was widely available 2)  You can still calculate the 2.8% rate from the rest of their datasets, and 3) By taking a ridiculous idea that no one but Heritage believed and turning into a ridiculous idea that even Heritage couldn't stand behind, it naturally made the rest of their rosy numbers look rather suspect.²

4) Oh. Also He Sort Of Ends Medicaid.

The current funding mechanism for Medicaid will be ended and states will be given block grants instead. We don't have much to say about this, except to note that, warts and all, Medicaid is the single most effective service at holding down health care costs. It is probably the opposite direction than where we should be heading.

5) Really. Really, This Looks A Lot Like The Affordable Care Act

Remember the no good awful socialist Affordable Care Act? It worked sort of like this:

• People received need-based vouchers for care
• People were able to shop and compare private plans on health care Exchanges
• The plans in the Exchanges had to meet a basic quality
• The plans were extremely limited in their ability to discriminate with price

This is, of course, totally different from Ryan's plan, which functions in this completely unprecedented way:

• Seniors receive need-based vouchers for care
• Seniors are able to shop and compare private plans on health care Exchanges
• The plans on the Exchanges have to meet a basic quality
• The plans are limited in their ability to discriminate with price

We don't like to wax poetic, but: What the hell, people? Not even Ryan, in spite of his best efforts, can actually articulate a difference between these two plans. This has to be the quickest reversal of socialism since Zukhov said, "And we'll call it Operation Mars."

Now, we aren't saying that you have to hate Ryan's plan just because you hated ObamaCare. We, for example, made our peace with the Affordable Care Act because a) no one looked especially inclined to give us single-payer, and b) giving crappy insurance to previously uninsured sick people looked like a step in the right direction. Ryan, however, is planning giving extremely crappy insurance to a bunch of old people who currently have perfectly good insurance, thank you very much, before taking the extra step of making it even more crappy over time.

Needless to say, we are unamused.

But while you can hate/love ObamaCare and RyanCare with perfect logical consistency, you cannot actually consider ObamaCare a socialist takeover and RyanCare a triumph of the free market. Please, people. You have to at least look like you're trying.

5) It's Not Just Medicare

It's also worth mentioning that Ryan finds time to increase taxes on most of the bottom 90% of society, while reducing taxes on the top 10%. The top 1% saves rather a lot, actually - about 15% of income.

He also, in an astonishingly crazy fashion, promises to reduce all other spending, apart from medicine and social security, from 12% of GDP to 3.5%. Since he's promised only cursory cuts to defense, the damage to the social programs in non-defense discretionary, such as food stamps and Pell grants, will likely be catastrophic.

6) If It's Such A Bloody Good Idea: Why Not Now?

One final, and in our eyes, most damning question. If Ryan's plan is so effective, if it really holds down the costs of care, results in major savings, promotes individual choice, but in no way damages the efficacy of health care - why wait? Why not start it now?

You would need time, of course, to get the exchanges up and running. ObamaCare needed four years - we'll round it up to five, just to give Ryan the benefit of the doubt. Five years to set up the exchanges, and in 2016 Medicare ends and every once and future senior gets a voucher for care.

Sound good?

It doesn't to Ryan. It doesn't because it's a terrible plan and seniors reliably vote Republican. So in an extreme act of cowardice, Ryan reverses course. No one over the age of 55 will be affected. This isn't "save the future for our children." It's "save the present, screw the future."

As others have pointed out, this creates a completely unsustainable political dynamic. Seniors turning 65 in 2022 will see their peers get lavish Medicare benefits, while they're sent scurrying for scraps in the wasteland of the exchanges. This is hardly going to last. Ryan's plan isn't just cruel and irresponsible. It's cruel and irresponsible and unlikely to work.

In Close

All in all, we're bemused by Ryan's plan. If we had set our enviable intellect to the task of creating a plan that would be hated by the public, pilloried by the Democrats, and be the mass political suicide of the Republicans, we could not have done better.

We reserve the right to add to this post as the mood strikes us.

Update: An earlier version of this blog incorrectly stated that seniors would pay for 68% of their health care costs under Ryan's plan. The CBO estimated that they will pay for 68% of their insurance premiums.

Update, Again: In what can only be described as a divine taste for cruel irony, the original version of this blog had extensive errors. See? We told you we shouldn't have rushed into anything. The original confused the Plan For Prosperity budget with Ryan's Roadmap, which would have been only a minor irritation, except we linked to the wrong CBO report. Mentions of the Roadmap have been corrected and the link has been fixed. The percentage of insurance premiums was actually correct. At least we didn't screw that up twice.

¹Other picks from the Heritage Foundation highlight reel: The Bush tax cuts will increase household income and the Bush tax cuts will pay off our national debt by 2010.
²As of writing this, they just took down the entirety of their original forecast and replaced it with something marginally less insane. Very marginally. Small improvements, and all that.

This Is Not The Way Forward

Lately, we're getting a bit desperate for topics to discuss that don't make us sound too much like an unhinged foaming partisan hack. It's not easy. We're very excitable around this blog.

Still, sounding like you're a few screws short of marching out of a fifteenth-story window is really not the way to appeal to a broad demographic of readership. Although, quite frankly, it would be quite the feat for our readership to go any lower. Perhaps if we closed our eyes when posting?

So over the next few weeks, we'll discussing some calmer, more cerebral topics that don't get us all in a lather. That's right. You're about to be treated a rational Strawman Blogger.  Probably. At least until such a time as we go off our meds.

We'll start with Libya. We're calm about Libya. Partially because we're an insular, narrow-minded American with a shaky grasp of geography, but mostly because it's a messy regional conflict, and it's unlikely that anyone in America would be dim enough to needlessly entangle themselves in a war with no clear good guys, uncertain prospects, and no clear timeline for resolution.

What's that? Eh? Oh.

We really cannot fathom the mindset that has led the administration to believe that lobbing cruise missiles over sky of north Africa is a good idea, other than that we have some lying around and someone thought it would be fun. But as a military tactic? That kind of assumes that the one thing preventing the rebels from sweeping into power in Western Libya is a Tomahawk strike. Call us unconvinced.

Now, it's entirely possible that proper air support will do a world of good for the rebels. As our wiser friends have pointed out, it's not like Ghaddafi's army is exceptionally large or well-organized, and the fact that a fair portion of it consists of the local hired help is unlikely to improve long-term morale. But historically, air campaigns have not been terribly successful at disloding committed opponents. Battle of Britian, Kosovo, and ect. and so on. As it turns out, it is difficult to occupy a country with an F-22.

Apart from the success of the campaign, we really question the point of getting involved in the first place. Look, people. War sucks. It sucks a little bit for a lot of people, and it sucks much much worse for the few people we ask to do all the fighting. All in all, it's something to be avoided as much as possible.

But if the goal is important, and if it helps secure American interests, than sometimes the dirty work becomes necessary dirty work. And as the saying goes, if something is worth doing, it's worth doing right.

So the question remains: Is Libya important to America? If so, then why are we wasting our time faffing about with cruise missiles when something more direct is required? And if it's not - well, why are we still faffing about with cruise missiles?

The answer, of course, is that it's easy. Americans are not highly bothered when a bomb lands on the head of a civilian, provided it does so outside a comfortable several thousand mile radius. But they are very bothered when American soldiers are put in harms way. To avoid stressing anyone out, our default option becomes an expensive air campaign of questionable merit, even if it's not likely to produce any good result, simply because no one is going to object.

So there you go. We do, of course, hope it all works out for the best. Previous comparisons aside, Quaddafi is not terribly well entrenched. But it does make one wonder.

A Moment Of Bipartisanship

You want to know what’s awesome? Congress. 64 senators just wrote a letter to the White House begging the president to take the lead in reducing the deficit. Yes! That president! The executive head of the United States who's involvement in passing legislation involves a) signing it, or b) asking Congress to pass it so he can sign it.

The Senate, on the other hand, used to be the body we regularly trusted with passing laws. And sixty four (64!) Senators have signed this, in spite of the fact that you could not normally get more than eight to agree on pizza toppings.

Let's put this into perspective. Enough Senators have signed this letter that they could have drafted deficit-reducing legislation, voted on it, and passed it. It is enough Senators to defeat an anti-deficit-reducing filibuster. It is nearly enough Senators that, by the time the deficit-reducing bill arrived on the president's desk, it would have been veto-proof. It is actually just two Senators short of the number needed to impeach the president if he irritated them. It's really quite a lot of Senators.

So an adult might wonder why a filibuster-proof, almost veto-proof supermajority of elected officials trusted with the authority to pass laws is spending their time writing fan mail rather than, you know, actually doing something about the deficit. But then we would not be treated to the infinitely redeeming spectacle of sixty-four grown members of congress begging for an intervention like a hopeless crack addict. This is what makes America great.

The Bookstores! Won't Someone Please Think Of The Bookstores

We've nothing but respect for Ezra Klein, but this is odd.

Borders probably can't be saved. But what about Barnes and Noble? Over at GigaOm, Michael Wolf argues that they're going to need a radically different model if they're to survive: "In the collapsing world of books, it’s every man for himself, and its time for B&N to accelerate its push into becoming a digital publisher."

Right. So we're pathologically lazy, and didn't really want to take the time to research the current size of the e-book market - not that anyone likes to disclosure their sales figures, anyway. A year-old Forrester research study will have to do. A quick and dirty look at their projections suggest around 5 million consumers. Fine.

Let's put that in perspective. How big is the book trade? Again, we turn to 2009 numbers of questionable veracity: 23.9 billion. E-books pulled in a respectable $313 million.

Hang on a tick. Just north of $300 million? Even if we postulated that the e-book market increased ten-fold in the intervening two years, they'd still comprise somewhere north of 10% of total sales¹. That's big, but it's not THAT big.

It's also assuming a zero-sum situation - at least one of the studies we read suggested that owning an e-reader increased the number of books read, but didn't decrease paperback sales.

Curiouser and curiouser. We're no trained retailer, but it's possible a market the size of the e-book could destroy a company. It just seems unlikely. While we usually promise not to source the Wall Street Journal, we'll make the exception and direct you here. Their take, at least, is that problems facing Borders are a bit more traditional - $1.29 billion in liabilities and intense competition from online retailers. One assumes the recession didn't help.

Anyway. All of this is to say two things: There is no collapsing world of books.  When a book moves to an e-reader, it doesn't disappear. It moves onto a new medium. That's a good thing!

And while book sales might be down, so are sales in everything else. Toyota had to be rescued by the Japanese government back in 2008. That doesn't mean we face the collapsing world of the car.

Border's bankruptcy wasn't driven by the e-book, although it probably didn't help. It was driven by a crap economy and a lot of debt, plus stiff competition from a very efficient online retailer. Eventually the e-reader will own the market - just not quite yet.

 ¹Yes, this is an unedifying miscarriage of basic mathematics. We do not bother to dwell upon the expected market size or the commiserate decline in paper book sales. Forgive us.

Children Of The Revolution

If anyone in the Western hemisphere hasn’t weighed in on the events in Wisconsin, then it’s news to us. It’s a situation perfectly designed to excite both sides – conservatives have an opportunity to deliver a final blow in their long fight against the labor movement, while the unions, having contrived to lose most of their major battles in the last thirty years, see a chance to win a fight.

One interesting dialogue has emerged, with notables like Krugman and Drum on one side, and Avent to the other. In the first argument, unions represent the last meaningful political power that still fights for the middle class. America is already flirting with oligarchy, so it seems inopportune to surrender the field to vested business interests.

On the other hand, as Ryan Avent persuasively points out, unions haven’t been terribly good at mobilizing for the middle class any time recently. Wages have stagnated, jobs have disappeared, and union membership is falling. Much of this blame lies elsewhere. The mechanization of manufacturing brutalized many traditionally staunch union vocations. An increasingly globalized world was always going to decrease America’s relative share of the international economy.

Also, as others note, unions are not angels. They lead to cartelization and abuse. Often, they fight to deliver a larger share of a shrinking pie, rather than promoting policies that would lead to greater economic growth for all. They sometimes protect the employment of workers who are not fit for their positions.

Further, while cursory evidence strongly suggests no correlation between union membership and state budget deficits, and weak correlation between membership and per capita spending, state employees are an expense on the public purse. At a time when the largesse of the government is constrained, it is perfectly equitable that they should shoulder some share of the burden.

We’re big fans of Avent. We like the cut of his jib. But in this case, we disagree. Not, we’re afraid, for any terribly factual or rigorous reason. We’re just pissed.

To us, it seems that this recession has offered innumerable opportunities for the poor and the middle class to “shoulder their share” of the burden. The mortgage cramdown was defeated because it posed a threat to bank balance sheets and because renegotiating mortgages rewarded irresponsible borrowers. The Republicans suggest cutting social programs because we can not afford things like nutrition assistance or worker retraining – but tax cuts are probably ok. We can’t afford more stimulus, can’t countenance a rate of inflation that would erode nominal debts, and certainly aren’t about to let those dastardly public workers of the hook.

Yet we passed TARP. We repaired the balance sheets of the big banks. We recapitalized the financial sector. We made good on AIG’s collateralized obligations. We didn’t stand in the way of record bonuses on Wall Street. We didn’t pass clawback taxes on bonuses or a Tobin tax, or raise bank collateral independent of Basel III, or pass a strong Volcker rule. We allowed exemptions for derivatives trading on clearing houses and we didn’t touch the taxation of capital gains. The wizards of the financial world ran the economy over a cliff and in return, we did nothing.

And there was always a reason for it! Always a perfectly good reason. We’ve got to keep the economy humming, we have to make the financiers happy ensure a smoothly running economic machine. Only it’s not running very smoothly, not these days, not with growth below trend and inequality growing and revenues down and budget deficits on the rise. So now we take the axe to the public sector unions. Because someone has to help balance the books.

So when we defend the unions in Wisconsin, it’s partially because we’ve reasons to like the concept of organized labor as a countervailing political force. But also because, in a fit of pique, we want a line drawn in the sand. We want our fucking revolution. Because when it’s time to pay the pound of flesh, our betters always seem to have better things to do, but we’re given a knife and asked to start cutting. And that’s not right. That’s not right at all.

The Indefensible Defense Of Defense

Via Paul Krugman, a note on the real state of defense spending:
We agree, but disagree. We're very fickle like that.

As we've mentioned time and time before, you cannot be concerned with the deficit unless you are concerned about health care. Social Security is not a long run problem. Discretionary spending is not a long run problem. Defense spending is not a long run problem. Health care is.

And yet.

Advocating cuts to the defense budget makes no sense if you're looking to cure our structural budget issues. But protecting the DoD while advancing draconion cuts to essential non-defense services is the height of idiocy. Defense amounts to 20% of spending - the entire non-defense discretionary budget is three-fourths of that.

So don't cut defense to cure the deficit. But if you insist on kneecapping programs like SCHIP, nutritional assistance, the Department of Transportation, education, and research and science, then defense should at least shoulder an equal burden.

. . . if we’re talking about fiscal issues, you have to bear the arithmetic in mind. We’re not living in the 1950s, when defense was half the federal budget. Even a drastic cut in military spending wouldn’t release enough money to offset more than a small fraction of the projected rise in health care costs.

So by all means, let’s try to crack down on the massive waste that goes on in matters military. But doing so would be of only modest help on the larger budget problem.

Austerity Now!

Via Felix Salmon, a great read on the historical result of austerity movements:

David Leonhardt takes an important look at Germany, which you might think was benefiting, in some kind of zero-sum mathematics, from the pain of the European periphery. It isn’t: German GDP is still significantly lower than it was in the first quarter of 2008, while US GDP is now back above its pre-crisis levels. (Britain is doing significantly worse than either.)

“The historical lesson of postcrisis austerity movements,” writes Leonhardt, “is a rich one,” and also clear: they don’t work, even if they’re “morally satisfying.”

I was briefly concerned that Britain was showing some unexpected economic dynamism after mauling the public budget, disproving my prediction that pushing draconian cuts in the middle of a crushing recession is a universally stupid idea. I am happy to announce that the recent declining state of their economy has kindly consented to prove my point. If only it didn't involve the utterly unecessary suffering of millions of Britons.

We Appreciate Your Input At This Delicate Time . . .

. . . but not enough to enable it.

You'll notice that we've recently disabled comments on the blog. This is not an attempt to censor you, our loyal readers. But given our admirable dearth of site traffic, maintaining a commenting system seemed superfluous. If you see a post, it's safe to assume that no one else has read it.

So comments off in the meantime. We'll reconsider our decision in the unlikely event we develop a capacity for self-reflection. Do not hold your breath.

On Morality

We've meant to write this post for some time now. Six or seven weeks, we think. Each time we've stopped and started, started and stopped, over and over again. Et cetera et cetera, ad infinitum. Blogging can be a humbling practice it seems.

But we've decided to press ahead. The business of thinking can be messy, so it's perhaps suitable that the business of recording one's thoughts should be messier still. Perhaps this is why we still occasionally maintain a blog that no one reads. Public catharsis, and all that.

About two months ago the griding remorseless cogs of the economy finally caught up to our place of employment. There was a certain inevitability about the proceedings. We have long been profitable without much profit, always productive but never quite prolific. We are, in other words, an agreeably irrelevant mid-sized financial firm, proudly serving a dwindling group of clients who will not always be able to support our existence.

There are a thousand banks like us across the country. Some will rally, some will be bought out by their competitors, and some will fade to the margins before disappearing entirely. Not a bad fate, that. There's something to be said for serving your customers faithfully for as long as you're able and then packing it all in. But of course the CEOs and presidents of replaceable mid-sized financial firms don't like this.¹ Irrelevancy doesn't suit them. They're dynamic folk - relevancy is kind of their thing. Not the sort to go quietly into that good night, and all that.

So, like many others in our position, we've begun the messy process of restructuring. The consultants have been hired - they ghost about the place with pale faces, bloated little demi vampires fed with too little sunlight and too much recycled air. Business lines will be folded and amalgamated, new processes put in place, and cheery new corporate diktats issued to put a gloss on the process. And, of course, many people will be summarily terminated. A great many people, if the rumors are at all to point.

Now, don't go fearing for your assailed and assaulted blogger. We're an inadequate person of mean skill, but we've always benefited from the same sense of survival that benefits rats and other low rodents. We are rarely pleasant but almost impossible to kill. Corporately-speaking, of course.  Bouncebackability is our preferred term.

But many of our coworkers will not be so lucky, and in accordance with the law of averages, many will be our dear friends. It is a painful ugly business. No one wants to be sent home to face their wife and family, forced to explain that they won't be going to work tomorrow, or the day after that, or any day from then proceeding. No one wants to see it happen to a friend.

Like past times of adversity, these recent events have rendered us unusually reflective - as time passed, it seemed suitable to transcribe at least some. So what follows, however incoherent and contrary, are our thoughts on the business of business, that is regularly inflicted on the people around us.

We apologize for any inadequacies that follow. They are entirely of our own making.

Part I - Homo Homini Lupus

We've been dwelling for some time on a this. It certainly wasn't preordained. Doctor's son, a smattering of private education. Never bereft of the silver spoon. We cheered against Clinton in '92. Again in '96. We read The Fountainhead when we were fifteen - surely enough to condemn us to life as a cynical, unserious misanthrope.

But for all its allure, conservatism eventually left us cold. And why, we wonder. Why, when we were preaching the good news, did the doubt creep in. Why did we stray from the path?

Around twelve years ago we read Jonathon Kozol's Amazing Grace, which described life in America 's poorest urban communities. Loyal readers will no doubt inform us of it's many faults but, for a young boy raised in sheltered circumstances, it made a remarkable impression. It challenged our view of the world in a way we'd previously avoided.

Chief among these doubts was a simple thought: What if it was us? As a son of privilege, we are (if we may modestly suggest) fairly near perfect. We work a stable job. We are are well read and well travelled, and have an education of enviable expense. Perhaps we fell short of the peak of our powers, but we've certainly achieved a life of some credit. And good for us!

But in the back of the mind, in the niggling recesses, are the whispers of doubt. The laziness and the arrogance, the self righteousness, the fatal inattention to detail. Not terrible faults, to be sure. But what things had been different? What if I was born different?

Such a tasty question: What if you were born poor? Forced to answer, we think most conservatives would say this: It doesn't make a damned bit of difference. We are who we are, and this world is of our own making.

Liberals disagree. We say that life provides some with challenges that are all but impossible to overcome without assistance. It is the responsibility and the measure of a right society to alleviate the suffering of the needy to the best of our ability, with the common resources at our disposal.

The conservative regard for the poor can only be sustained if you strip them of their basic humanity.² They can't be poor because they were born poor. They are poor because they are lazy, because they are prone to crime and addiction, because they are incapable of making something of themselves. Conservatives say that for us it would be different. We would not be unemployed, or in jail, or leave our wives. We would not have failed to graduate high school, depend on TANF, or use food stamps. We would not have subsidized lunches.

Perhaps this sounds unfair. For our many conservative family and friends, we agree. But for the political body of conservatism, who's behavior has surpassed inimitable? When you cheer Paul Ryan's road map as a blueprint for destroying Social Security and Medicare, when you advance a budget that cuts SCHIP and nutrition assistance but protects farm subsidies and defense, then you've shouldered the burden of proof.

We used to believe this. The interminably lazy poor. The insufferably needy needy. We weren't just conservative - we were good at it. As you've no doubt noticed, no one does scorn like we do scorn.

But then there were the statistics. There is no single greater corollary for poverty than being born into poverty (that, and divorced parents. Sorry Dad). Not race, not intelligence, not background or education, not location. Be born poor, live poor, die poor. The self made man is such an outlier he borders on myth. Most who struggle against poverty lose.

More recently, we've had an increasingly difficult time justifying our treatment of the poor with our own Christianity. Disdain for poverty only works if you assume that Jesus wasn't being particularly serious whenever he discussed the subject. Redacting large portions of the New Testament struck us as heretical.

Deus Ex Machina

But ours is not a popular position. It hasn't been since the expansion of the Great Society under Johnson, or the heady days when Truman took Social Security and transformed it into something with bite, something that mattered.

Since the 80s, the field of economics has advanced as the preferred description of our society.³ Perhaps this was due in part to the long prosperity of the Great Moderation- we leave that discussion for another day. But increasingly, political action can only be undertaken if it can be seen to benefit to business interests and support the free market.

Health care reform wasn't justified because millions of Americans had no access to health care, and that some died. Instead, they said it improved the long run budget outlook. Charter schools? The free market can fix education. Social Security? Privatise it. Financial reform? Far too onerous for banks that haven't crashed the world economy in nearly three years.

It worked because, at least at the beginning, economics promised so much. A truly rigorous science to maximize production and development. But somewhere along the way, we confused the free market for morality. It used to be that the free market was good because it advanced human prosperity. Now, humanity is only good if it moves the market.

Somewhere along the line, we confused the phrase, "The free market is good when it advances human interests," with the more digestible, "The free market is good." Now that phrase elides a world full of damaging inefficiencies.

Free markets may be the best of the rest, but they are still sub-optimal. Free markets aren't perfect. Free markets produce oligarchies, monopolies, and insider trading. They reward asymmetrical information, the manipulation of stock prices, rent-seeking, and the brutal maltreatment of labor. If it's profitable, it's permissible.

Indeed, it's not even accurate to call America a free market at all. Better to describe as a regulated capitalism. Thank God for that. A cursory glance at working conditions prior to the organized labor movement should cure you of any latent nostalgia. God forbid we live in any year prior to the invention of penicillin or the founding of the SEIU.

The free market may produce moral outcomes - that does not make it moral. But somewhere along the line we abdicated our responsibility to basic human decency. We no longer ask ourselves if we've treated others well, if we've cared for the unfortunate, if we've done our part to give voice to the voiceless. Businesses are responsible to shareholders, not a community, and we're responsible only for our businesses.

Where does this lead us? We prefer the original:

"It was not a nice world this, not a nice world at all. It was an Old Testament land he found himself in, a land of barbarity and retribution."

Part III - Veritas

So to the end, and back to the beginning. About a year before they deemed our beloved coworkers surplus to requirements, one of the executives of our firm sat down and my desk and asked me a question. "Why is it," he wondered, "that young men like you have so little loyalty to your employers?"

"In my day," he continued, "we were happy to get a job, work hard, and wait for our turn. People these days just don't want to wait. Why is that?

A very good question. We are infected with the mercenary spirit.

Perhaps it began when the network of subsidies for higher education were dismantled, saddling us with crippling debt for an education we could barely afford, but couldn't afford to miss.

Perhaps it was when pensions rendered American companies "economically uncompetitive" with their foreign counterparts, and they were offloaded in favour of worker-funded 401ks.

Perhaps it was when libertarians attacked the minimum wage as market distorting and unconstitutional.

Perhaps it was at the start of the right-to-work states that began the long slow degradation of the organized labor movement.

Perhaps it was when health care was deemed, not a right, but a privilege, and we watched the people we love struggle under the burden of onerous medical bills.

Perhaps it was when the Republican minority blocked the extension of unemployment benefits during the longest recession in modern history.

And perhaps it was when our employer, in an effort to increase profits and streamline costs, began the process of summarily dismissing our fellow employees, who's only crime was to show a modicum of loyalty to a company not capable of showing the same.

So what gives? Beats the hell out of us.

¹For much more on this, consider Matthew Yglesias in the original.
²The poor, not the conservatives. Actually it works either way.
³It would be poor of us to suggest we thought of this. Hardly. But for the life of we cannot locate the blog that inspired us. So, for fear of being accused of plagiarism, send us your thoughts on where this comes from. Suggestions welcomed. Update: Can we get a what what? It's Barbara Kiviat. Shame on us for forgetting.

On The Delicate Art Of Negotiation

Last week Wisconsin Governor Scott Walker set out to eliminate collective bargaining for public sector unions to help close the budget deficit. Most of them, at any rate - the ever conservative firefighters and police officers unions got a pass.

Since the measure was ostensibly taken to alleviate fiscal problems, we can only assume that if public sector unions met enough of Walker 's demands to help ensure solvency, he would of course be happy to reach a compromise without massively changing the political status quo. Right

In Wisconsin , Democrats and unions have offered Gov. Scott Walker the benefit concessions he's asked for, but not the end to collective bargaining he's demanded. Thus far, he's said no -- and he's threatened to let a Friday deadline for restructuring the state's debt come and go, at a cost to Wisconsin of more than $160 million, if Democrats don't agree to return and allow the full passage of his proposed law. (Wonkbook, Klein/Matthews)

Curious. It almost seems as though the deficit was never the problem at all, but was just a convenient excuse to annihilate a disagreeable political constituency. What men build up . . .

On Social Security

I can't dig up the Mark Thoma link, but let me second his opinion. There is no Social Security problem in this country. There is a one-time demographic adjustment that normalizes in a few years. Tweak the benefits or make a minor adjustment to funding and it's solvent into the forseeable future.

And yet somehow this has become a reason to slash benefits for the single most effective anti-poverty measure in American history. Well done, everyone. Round of applause.

Graphs coming later.

Free Ain't Free

Yglesias says it best:

. . . Nugent should note something. He worries about [his niece] only in case [she] actually loses her job. If she voluntarily switches to another job, she’s fine. But that’s thanks to a regulation that allows people who maintain continuity of coverage to keep it notwithstanding adverse selection issues. And the only reason Nugent’s niece’s employer offers group health benefits at all is that large insurers receive massive tax subsidies to do so. The health insurance market mostly works for most people most of the time only because it already involves massive government intervention.

Let's put this in perspective: The yearly cost of the employer tax subsidy is $177 billion. It is the single largest expenditure in the tax code.

A free market? Hardly. No more than the Veterans Administration, funded and run directly by the federal government. No more than Medicare, which insures millions. Employer provided health care would not exist without enormous government spending, supported by a thicket of regulations that make sure that you, working in your job, can't be denied coverage.

If you get health care in this country, you do so because the goverment has invested billions to pay for it. Want to see someone free riding on the federal dime? Look in the mirror. Look at a group of people who, having benefited from government subsidies of staggering size, work desperately to deny that right to others.

So what would a free market in health care look like? As Yglesias notes, it's just like insuring a car. You call up an insurer. They ask how sick you are. If you're unlucky enough to have a chronic conditions, your premiums skyrocket. If you're sick enough, they'll simply deny your coverage. That's it. No recourse, no subsidy. It's a nihilistic world out there.

But of course, if your auto insurer charges too much, you can take a bus. It's not so easy not to get sick. But then, thank God for Uncle Sam.

On The Non-Useful Non-Defense Discretionary Spending Cuts

Better late than never: Our thoughts on last week:

Without making too big a fuss over the spending cuts released by the House today, a few quick points.

First, the cuts are brutal and deep, and they are disproportionately brutal and deep for the poorest among us. It costs relatively little to fund nutrition assistance to the needy, but it does enormous good.

But the cuts are hardest on some of the services we need the most. Education, Labor, and HHS: 7.3%. Transportation: 15%. Energy Development: 11.5%. It's a dystopian future the House imagines for us. Reduced investment in education and infrastructure, increased reliance on fossil fuels, kneecapped environmental protections, and an altogether heavier burden of poverty.

Secondly, let no one argue that they don't know the priorities of the Republican House. This is as much a manifesto as a budget authority. Even as they propose to take a hammer to social programs and regulatory authorities, they find room to increase defense spending by 3%. This is a fundamental debate on what the government should be involved in. The House's opinion? Not in helping the poor. Not in educating our children or building our highways. Not in regulating our banks.

Lastly, and most importantly, all of this highlights the uselessness of a non-defense discretionary spending cut. That type of spending is 15% of the federal budget - less, if you discount the Veterans Administration. And from that 15% comes almost everything we identify as government. The FBI. The Department of Education. Transportation grants. Nutrition assistance. Farm subsidies, if that's your thing. And if we cut every single one of these departments in entirety, we'll still be left with a government 85% as large as it is today.

15%? Christ. The DoD will make up that difference in a decade.

In return for that, we'll get a country that, with a degrading infrastructure and handicapped education system, is less able to meet the challenges of the next century. Something that is likely to make our budget problem worse, not better. It's a wonderful deal.

Maybe all of this would be understandable if taxes weren't near the lowest point they've been in history. But they are. Maybe if investors were demanding massive interest rates in return for purchasing government debt. They aren't. Maybe if the actions of the Fed were sparking widespread core inflation and crowding out business investment. But they haven't. This isn't an act of necessity. It's a choice. And it's a choice that speaks volumes of the eagerness and the ethics of the people who make it.

Swing For The Fences

So the House Republicans have sketched their plan to save $40 billion from the budget. It is as awesome as you would expect:

House Republicans sketched their vision for a smaller federal government Wednesday, proposing sharp spending cuts that would wipe out family planning programs, take 4,500 cops off the street and slice 10 percent from a food program that aids pregnant women and their babies. (emphasis added)

Family planning and neonatal nutrition? Because that's what's holding America back. Our dangerous undersupply of malnourished babies.

Can We Stop Referring To It As Record-Breaking These Days?

On an unrelated point, the SMB's very own Seattle Seahawks have crawled despairingly into the playoffs this year. With a stunning 7-9 record.

Now, we are not exactly American football fans, but only the most appalling heathen would fail to support his local sports teams. But what's really galling about the situation is that everyone appears proud of this. "Look at us, chaps," they cry, "We're record breakers!"

Of course you're bloody record breakers. You broke the record of no one ever being as appalling as you but still fluking their way into the playoffs. You are the statistical outlier of failing to improve in any way on the prior year's awful performances, but somehow managing to be rewarded for it by the odd law of fate.

I'm just sayin'.