Sunday, October 31, 2010

GDP & the Election

Ezra looks at the election through the prism of GDP.
Today's GDP numbers are a good way to understand Tuesday's election. Start with who Barack Obama isn't: Franklin Delano Roosevelt. You hear people say that if Obama could only sell his vision, his agenda or his commitments the way FDR could, he'd be safe right now. And the comparison is understandable: Like FDR, Obama took office shortly after a financial crisis. But unlike FDR, who took office after three years in which GDP shrank by an average of 9.6 percent each year, Obama -- and his predecessor -- responded effectively enough and quickly enough to stop the economy from collapsing. Our worst year was 2009, when GDP shrank by 2.6 percent. And that was the only year in which we actually lost ground.

FDR, for his part, took office after the worst of the Great Depression was over, and -- in part because of his efforts -- when the real recovery was beginning. In 1934, the year of his first midterm election, GDP grew by more than 10 percentage points. Obama took office in 2009, which was our worst year. And this year, the year of his first midterm, we're on track to grow by 2.5 percent. That is to say, it isn't a vision thing. If Obama could get FDR's numbers, and if he could've dodged the worst years of the crisis, he could go mute and still win the election.

Obama is also not Bill Clinton. Clinton lost 54 seats in 1994, but the economy wasn't doing particularly badly. It was the third straight year of growth, and when all was said and done, we'd expanded by 4.1 percent. Democrats hold almost exactly as many House seats in 2010 as they did in 2004, and if Nate Silver is right and they lose 53 of them, they will, given the economy, have outperformed Clinton's Democrats quite substantially. Maybe passing health-care reform actually helped?

The best comparison, it turns out, is between Obama and Ronald Reagan. The 1982 midterm election also came amid a weak economy. We'd shrunk by 1.9 percent, although we'd grown -- slowly -- the year before. The two presidents were also posting similar approval numbers: According to Gallup, Reagan had 43 percent at this point in his presidency, and Obama has 44 percent.
There is, however, a difference: Reagan's party was in the minority in the House. They had 192 seats and lost 26 of them. That's a 15.6 percent loss. If Democrats lost the same percentage of their 256 seats, they'd lose 40 seats this year. But because having a large majority means, by definition, holding many more vulnerable seats, the likelihood is that Republicans would have lost much more than 15.6 percent of their seats if they'd had another 54 seats to defend, and if unified government had left all the blame on their shoulders.
So Obama can't show the progress that either Bill Clinton or FDR could in the months before their first midterm elections. He's got more growth than Ronald Reagan did, but also more seats and unified control of government. He's got, in other words, a pretty bad situation. Reagan did too (though the cause of his recession was the Federal Reserve, and so recovery was easier to attain after the election), but Clinton really didn't. It's his losses that really stand out.

Tuesday, October 19, 2010

It's Not Spending....It's Spending by Democrats

Kevin Drum nails the dishonesty in the complaints by Republicans about all that spending.
Now, it's true that a divided government is almost certain to spend less than one controlled by a single party. Beyond that, though, there's little evidence that extreme conservatives are any more concerned about spending now than they've ever been, and over the past 30 years they've never been concerned about spending. They didn't cut it under Reagan, they didn't cut it under Bush Sr., and when they finally controlled the government completely under Bush Jr., they didn't cut it then either. Hell, Social Security privatization never got anywhere even within the Republican caucus despite the fact that it was sold relentlessly and dishonestly as a free lunch. Actual cuts in spending were never on the radar.

The tea partiers are angry not over spending, but because a Democrat is in the White House. Rick Santelli's rant, which kicked off the whole movement, occurred one month after Obama took office. That was before the auto bailout, before health care reform, before financial reform, before the Iraq drawdown, before cap-and-trade, and before extension of the Bush tax cuts was even on the horizon. The only thing that had happened at that point was the stimulus bill, but even as big as that was, everyone knew it was a one-time shot, not a permanent change in spending levels.

Really, there's just no evidence at all to suggest that tea partiers are any more upset about the level of spending and deficits than they ever have been. Rather, they're upset because the spending is currently being done by a Democrat. As soon as Republicans are doing it, they won't really care anymore.

Monday, October 18, 2010

Foreclosure Follies

Barry Ritholtz has the perfect summary of the state of play in how the major banks handle the foreclosure process,
I am not sure why so many people are so confused over the concerns of the legal status of robo-signers.
I’ll let Thomas A. Cox, a retired lawyer, describe GMAC’s foreclosure process and the work of its limited signing officer, Jeffrey Stephan in a court filing:
“When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching ‘a true and accurate’ copy of a note or a mortgage, he has no idea if that is so, because he does not look at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t.”
Gee, how could anything go wrong in that situation?

Monday, October 4, 2010

It's the Legislature, Stupid

Ezra counters a Tom Friedman column calling for a third party Presidential candidate as the solution to government gridlock.
That might actually be the easiest thing you can say in American politics. John McCain ran as the enemy of special interests. Barack Obama did, too. His compromises and disappointments, as Friedman admits, had nothing to do with a paucity of anti-special interest applause lines. They had to do with the limits of Congress. "Obama probably did the best he could do," says Friedman, "and that’s the point. The best our current two parties can produce today -- in the wake of the worst existential crisis in our economy and environment in a century -- is suboptimal, even when one party had a huge majority."

And the answer to that is ... a tiny third party running a presidential candidate? No. If the legislative system is broken -- if the best we can do is not good enough -- you need to change the legislative system. Friedman laments Obama's "limited stimulus" and decision to "abandon an energy-climate bill altogether," but he doesn't mention the one thing that would've allowed for a larger stimulus and a fighting chance on an energy and climate bill: eliminating the filibuster.
The worst illusion pundits foist on the populace is the idea that if we just elect the right guy (or gal) to be president, everything will be fine. It won't be. If you don't like how our laws are being made, you have to change how our laws are being made. And that doesn't mean changing the president, who's not even in the branch of government that makes our laws. Elect Ralph Nader, or some other hard-charging third-party candidate with a penchant for applause lines, and everything will just be filibustered to death. 

"He probably did the best he could do," some pundit will say, "and that’s the point. The best our current three parties can produce today is suboptimal."

Sunday, October 3, 2010

Center to the Right?

Ezra Klein on the question of whether the US is a center-right nation.
We know that self-described conservatives outnumber self-described liberals, and appear to have done so for as long as we've been polling the question. But we also know that self-described Democrats outnumber self-described Republicans -- even when conservative pollsters are asking the question -- and that's been true for decades, too. So we're a conservative country ... that leans towards the Democrats? Huh.

We know, for instance, that Americans are less bothered by inequality than Europeans. But we also know that, when given a choice (pdf), Americans say they'd like their level of wealth inequality to look less like America's and more like Sweden's.

America's center-rightness is supposedly proven by the fact that we don't have a government-run health-care system. But we love our Medicare. We prefer it, in fact, to our private insurance. And we're less satisfied with our system than Europeans are with theirs. So we're a country that opposes government-run health care -- except when we have it, and then we far prefer it to the private market, and we're more likely than people in other countries to demand that our health-care system gets rebuilt.

I want to be clear what I'm arguing here: It's not that Americans don't have measurably different opinions than Europeans. It's that our opinions and the outcomes of our political system are not closely correlated. Rather, I think that the exceptionalism of the American political system comes from its structure, which is conservative with a small-c.

Because it's harder for the government to do things, the government does fewer things. At least seven presidents have run for office with some sort of universal health-care plan. In another system, one of them would've succeeded, and we would have had national health care by the mid-20th century, and one of the central policy differences between America and Europe wouldn't exist. As it happens, our system makes legislative change difficult, and so they all failed. But in the cases when they succeeded -- Social Security and Medicare -- their successes are wildly popular, and efforts to roll the programs back have been catastrophic failures. The American political system isn't so much biased against the left or the right as against change in general, and though there are occasional moments when events and majorities align to allow a political party to achieve a lot of the items on its agenda, they're quite rare, and almost never durable.