They're Doing It Again

Steve Benen picks up on the latest feigned right wing outrage attack (over Obama not going to Arlington on Memorial Day) to review the fainting spells that have afflicted the GOP (and Fox News) over the past 16 months.

Several months ago, Atrios noted, "When Dems are president, perfectly normally ways of doing things are rebranded as somehow odd."

Ain't that the truth.

* Teleprompters: This trend of characterizing routine developments as controversial started very early in the Obama presidency. Every modern president has used teleprompters, but Republicans and the media thought it was hilarious and wildly important when Obama did the same thing.

* Bowing: Several presidents have been photographed bowing to foreign heads of state, but Republicans and the media thought it was absolutely scandalous when Obama did the same thing when meeting leaders where bowing is customary.

* Talking to school kids: Presidents Reagan and H.W. Bush spoke to school children in national addresses, even taking a little time to push their political agendas. When Obama delivered a speech encouraging kids to do well in school, Republicans freaked out; Fox News compared the president to Saddam Hussein; and the New York Times literally ran a front-page story about it.

* Czars: For a half-century, presidents have relied on so-called "czars" for various policy areas. By one count, George W. Bush had 36 czar positions filled by 46 people during his two terms. No one cared. Obama's use of czars became the subject of months of media scrutiny, and even congressional hearings in response to Republican apoplexy.

* Oval Office attire: Several modern presidents have been seen in the Oval Office without wearing a suit jacket. When Obama did it, Republicans ran to the press to complain, and the media actually published pieces on the subject.

* Criticizing partisan media: White House complaints about unfair media coverage are as old as the republic. When the Obama White House noted what is plainly true about Fox News -- it's a Republican outlet -- the media went a little berserk, with the Washington Post and NPR characterizing the administration's criticism as "Nixonian."

* Reconciliation: Republican policymakers have relied on reconciliation to get around filibusters for decades. When Obama recommended the same tactic for health care, the GOP pretended it was an outrageous assault on the political process, and the media pretended Republicans' cries were legitimate.

* Industry bailouts: Government bailouts of struggling American industries and major companies have been common for decades. When Obama rescued GM, it was used as an example of his purported desire to a communist dictator.

* Campaign intervention: Every president has had a hand in campaign activities, with several presidents offering jobs to candidates to get them out of various races. When the Obama White House intervened in Pennsylvania's Democratic Senate primary -- offering a House member an unpaid advisory gig -- the media found it fascinating and Republicans called for the FBI and a special prosecutor to intervene.

* Memorial Day: Many presidents have not appeared at Arlington on Memorial Day. When Obama does it, there's a "controversy."

The FT has a good summary of the possible reasons behind the North Koreans deliberate sinking of the South Korean warship on March 26.

● Revenge
North Korea wanted revenge for a sea battle in November, when one of its ships was badly damaged. The vessel had exchanged fire with South Korean gunboats after straying across a disputed maritime border into what Seoul insists are its waters. South Korean military intelligence says revenge is Pyongyang’s primary motive.

● To smooth the succession
Kim Jong-il, North Korea’s dictator, is almost certainly transferring power to his third son, Kim Jong-un. Some defectors have said he is trying to associate Jong-un’s name with major successes in domestic propaganda. One civic group with contacts in North Korea says celebrations at a naval base directly honoured Jong-un for the sinking.

● An internal power struggle
Some analysts believe the attack could have been the work of a single rogue commander, possibly vying for patronage as the succession gathers pace. North Korea this month made the highly unusual announcement that it was removing Kim Il-chol, a senior admiral on the National Defence Commission, prompting speculation the navy could have exceeded its authority. But most mainstream analysts think the attack would have been impossible without the green light from Kim Jong-il.

● A reversion to hardline ideology
Some scholars say Kim Jong-il had, until last year, been increasingly open to advice from a more liberal faction, advocating market and currency reform. When this backfired, he had no choice but to listen more to Cold War-era ideologues who favoured tactics such as assassinations and submarine attacks. Seoul’s spy service has also recently detained assassins sent into South Korea to assassinate the most senior communist official to flee to the south.

● Breakdown of command in North Korea
Perhaps the most worrying of the possibilities is that Kim Jong-il is no longer in full command, possibly because of a stroke the North Korean leader suffered in 2008. This could mean the sinking was either the result of jostling commanders or poor judgment from Mr Kim himself. Andrei Lankov, a North Korea expert at Kookmin University in Seoul, believes the country has become a “rudderless ship” and that logical decision-making has fallen to pieces, as seen when Pyongyang revalued its currency to disastrous effect late last year.

● To distract from economic woes at home
South Korea’s military intelligence argues the sinking of one of its warships by Pyongyang could distract from hunger and economic failure in the north. However, North Korea openly denies the attack and there is little evidence of it being mentioned in propaganda beyond that intended for small numbers of senior military and Communist party officials.

● Bitterness about G20 meeting in Seoul
Seoul has been turning its presidency of the G20 group of leading economies this year into domestic propaganda, parading how well it has developed economically since the Korean War of 1950-1953. Pyongyang has historically been resentful of South Korea hosting major international events such as the Olympics and the World Cup and has tried to wreck any positive press.

Rand Paul and Civil Rights

Bruce Bartlett summarizes the central problem with Rand Paul's opposition to the Civil Rights Act of 1964.

As we know from history, the free market did not lead to a breakdown of segregation. Indeed, it got much worse, not just because it was enforced by law but because it was mandated by self-reinforcing societal pressure. Any store owner in the South who chose to serve blacks would certainly have lost far more business among whites than he gained. There is no reason to believe that this system wouldn't have perpetuated itself absent outside pressure for change.

In short, the libertarian philosophy of Rand Paul and the Supreme Court of the 1880s and 1890s gave us almost 100 years of segregation, white supremacy, lynchings, chain gangs, the KKK, and discrimination of African Americans for no other reason except their skin color. The gains made by the former slaves in the years after the Civil War were completely reversed once the Supreme Court effectively prevented the federal government from protecting them. Thus we have a perfect test of the libertarian philosophy and an indisputable conclusion: it didn't work. Freedom did not lead to a decline in racism; it only got worse.

Sadly, it took the Supreme Court more than 50 years after Plessy before it began to undo its mistake in Brown. This led to repeated efforts by the Eisenhower administration to enact civil rights legislation, which was opposed and gutted by Senate Democrats led by Lyndon Johnson. But by 1964, it was clear to Johnson that the tide had turned. The federal courts were moving to dismantle segregation to the extent they could, and the 1963 March on Washington, the murder and beating of civil rights demonstrators in the South and growing awareness of such atrocities changed the political climate and made the Civil Rights Act of 1964 possible--despite the filibuster against it by Senator Robert C. Byrd, who still serves in the Senate today.

If Rand Paul were saying that he agrees with the Goldwater-Rehnquist-Bork view that the Civil Rights Act of 1964 was unconstitutional and that the Supreme Court was wrong to subsequently find it constitutional, that would be an eccentric but defensible position. If he were saying that the Civil Rights Act were no longer necessary because of the great strides we have made as a country in eradicating racism, that would also be defensible. But Rand's position is that it was wrong in principle in 1964. There is no other way of interpreting this except as an endorsement of all the things the Civil Rights Act was designed to prohibit, as favoring the status quo throughout the South that would have led to a continuation of segregation and discrimination against African Americans at least for many more years. Undoubtedly, changing mores would have broken down some of this over time, but there is no reason to believe that it would have been quick or that vestiges wouldn't still remain today. Indeed, vestiges remain despite the Civil Rights Act.

I don't believe Rand is a racist; I think he is a fool who is suffering from the foolish consistency syndrome that affects all libertarians. They believe that freedom consists of one thing and one thing only--freedom from governmental constraint. Therefore, it is illogical to them that any increase in government power could ever expand freedom. Yet it is clear that African Americans were far from free in 1964 and that the Civil Rights Act greatly expanded their freedom while diminishing that of racists. To defend the rights of racists to discriminate is reprehensible and especially so when it is done by a major party nominee for the U.S. Senate. I believe that Rand should admit that he was wrong as quickly as possible.

Not Your Grandfather's Tea Party

Michael Kinsley compares the Tea Party movement to 1960s antiwar activists (h/t Sully).

A final difference: although the 1960s featured plenty of self-indulgence, this wasn’t their essence. Their essence was selfless and idealistic: stopping the war; ending racism; eradicating poverty. These goals and some of the methods for achieving them may have been childishly romantic or even entirely wrongheaded, but they were about making the world a better place. The Tea Party movement’s goals, when stated specifically, are mostly self-interested. And they lack poetry: cut my taxes; don’t let the government mess with my Medicare; and so on. I say “self-interested” and not “selfish” because pursuing your own self-interest is not illegitimate in a capitalist democracy. (Nor is poetry an essential requirement.) But the Tea Party’s atmospherics, all about personal grievance and taking umbrage and feeling put-upon, are a far cry from flower power. There is a nasty, sour, vindictive tone to the Tea Party that certainly existed in the antiwar movement and its offspring, but never dominated the atmosphere created by these groups.

Some people think that what unites the Tea Party Patriots is simple racism. I doubt that. But the Tea Party movement is not the solution to what ails America. It is an illustration of what ails America. Not because it is right-wing or because it is sometimes susceptible to crazed conspiracy theories, and not because of racism, but because of the movement’s self-indulgent premise that none of our challenges and difficulties are our own fault.

“Personal responsibility” has been a great conservative theme in recent decades, in response to the growth of the welfare state. It is a common theme among TPPs—even in response to health-care reform, as if losing your job and then getting cancer is something you shouldn’t have allowed to happen to yourself. But these days, conservatives far outdo liberals in excusing citizens from personal responsibility. To the TPPs, all of our problems are the fault of the government, and the government is a great “other,” a hideous monster over which we have no control. It spends our money and runs up vast deficits for mysterious reasons all its own. At bottom, this is a suspicion not of government but of democracy. After all, who elected this monster?

This kind of talk is doubly self-indulgent. First, it’s just not true. Second, it’s obviously untrue. The government’s main function these days is writing checks to old people. These checks allow people to retire and pursue avocations such as going to Tea Party rallies. This basic fact about the government is no great secret. In fact, it’s a huge cliché, probably available more than once in an average day’s newspaper. But the Tea Party Patriots feel free to ignore it and continue serving up rhetoric about “the audaciousness and arrogance of our government,” and calling for the elimination of the Federal Reserve Board or drastic restraints on the power of the Internal Revenue Service.

Taxing Policy

Jonathan Chait summarizes the insanity that is Republican thinking on tax policy.

In the Republican view, tax cuts do not increase deficits, because they either 1) produce enough growth to increase revenue, or 2) reduce revenue and thus "starve the beast" of spending, or, somehow, both. A corollary holds that tax hikes do not reduce deficits, because they either 3) decrease economic growth and thus decrease revenue, or because 4) the added revenue will cause the government to spend more money. 

 

This is how discussions of tax revenue that involves any Republican or almost any member of the conservative movement has gone over the last two decades. The discussion is completely detached from reality. All four elements of the Republican tax catechism have been utterly destroyed by empirical reality. It may be theoretically possible for tax rates to be high enough that tax cuts could produce higher revenue, but we're nowhere close to that point. Nor is there any evidence that a lack of revenue will cause the government to stop spending money. (Look around.) Indeed, evidence points in the opposite direction, with rising revenues correlating with falling expenditures, and falling revenues with rising expenditures.

Nonetheless, this has been the state of Republican thinking on taxes since 1990. Supply-side economics gained a foothold within the GOP in the late 1970s, and reached its glory in 1981. But moderate Reaganites realized that supply-side economics had created massive deficits and enormous tax inequities, and clawed back the effects of their policies by enacting tax hikes in 1982 and 1983 and a progressive tax reform in 1986. In 1990, George H.W. Bush clawed back the supply-side revolution a bit more by agreeing to a small tax hike as part of a major deficit reduction package. Conservatives, led by Newt Gingrich, revolted, and vowed never to permit such heresy again. The moderates were banished, and anti-tax absolutism became the sole permissable point of view. Republican candidates for office henceforth had to sign anti-tax pledges (not, however, anti-spending pledges.) In the last presidential election, every major Republican presidential contender asserted that George . Bush's tax cuts had caused revenue to rise. Every major conservative opinion outlet backed this line. (In 2007, libertarian Megan McArdle had a right-wing book review spiked because it asserted that the Laffer Curve did not apply to current U.S. tax rates.)

This is a long way of saying that Kevin Williamson's recent National Review article criticizing supply-side economics is a very big deal. It's not quite a full frontal attack on supply-side economics, more of a lament that the dogma has been stretched in ways that even its founders would find extreme. It resembles Kruschev's "secret speech" (subsequently made public) denouncing Stalin's cult of personality more than actual Perestroika. Still, the article makes plain the clear fact that, at the very least, supply-side economics has been a total failure from the conservative point of view.

Oil Spill.... Blame Cheney

Jonathan Chait pins the blame for the oil spill on Dick Cheney.

William Galston puts together the pieces on the apparent regulatory failure that led to the Gulf disaster. During George W. Bush's first term, the Minerals Management Service proposed -- and them under heavy industry pressure, relented -- upon requiring a remote-control failsafe to prevent offshore disasters like this one. Galston asks:

So here’s my question: what is responsible for MMS’s change of heart between 2000 and 2003 on the crucial issue of requiring a remote control switch for offshore rigs? What we do know is that unfettered oil drilling was to Dick Cheney’s domestic concerns what the invasion of Iraq was to his foreign policy—a core objective, implacably pursued regardless of the risks. Is there a connection between his infamous secret energy task force and the corrupt mindset that came to dominate a key program within MMS? Would $500,000 per rig have been regarded as an unacceptably expensive insurance policy if a drill-baby-drill administration hadn’t placed its thumb so heavily on the scale?

A National ID Card?

Ezra on the viability of a national ID card as a component of immigration reform.

But it's still a biometric national ID card. It's handed out by the Social Security Administration and employers are required to check it when hiring new employees. Essentially, if you want to participate in the American economy, you need this card. "Within five (5) years of the date of enactment, the fraud-proof social security card will serve as the sole acceptable document to be produced by an employee to an employer for employment verification purposes," the bill says. "This requirement will exist even if the employer does not yet possess the capability to electronically verify the employee by scanning the card through a card reader."

The theory here is simple: Illegal immigration is a problem because illegal immigrants can get jobs. As the bill says, "in order to prevent future waves of illegal immigration, this proposal recognizes that no matter what we do on the border, our ports of entry, and in the interior, we will not be completely effective unless we can prevent the hiring, recruitment, or referral of unauthorized aliens in America’s workplaces. Jobs are what draw illegal immigrants to the United States."

That's why some think the biometric ID card a game changer for immigration politics. Enforcement might be popular, but the public knows full well that it doesn't really work. As things stand, the border is pretty militarized but the flow of illegal immigrants hasn't stopped. By focusing on the employment prospects of illegal immigrants and forcing workplaces to use biometric identification, Democrats hope to convince people that they have a real strategy for ending the problem of illegal immigration. And if they can convince people of that, they think they can get a path to legalization for the existing community of illegal immigrants as a way to mop up the remainder of the problem.

The oddity of this strategy, of course, is that anti-immigration sentiments run highest among the same communities that are most opposed to national ID cards. Now, it's also the case that if you're going to support citizenship searches for people with Hispanic-looking shoes, it's a bit odd to worry about an ID card to verify employment. But even so, without Republicans on the bill to give this strategy cover, it'll be interesting to see whether the anti-immigrant right embraces the ID card as a way of staunching the flow of illegal immigrants or assails Democrats for trying to create a biometric police state.

The Case Against Goldman Sachs

Barry Ritholtz (who is a lawyer, as well as a financial advisor and blogger), lists 10 points supporting the case against Goldman Sachs.

1. This is a Weak Case:  Actually, no — its a very strong case. Based upon what is in the SEC complaint, parts of the case are a slam dunk. The claim Paulson & Co. were long $200 million dollars when they were actually short is a material misrepresentation — that’s Rule 10b-5, and its a no brainer. The rest is gravy.
 
2. Robert Khuzami is a bad ass, no-nonsense, thorough, award winning Prosecutor:  This guy is the real deal — he busted terrorist rings, broke up the mob, took down security frauds. He is now the director of SEC enforcement. He is fearless, and was awarded the Attorney General’s Exceptional Service Award (1996), for “extraordinary courage and voluntary risk of life in performing an act resulting in direct benefits to the Department of Justice or the nation.”
When you prosecute mass murderers who use guns and bombs and threaten your life, and you kick their asses anyway, you ain’t afraid of a group of billionaire bankers and their spreadsheets. He is the shit. My advice to anyone on Wall Street in his crosshairs: If you are indicted in a case by Khuzami, do yourself a big favor: Settle.

3. Goldman lost $90 million dollars, hence, they are innocent:  This is a civil, not a criminal case. Hence, any mens rea — guilty mind — does not matter. Did they or did they not violate the letter of the law? That is all that matters, regardless of what they were thinking — or their P&L.

4. ACA is a victim in this case: Not exactly, they were an active participant in ratings gaming. Look at the back and forth between Paulson’s selection and ACAs management. 55 items in the synthetic CDO were added and removed. Why?
What ACA was doing was gaming the ratings agencies for their investment grade, Triple AAA ratings approval. Their expertise (if you can call it that) was knowing exactly how much junk they could include in the CDO to raise yield, yet still get investment grade from Moody’s or S&P. They are hardly an innocent party in this.

5. This was only one incident: The Market sure as hell doesn’t think so — it whacked 15% off of Goldman’s Market cap. The aggressive SEC posture, the huge reaction from Goldie, and the short term market verdict all suggest there is more coming.
If it were only this one case, and there was nothing else worrisome behind it, GS would have written a check and quietly settled this. Their reaction (some say over-reaction) belies that theory. I suspect this is a tip of the iceberg, with lots more problematic synthetics behind it.
And not just at GS. I suspect the kids over at Deutsche bank, Merrill and Morgan are working furiously to review their various CDOs deals.

6. The Timing of this case is suspect. More coincidental, really. The Wells notice (notification from the SEC they intend to recommend enforcement) was over 8 months ago. The White House is not involved in the timing of the suit itself, it is a lower level staff decision.

7. This is a Complex Case:  Again, no. Parts of it are a little more sophisticated than others, but this is a simple case of fraud/misrepresentation. The most difficult part of this case is likely to turn on what is a “material omission.” Paulson’s role in selecting mortgages may or may not be material — that is an issue of fact for a jury to determine.  But complex? Not even close.

8. The case looks thin: What we see in the complaint is the bare minimum the prosecutor has to reveal to make their case. What you don’t see are all the emails, depositions, interrogations, phone taps, etc. that the prosecutors know about and GS does not. During the litigation discovery process, this material slowly gets turned over (some is held back if there are other pending investigations into GS).
Going back to who the prosecutor in this case is: His legal reputation is he is very thorough, very precise, meticulous litigator. If he decided to recommend bringing a case against the biggest baddest investment house on Wall Street bank, I assure you he has a major arsenal of additional evidence you don’t know about. Yet.
Typically, at a certain point the lawyers will tell their client that the evidence is overwhelming and advise settling. That is around 6-12 months after the suit has begun.

9. This case is Political: I keep hearing that phrase, due to the SEC party vote. It is incorrect. What that means is the case is not political, it means it has been politicized as a defense tactic. There is a huge difference between the two.

10. I’m not a lawyer, but . . . Then you should not be ignorantly commenting on securities litigation. Why don’t you pour yourself a tall glass of STF up and go sit quietly in the corner.

Tea for Dupes?

Jonathan Chait looks at the fundamental duplicity behind the Tea Party movement.

Jonah Goldberg says the Tea Party movement is, in part, "a delayed Bush backlash." George W. Bush, the argument goes, was a squish who betrayed the conservative philosophy. But since the right had nowhere to go, the current backlash against deficits and the financial bailout is a time-released backlash against his policies, because "Conservatives don’t want to be fooled again."

But they are being fooled again. Indeed, the Tea Party movement is a vehicle of the fooling. The conservative movement is organized around the principle of opposition to progressive taxation. Tax cuts -- the more regressive the better -- take priority over everything else. That was also the organizing priority of the Bush administration -- which, unsurprisingly, enjoyed overwhelming support from conservative elites and conservative voters in both 2000 and 2004.

Now, one problem with the conservative movement's monomaniacal opposition to progressive taxation is that it's a poor way to shrink government spending. People don't favor tax cuts for the rich, so the only way to enact those tax cuts is to deny that there's any trade off between them and more popular spending programs. Bush was never going to be able to oppose the wildly-popular prescription drug benefit in 2000 while also favoring a huge tax cut. He may have gotten away with abandoning the prescription drug benefit in 2003 by telling the public it was no long affordable, but that would have complicated his ability to pass another huge tax cut in 2003. So he did it all and set a fiscal time bomb.

The backlash against Bush from the right is largely a way of absolving conservatism of Bush's failures. Indeed, the Tea Party movement is largely driving the Republican Party along the same lines that Bush did. The central emphasis of the movement is opposition to progressive taxation -- hence the emphasis on Tax Day rallies, the defining of "Tea" as an acronym for "Taxed Enough Already," and the general Randian flavor of the movement.

On the merits, taxes are a strange focus of conservative ire. President Obama has kept in place the Bush tax cuts for 98% of the public, tax revenues are at a low point, and the stimulus included hundreds of billions of dollars in new tax cuts for businesses and individuals. (To be sure, you can dismiss these as temporary, and I'd agree, but on the same grounds, you ought to dismiss as temporary the rise in stimulus spending that went along with the tax cuts.)

But the emphasis on opposing progressive taxation does serve the interests of the Republican Party just fine. If you look at the general thrust of the Tea party complaints -- the focus on taxes, the persistent denunciations of Medicare cuts -- you can see it's pushing the GOP in the direction it already wants to go, which is to replicate the policy mix of the Bush administration. This isn't a rebellion against Bush's policies but a way of displacing anger at their failure.

Brown for the Count

Steve Benen on Massachusetts Republican Senator Scott Brown's TV appearance on Sunday.

Yesterday, the dimwitted senator appeared on CBS's "Face the Nation," and was asked about far-right Tea Party activists and their fears about "socialism." Host Bob Schieffer wanted to know if Brown agrees with their paranoia. Here's the senator's response in its entirety, exactly as it appeared in the official transcript:

"I know that the President should start to focus on jobs and job creation and -- and -- and -- and -- and that hasn't been done. Since I've been here we've done health care, which they obviously rammed through by using a parliamentary procedure that has never been used for something this big ever. And then the bill as we're finding out is -- is flawed, seriously flawed. It's going to cost medical device companies in my state, you know, thousands of jobs. But then, we're taking -- we're talking now about regulation reform. We're politicizing that. Maybe -- I've heard illegal immigration is going to come forth. When we're in Pakistan and Afghanistan, the only thing they talked about from the Presidents all the way down to the poorest farmer were jobs. Since I've been here, I've heard zero talk about jobs. So, I'll let -- leave that up to the political pundits, but I know from what I've seen that we need to focus on jobs and the President should start to do so."

Now, with a response like this, it's tough to know where to start. One could point out that Brown is wrong about the focus on job creation by pointing to the stimulus bill that rescued the economy. One could note that Brown is wrong about health care, which wasn't "obviously rammed through by using a parliamentary procedure," but rather, passed the Senate through regular order.

But I was particularly struck by the notion that Brown believes he's "heard zero talk about jobs." I realize Brown isn't the brightest light in the harbor, if you know what I mean, but after only three months in the Senate, I do expect him to have some sense of the bills he's already voted on. For example, he might remember voting on this "tax extenders" bill last month, which was intended to spur job creation, or perhaps voting on this job bill in February. In both instances, Scott Brown voted with Democrats, which was a fairly big deal with his far-right buddies. Seems like the kind of thing he might remember. It really wasn't that long ago.

And yet, there was Brown, telling a national television audience he's "heard zero talk about jobs." That's true, so long as one ignores all the talk about jobs.