Saturday, October 29, 2016

Initial Thoughts On Impact Of Comey's Letter On The Election

As the initial impact of FBI Director James Comey's explosive and ill-considered email to Congress begins to fade and the reality of the situation comes into focus, we can begin to venture what kind of an effect this will have on the election. I do agree with Hillary that most voters have already factored the email issue into their decision, one way or another. For those that were never going to vote for Hillary anyway, this is just a confirmation of their biases. For those that will support Hillary, the fact that there is apparently no new information here will simply confirm their vote. For the handful of voters who claim that they haven't already made up their mind, this story will simply confirm what they were probably already going to do once they got into the voting booth anyway. So, as far as the presidential race goes, I really don't think this will change the dynamics of the race.  Trump is still massively behind and his path to victory in the electoral college is virtually non-existent. Even a swing of one or two points will not change anything and the impact on the result of the presidential race will (hopefully) turn out to have been marginally effected by Comey's actions.

The damage in some of the incredibly tight down-ballot races, however, could be significant. GOP candidates can twist Comey's letter into an indictment of Hillary and help turn out their presently demoralized base. It also enhances their message of needing a Republican check on the potential lawlessness of a Clinton presidency and a Democratic Congress. The balance of power in the Senate hangs on a handful of incredibly tight races and the size of the significant Democratic gains in the House depends on how many Republicans who are disgusted by Trump will decide not to even vote. On the Rachel Maddow Show last night, Howard Dean expressed his belief that Comey's letter will have very little impact on the down-ballot races because those races have already become individualized, meaning that the focus is on the individual candidates rather than a generic partisan battle. In addition, Hillary's email issues have nothing to do with those down-ballot Democratic candidates.

I think we will be able to get a read on whether the Clinton campaign's internal polling sees the race moving against them pretty soon. Of course, they need to press Comey to provide further clarification. But if that becomes a drumbeat and dominates their campaign statements, then I think you can surmise that they believe the issue is really hurting them. If Hillary continues with her normal campaign speeches and the campaign presses Comey with a single statement every day, then it is probable that Comey's letter is not hurting them.

On Maddow's show, she referenced the indictment of Cap Weinberger which came out four days before the 1992 election. In that indictment, there was a memo that seemed to indicate that George H. W. Bush was far more intimately involved in the details of the Iran-Contra affair than he had otherwise indicated. Bush and his supporters blamed the Independent Counsel, Lawrence Walsh, for slowing his growing momentum and costing him the election. One count of that indictment was subsequently thrown out because the statute of limitations on the particular crime had expired, but four others stood. But to use this as an example or parallel for what Comey has done it to totally ignore the details. As opposed to Comey who is technically merely an investigator, Walsh was a prosecutor who had secured an indictment. Additionally, Walsh at least presented the evidence he had to the public so that they could make their own informed decisions. Comey, so far, has refused to do so.

Comey's inappropriate letter has and will dominate the news for the next few days. It remains to be seen if it will effect the outcome of the elections.

Comey Must Provide More Information Immediately

The pressure on FBI James Comey to release more information about these new emails that may or may not be relevant to the Clinton email server investigation continues to mount. Both campaigns are demanding he provide more information. It appears that the FBI has not even begun to look at these emails and it is unknown what relevance they might have. If Comey thought that he could control the message about these emails by sending this cryptic letter to Congress, he was sadly mistaken. The FBI and the DOJ are apparently leaking like a sieve to reporters in an apparent attempt to "clarify" what the real situation is without making an official statement. According to those leaks, the emails were not sent by Hillary Clinton, were not sent from her email server, and may be entirely duplicative of other emails that have already been reviewed. Rather than controlling the message, Comey has unleashed a torrent of rumor, innuendo, and reporting from unnamed sources. That is hardly controlling the message.

Comey's letter violated long-standing DOJ norms that consider the sensitivity of releasing any information near an election. It is being reported that Comey ignored Attorney General Lynch's request that he abide by these norms. Additionally, the WSJ is reporting that the emails in question may have ALREADY been reviewed by the FBI in the earlier investigation. The most frustrating part of Comey's letter is his statement that these emails "appear to be pertinent to the investigation" when it appears the FBI has no clue whether or not that is actually true. As Matthew Miller has pointed out, the job of the FBI is to investigate and pass on its findings to a prosecutor. It's job is not to characterize their findings and comment about ongoing investigations. It is especially irresponsible to insinuate that new information has become available, which is what his letter does, when, in fact, it has yet to be determined whether any of that information is, in fact, new and relevant. At some point very soon, the FBI is going to have to come out and say what I presume Comey's letter actually meant - that there is a new batch of emails that need to be reviewed in order to see if they are relevant and that the investigation of these emails will extend well beyond election day. To say nothing officially at this point, especially when information is constantly leaking, borders on the criminal.

Natural Weekends - Hawks

Friday, October 28, 2016

Feinstein Releases Statement Ripping Comey For "Appalling" Letter

Senator Dianne Feinstein, ranking Democratic member of the Senate Intelligence Committee, has just issued a statement ripping FBI Director James Comey. I can expect we will see more of the same from important Democrats. It is important to understand and reiterate just how shocking Comey's letter today was and for its appalling break with tradition and existing DOJ guidelines.

Comey's Cryptic Letter On Hillary's Emails Is Totally Inappropriate

I guess we had to figure that there would be one more incredible twist left in this year's crazy presidential campaign and today we got it. FBI Director James Comey sent a letter to the chairmen of certain Congressional committees stating that he was re-opening the investigation into Hillary Clinton's emails. The letter states, "In connection with an unrelated case, the FBI has learned of the existence of emails that appear to be pertinent to the investigation. I am writing to inform you that the investigative team briefed me on this yesterday, and I agreed that the FBI should take appropriate investigative steps designed to allow investigators to review these emails to determine whether they contain classified information, as well as to assess their importance to our investigation. Although the FBI cannot yet assess whether this material may be significant, and I cannot predict how long it will take us to complete this additional work, I believe it is important to update your Committees about our efforts in light of my previous testimony."

I understand that Comey feels he is in an impossible position at this point. If he says nothing and these new emails turn out to be incriminating, then the Republicans will be all over him for not announcing the probe before the election. On the other hand, releasing a cryptic comment like this without any details and with no timetable for resolution will make Democrats ballistic and accuse of him trying to sway the election, especially if nothing comes from this new investigation.

But, unless the FBI has some pretty clear-cut proof that they can share with the public, then he really should not be saying a thing. The FBI cleared Hillary and ended their investigation this summer. It is perfectly within their right to re-open this investigation. But to make it public without providing any kind of substance to their rationale for doing so is totally inappropriate, especially when they admit they are unsure of whether the new emails are material and when their investigation might end. All this does is provide fodder for the Trump campaign while at the same time giving the Clinton camp absolutely nothing to refute or rebut in any way.

This is not the first time that Comey has made inappropriate remarks as head of the FBI. Back in July, he had a press conference where he commented on the ongoing e-mail investigation. As Matthew Miller, a former Department of Justice spokesperson, pointed out at the time, those comments clearly violated Department of Justice rules on commenting on ongoing investigations. Miller also notes on his twitter feed today that the FBI is refusing to disclose if it is even investigating the reported Russian hacking of Democratic officials, so why is it commenting on its investigation of Hillary's emails.

The lack of political sensitivity to this kind of cryptic disclosure is shocking and certainly makes you question Comey's motivations.

Obamacare Rate Hikes Partly Due To States Opting Out Of Medicaid Expansion

I wanted to follow up on a prior post about the problems with Obamacare. One of the reasons that the pool of enrollees has turned out to be slightly less healthy than expected is because of the deliberate sabotage of Republicans in states around the country. When those red states opted out of the Medicaid expansion, it meant that those potential Medicaid enrollees actually moved into the regular Obamacare exchanges. A government study showed that the exchanges in states that opted out of expansion had 40% of enrollees with incomes between 100 and 140 percent of the poverty line. In states that adopted Medicaid expansion that number was just 6%. As Jordan Weissmann writes, "Herding poorer families into the exchanges has almost certainly left insurers with a sicker customer base, since low-income Americans tend to be less healthy. That, in turn, drives up costs for everybody. Controlling for other variables, the Department of Health and Human Services researchers estimated that in 2015, premiums were 7 percent lower in states that decided to expand Medicaid than those that didn't. It seems entirely possible that difference has grown with time as carriers have had to further adjust their prices to reflect the health of their customer bases."

Please read Jordan's entire article as it describes other ways in which certain states have adopted policies that make it harder for Obamacare to be as effective as it could be.

Kirk's Mocking Comment Reflects GOP Bias Against Women And Minorities

I know it is usually not helpful to take a single incident and make it a reflection of a greater truth. But sometimes it really does seem appropriate. Could there be any greater example of the demeaning attitude of the current male Republican elites toward women and minorities than the exchange between Mark Kirk and Tammy Duckworth at last night's Illinois' Senate debate:

Duckworth: "My family has served this nation in uniform, going back to the Revolution. I'm a daughter of the American Revolution. I've bled for this nation. But I still want to be there in the Senate when the drums of war sound. Because people are quick to sound the drums of war, and I want to be there to say this is what it costs, this is what you're asking us to do. … Families like mine are the ones that bleed first."
Kirk: "I had forgotten that your parents came all the way from Thailand to serve George Washington."

Can you imagine Kirk responding that way to a male whose family emigrated to America from Judeo-Christian Europe. Can you imagine him saying that to a decorated war-hero who had lost both legs and was a man. Not a chance. And the most disgusting part of his remark is that, while Duckworth's mother is Thai-Chinese, her father's family has lived in this country since before independence and Duckworth herself is a member of the Daughters of the American Revolution. But if you are a woman or a minority, you are apparently will never be "American" enough.

Another Social Security Scare Story - The Zombie Lie Lives

It seems like I could spend every single day refuting another misleading article about Obamacare, the debt, or Social Security. It is almost a daily onslaught on what Krugman calls the "zombie lie" - no matter how many times it gets refuted, it just keeps coming back to life. Today's zombie comes from Bloomberg which has run another scare story on Social Security.

The fact that the Social Security Trust Fund will be depleted somewhere around 2035 is not in dispute. What is in dispute is the severity and timing of changes that will need to be made in order to push that date farther into the future. The Bloomberg article initially focuses on the declining worker-to-beneficiary ratio as one of the drivers of the problem noting that the ratio is projected to fall to 2.1 in 2040 from the 3.2 level that existed in 1975. Interestingly, that same ratio fell from 16.5 in 1950 to its 1975 level without driving Social Security into insolvency. The critical question is not the worker-to-beneficiary ratio but how much workers wages will actually rise over the next few decades. In fact, part of the reason there is a potential issue with Social Security is because workers wages have been stagnant for the last couple of decades. Faster rising wages will extend the solvency of Social Security.

The Bloomberg article at least lists a number of options for extending the Social Security Trust Fund and it rightly points out that it will probably take a combination of changes to accomplish this. But some of the proposals consist of cutting benefits now, such as slowing cost-of-living adjustments or raising the retirement age, so we can make sure we don't have to cut benefits later. This makes no sense. Why not just wait to see exactly where we are before we start cutting benefits. Yes, a growing workforce would help but, as I mentioned before, so would growing wages. They do float the idea of raising the payroll tax by about 2.5%. That alone would solve the problem. But they dismiss this as being politically impossible. But, as Dean Baker points out, there was hardly a huge outcry when the payroll tax went up by 2.0% in the beginning of 2013 when the payroll tax holiday ended after its institution in 2011. So it doesn't seem like it would be so impossible to do that again.

The Bloomberg article claims that the neither candidate has produced a solvency plan for Social Security. But one of the options that the article provides as a solution involves eliminating the taxable minimum at which the payroll tax ceases to be in effect along with a gradual increase in the payroll tax. So let's go back to the third debate when the discussion of Social Security solvency came up. Hillary's response (without Trump's "nasty woman" interruption) was, "I am on record as saying we need to put more money into the Social Security Trust fund. That's part of my commitment to raise taxes on the wealthy. My Social Security payroll contribution will go up as will Donald's assuming he can't figure out how to get out of it, but what we want to do is...replenish the trust fund by making sure that we have sufficient resources, and that will come from either raising the cap and/or finding other ways to get more money into it." That sounds awfully like the idea of raising the cap and the tax rate, although it was admittedly not explicitly the Bloomberg option.

The reality is that small tweaks to the payroll tax rate and the income cap at which the Social Security tax ceases to be paid will easily solve the solvency problem. But the greatest impact in reducing the issue of Social Security solvency would be faster rising wages for American workers, rather than letting the benefits of a growing economy mostly accrue to the top 1%.

Two Faces Of US Justice - Bundy Acquittal And Dakota Pipeline Protests

Is there anything that shows the bias and prejudice in our current criminal justice system than, on the same day, seeing the acquittal of an all white group of men who illegally took over a federal facility and actively encouraged the potential use of violence while peaceful protesters who are defending sacred Indian land that is theirs by treaty get shot and arrested in order to allow big business to build a pipeline through their land.

The Bundy group was treated with kid gloves and were eventually arrested peaceably. It was a remarkable show of restraint by law enforcement that worked out in the end. But, because it did end so peaceably, it perhaps made it easier to acquit them. Those peacefully protesting the Dakota Access Pipeline have been met with a declaration of a state of emergency by the governor that mobilized the National Guard, allowed the use of outside police forces, and the deployment of militarized police vehicles. This a stark contrast to the treatment of the Bundy group that occupied the Malheur National Wildlife Refuge headquarters.

The pipeline clearly crosses lands that that belong to Native Americans under an 1851 treaty. Of course, the US has violated that treaty many times but that is hardly a legal excuse to violate it again. The silence from President Obama and Hillary Clinton so far on this issue is truly shameful. It is especially galling from Obama who visited the Standing Rock Sioux Reservation back in 2014 and said, "I know that throughout history, the United States often didn’t give the nation-to-nation relationship the respect that it deserved.  So I promised when I ran to be a President who’d change that -- a President who honors our sacred trust, and who respects your sovereignty, and upholds treaty obligations, and who works with you in a spirit of true partnership, in mutual respect, to give our children the future that they deserve." Yes, Obama has blocked construction on nearby federal lands and asked the company building the pipeline to voluntarily suspend work. But that is not enough at this point.

Hillary Clinton put out a typically wishy-washy statement yesterday that says, "Secretary Clinton has been clear that she thinks all voices should be heard and all views considered in federal infrastructure projects. Now, all of the parties involved—including the federal government, the pipeline company and contractors, the state of North Dakota, and the tribes—need to find a path forward that serves the broadest public interest. As that happens, it's important that on the ground in North Dakota, everyone respects demonstrators' rights to protest peacefully, and workers' rights to do their jobs safely." This is pretty pathetic but not unexpected from the ever-cautious Hillary. It would be nice to see Democrats as whole standing up to the oil-extraction industry and defending the rights and treaties of Native Americans.

Thursday, October 27, 2016

Another Misleading NYT Article On Obamacare

The New York Times has another classic misleading article about Obamacare today. Basically, the gist of the article is that younger and healthier people are willing to pay the penalty for not having insurance rather than sign up for Obamacare. And it quotes Joseph J. Thorndike, the director of the tax history project at Tax Analysts, a nonprofit publisher of tax information, as saying, "The penalty for violating the individual mandate has not been very effective. If it were effective, we would have higher enrollment, and the population buying policies in the insurance exchange would be healthier and younger."

As Dean Baker never tires of pointing out, this is just simply not true. When estimates on Obamacare first came out, no one had even considered that states would be allowed to opt out of Medicare expansion and that some would. But, even so, the number of people who are currently uninsured is well below the original estimates, meaning that more people have signed up than was originally anticipated.  In addition, far fewer employers have dropped their employer-sponsored coverage and converted their employees to Obamacare than was anticipated. This has contributed to the fact that the pool of Obamacare enrollees may be slightly less healthy than was predicted. It is certainly a much greater factor than the idea that not enough young people have signed up. As Baker notes, it is actually a greater benefit to the insurance company to have a healthy older person enrolled as their premiums are much higher. Finally, as the Times' article notes, the full impact of the penalty has only gone into effect for 2017, so it is a bit premature to say that the penalty is not sufficient. But that won't keep the Times from weaving a few miscellaneous anecdotes into a negative story.

Renewable Energy Capacity Exceeded Coal In 2015

I didn't want to let his pass without mentioning it. According to the International Energy Agency, the installed capacity of renewable energy worldwide surpassed coal for the first time ever in 2015. In addition, renewables, led by solar and wind, accounted for more than half of new energy capacity installed last year. Most of that growth, about 40%, came from China as they try to deal with their massive air pollution concerns. The agency predicts that renewables will account for 28% of all energy produced by 2021 as opposed to the 23% level in 2015. With the technology changing rapidly, the costs of renewables are continuing to fall and, accordingly, the energy capacity of renewables is continuing to increase.

Chaffetz Latest GOP Coward To Re-Endorse Trump

It is getting almost impossible to keep track of current Republican officeholders who have unendorsed Trump and then decided to re-endorse him. And some have seemingly gone through this process multiple times during this election. Of course, the two biggest names are Ted Cruz and Marco Rubio who would never vote for Trump until they decided they would. Others include Senator Deb Fischer, Senator John Thune, Rep. Scott Garrett, and Rep. Bradley Byrne.

Yesterday it was Rep. Jason Chaffetz turn to pull a 180. After initially saying he could never look his daughter in the eye and vote for Trump after the emergence of the "Access Hollywood" tape, Chaffetz sent out a tweet yesterday saying, "I will not defend or endorse @realDonaldTrump, but I am voting for him. HRC is that bad. HRC is bad for the USA." I guess he was not looking his daughter in the eye when he sent that out. Chaffetz then followed that up with his analysis of how he would govern with Hillary Clinton as President. Said Chaffetz, "It’s a target-rich environment. Even before we get to Day One, we’ve got two years’ worth of material already lined up. She has four years of history at the State Department, and it ain’t good." I'm so glad he is focused on policy.

The cowardice and lack of any real plans for America other than saying no to everything, disrupting an effective government, and attacking the foundations of our democracy are the over-arching themes of the Republican party these days. There is no Republican equivalent to LBJ to confront the tea party, Freedom Caucus, and right wing media and bring the party back into the mainstream of American politics. So it is up to the rest of us to make sure these people are defeated at the ballot box.

The Shortage Of Safe Assets And Now Dollars

The global shortage of safe assets has been a recognized problem since the financial crisis. It has resulted in below average and even negative interest rates. And the inability of politicians to muster the political will to confront this problem has robbed of us of the opportunity to rebuild our infrastructure and created the surge in huge capital flows as savings scour the globe in search of yield.

Now economist Carmen Reinhart documents the return of the "dollar shortage" and the emergence of parallel black market currency markets in countries around the world. The plunging commodity prices of the last few years have decimated currencies in places like Brazil, Russia, and Columbia. For those other countries that had pegged their currency to the dollar, it has meant a depletion of their currency reserves. As commodity prices still remained low, countries began to implement capital controls and tweaking their currency pegs. These moves allowed black-market currency markets to begin to pop up. Reinhart notes the emergence of these markets in places like Egypt, Nigeria, Iran, Angola, Uzbekistan, and South Sudan, among others. And, in the very worst cases like Venezuela and South Sudan, the dollar shortage is actually turning into food shortage. According to Reinhart, "Of far greater urgency is that dollar shortages have become food shortages in countries such as Egypt and Venezuela, as well as much of Sub-Saharan Africa, which rely heavily on food imports. Given import compression, the resulting scarcities, and skyrocketing black-market prices, the most vulnerable segments of the population have been left in profound jeopardy."

The concept of a "dollar shortage" emerged in the post-World War II era and part of the idea of the Marshall Plan was to alleviate this problem in post-war Europe. Today, there is no such plan to be had and many of these countries will be turning to the IMF for assistance. But the IMF is an agency committed to preserving stability and is certainly not equipped to rectify this situation through the kind of redistributionist policies that are needed. There really is no international organization that exists that is designed to specifically deal with the social costs of plunging commodity prices around the world.

We all know that food shortages will inevitably lead to political instability - we can see that in Venezuela today. But the political elites are so invested in an austerity mindset and obsessed with debt that they have totally lost sight of concept of investment and the idea that wealth might need to be redistributed slightly in order to maintain social welfare and social order. They disregard these issues at their own peril.

Wednesday, October 26, 2016

Study Shows Mergers Have Negative Effects For Consumers

A new research paper of the effect of mergers came out the other day and it certainly has relevance to the spate of mega-mergers that have recently been announced. It has generally been assumed that horizontal mergers will increase efficiency and productivity and those effects will be less for vertical mergers. The resulting increase in efficiency and productivity will then be passed along to consumers in lower prices. The prevailing anti-trust theory maintains that this consumer benefit is enough to allow these mergers to go ahead.

The new study by economists Bruce Blonigen and Justin Pierce pretty much destroys these long-held premises. Their study of manufacturing firms showed that mergers had no significant effect on plant-level efficiency and productivity and they actually resulted in increased markups of anywhere between 15 and 50 percent. So, there were no productivity gains and the price of the manufactured good actually went up. These effects were virtually the same whether the merger was a horizontal or vertical merger and whether it was within an industry or across industries.

Admittedly, this study only looked at the manufacturing industry and it may not apply to other sectors. But it blows a whole in the anti-trust theory that was developed by Robert Bork and others in the 1980s which held that a merger or takeover should be allowed to go ahead if some benefit accrued to the consumer. In most cases, companies pointed to the "synergies" and "efficiencies" that would result in lower consumer prices as a rationale for allowing the merger. For most Americans, that has resulted in fewer choices and higher prices and the consolidation of market power in a handful of companies across all major industries. This study certainly adds more fuel to the idea that these latest mergers deserve intense scrutiny. and a total re-thinking of existing anti-trust theory.

Voter Suppression Another Indicator Of Anti-Democratic Stance Of GOP

The New York Times finally has a front page story about the raft of voting restrictions in place for this election and the difficulty the judiciary is having in enforcing some of their rulings on voting rights. Of course, many of these voting restrictions are put in place by Republican legislatures and some of them have shown a clear intent solely to suppress Democratic voters. A federal court ruled North Carolina's voter ID law unconstitutional, saying the law's provisions "target African Americans with almost surgical precision." In Wisconsin, a legislator bragged that the new voter ID laws would reduce minority and youth votes and make the state more difficult for Hillary Clinton to win. Just yesterday, a local Wisconsin election official turned down a request by eight different student groups, including the Republican and Libertarian ones, at the University of Wisconsin, Green Bay to open an early polling place on the campus. The official reasoned (if you could call it that) that "I have heard that that students lean more toward the democrats and he [the state representative] is a democrat." In an Orwellian twist, the official believed that her ruling was perfectly fine because "I was reading the statutes and read: No site may be designated that affords an advantage to any political party." And, as the Times' story indicates, even after a judicial ruling, many of the states are simply openly ignoring the judge and/or dragging their feet in rectifying the problems. And, even as judges rule certain parts of the law unconstitutional, the resulting confusion makes it even easier to provide misleading information that restricts voting. As Ari Berman point out, of the nearly 900,000 eligible voters in Wisconsin and Texas who need to have voter IDs, less that 2,500 have actually been issued. Whether or not these people even intend to vote is really irrelevant - it is simply disenfranchisement on a massive scale.

Well over half of Republican voters in a number of polls believe that Hillary Clinton can only win the election through voter fraud. Donald Trump taps into that belief when he refuses to say he will accept the outcome of the election. There is a huge swath of the Republican party that no longer believes in democracy. Rather, they believe the whole system is corrupt. If you believe the whole system is corrupt, the voting for someone like Trump who will admittedly blow everything up makes sense. If you sincerely believe Democrats are stuffing ballot boxes, then suppressing Democratic votes via gerrymandering and voting restrictions is only fair game. Of course, most responsible GOP officials know that voter fraud is virtually non-existent but, playing to the fears of their base and instituting these measure,s allows them to keep their jobs and their power.

Over at the New Republic, Jeet Heer looks how much of the right has started to give up on democracy and the forces that are driving them. For the white nationalists, it is the realization that minorities will soon be the majority in this country and that they are facing a demographic doom. For social conservatives, evangelicals, and the Christian nationalists, it is the belief that the political system has become so secular that it needs to be overthrown. They also see that the Judeo-Christian hegemony over the nation is increasingly under attack and potentially doomed. Finally, the free-market libertarians believe that the increasing enfranchisement of "takers" who do not understand or necessarily believe in the "free market" is destroying the country. For all these groups, a return to what conservative writer Byron York describes as "a test for voting, limited-participation elections" provides an answer to their worries. Essentially their argument is that "we will be OK if we can just limit voting rights to those traditional American voting blocks." David Harsanyi, a senior editor at The Federalist, has called for "weeding out millions of irresponsible voters who can’t be bothered to learn the rudimentary workings of the Constitution, or their preferred candidate’s proposals or even their history" so that "we may be able to mitigate the recklessness of the electorate." He continues that this will not lead to a return of Jim Crow laws because the test "would ensure that all races, creeds, genders and sexual orientations and people of every socioeconomic background are similarly inhibited from voting when ignorant." Of course, who determines that ignorance is left unsaid. Please read the whole article to show just how far many thinkers on the right have gone in rejecting democracy.

This rejection of the democratic process has been building in the Republican party for years and it also goes hand-in-hand with the refusal of the GOP legislators to abide by the governing norms that have existed for decades. Impeachment, government shutdowns, birtherism, the refusal to even give a hearing to Merrick Garland, the voting suppression, and much more are just additional attacks on our democracy. As their base shrinks and becomes more extreme, Republican elites become even more fearful about attacks from their right. They all fear being the next Eric Cantor, unseated by a tea party extremist. That explains Ryan's and McConnell's refusal to repudiate Trump. In doing so, they have allowed the party to truly become anti-democratic and a threat to the foundations of America. This will not dissipate when Trump loses the election - it will only get worse. This radical, reactionary, anti-democratic party will probably become even more extreme. The white, Christian nationalists will not go quietly into the night. And it will take all our strength to fight them off and save democracy as we know it.

Don't Let The Progressive Narrative Get Lost In Attempts To Legislate

It is pretty clear that the Republican party will splinter into two different factions after this election. There will be the alt-right, white nationalist faction and the smaller group of small-government conservatives. But, prior to this election, the GOP mantra after losing another Presidential election has always been that the party did not nominate a "true conservative". 

Hillary Clinton has run her campaign on a pretty progressive platform. She has co-opted many of the proposals from the Bernie Sanders' campaign, which strongly challenged her from the left. I believe that the majority of Democratic voters these days are pretty firmly in the more liberal, progressive camp and quite comfortable with the albeit meaningless Democratic Party Platform that is one of the most progressive in history.

On the other hand, many of the currently elected Democratic party, including Hillary herself, still came of age during the era of the DLC, the Third Way, and triangulation, all of which are an anathema to progressives. Additionally, these same elected officials are actually trying to legislate which means getting some cooperation from an intransigent Republican party and that process will always pull them to the center.

Even if Democrats take control of the Senate and, more improbably, the House, there will still be a fair number of legislators who will be looking over their shoulder at a strong challenge from a Republican in the next election and that group will be able to pull the party to the right because Democrats will need every vote they can get to pass almost anything. My fear is that we will start hearing almost the reverse of the Republican mantra - that the only reason Democrats "got away" with such progressive policies was because Donald Trump was such a flawed candidate. There is still strong support for the increasingly insane idea of coming together for "bipartisan compromises" that comes from not only the media elite but also from some within the Democratic donor class. That view seemingly neglects how far to the right and off the rails the Republican party has gone.

With the margins in the Senate and even the House probably being razor-thin, there will be great pressure for Democrats to "work with" that rump of GOP conservatives in order to get things done. And those compromises may have to be made. I, myself, certainly feel more comfortable with Elizabeth Warren and Bernie Sanders in the Senate and their ability to hold Chuck Schumer's feet to the fire. But progressives can not let the narrative form that progressive policies didn't win the election, it was merely the failure of the Trump candidacy. Yes, Trump has run a truly horrific campaign. But it was progressive policies that inspired the base of the Democratic party, the young, African-Americans and Latinos, and women of all stripes. And these groups now make up a majority of the population and the party. And it is this base that they will need to be inspired in the off-year elections as well. Elected Democrats forget that at their peril.

GOP House And Senate Candidates Are Sensing Defeat

I've already written that Marco Rubio looks to be running scared, trying desperately to hold on to his shrinking lead in the Senate race in Florida. And, just to show you how bad things are getting for him, he essentially got booed off the stage by a largely Latino crowd in Orlando on Sunday. Admittedly, the crowd in Orlando was predominantly Puerto Rican, a group that has largely been consistent Democratic voters. But it was still striking to see Rubio booed and it was clear that much of it was in reaction to Rubio's support for Donald Trump, with one member of the crowd calling Rubio "a sell-out".  The polls have been tightening lately and the most recent polls showing the race within the margin of error. If the Democrat, Patrick Murphy, does not pull this race out, the DSCC may deeply regret pulling out of this race earlier in the campaign.

Meanwhile, House Majority Leader Kevin McCarthy stood firmly behind Trump, saying, "We need to elect Donald Trump President". All this tells me is that Republican leaders are increasingly concerned that they will lose the House and they believe embracing the party's base is the only way to hold it, figuring they have already lost those independents and Republicans who are disgusted with them for playing along with Trump for so long.  On the Senate side, Richard Burr, the GOP candidate in North Carolina is taking the same tack, embracing Donald Trump when he claimed there is "not a separation between me and Donald Trump". The Cook Political report has upgraded Democratic gains to 5 to 7 seats, enough to take control of that chamber. It noted that toss-up races tend to break as a group for one party or the other and, considering the cratering of Donald Trump's support, those races would go to the Democrats.

Tuesday, October 25, 2016

IBM Finds Macs Cheaper Than PCs In The Long Run

Apple has always had difficulty breaking into the certain segments of the business market but that is all beginning to change. Apple has always had an advantage in some industries such as education, architecture, and other artistic related jobs. Other areas have been more difficult, especially the financial industry. Part of that, of course, was simply a matter of cost. But it is increasingly apparent that the true cost of ownership for an Apple may actually be cheaper.

Last year, IBM allowed its over 400,000 worldwide employees to choose whether they wanted to use a PC or a Mac. Already, nearly one-quarter of its global workforce has chosen to move to Macs and the company expects that number to continue to grow. But the company also found that supporting its Mac users was far less expensive than supporting its PC users. IBM discovered that PCs generated double the amount of support calls and cost between around $275 to $550 more to support over a four-year period than Macs. That comes to a minimum of around $7 million in savings each year for the existing 100,000 users. And, incredibly, all those IBM Mac users are supported by just 5 administrators.

Solving The Problem Of The Global Savings Glut

Another NY Times article today discusses the global savings glut in Asia and Europe and whether that money's search for yield is creating an asset price bubble, particularly in US corporate bonds. According to Brad Setser, an expert in global financial flows, about $750 billion of private money has come into the United States in the last two years. He estimates that two-thirds of that total is coming from primarily Asian and, to a lesser extent, European investors. This global savings glut keeps interest rates artificially low as the money cycles through the financial system in search of higher returns. Everyone acknowledges that a better use of these savings would be to actually invest these savings in "real" investments like infrastructure or even direct spending than to just be chasing yield.

The role of financial markets is supposed to be an efficient allocation of capital. It's pretty clear that is not happening these days. The answer, of course, is for government to step in and rectify the problem. The easiest way is for governments to issue more debt in order to pay for those "real" investments. But the deficit hawks and the believers in the "confidence fairy" that demands austerity refuse to accept that. Of course, as we have seen from the economic contractions and anemic growth from those countries forced into austerity, this is totally counterproductive. That is why European austerity is so frustrating. But, if you are worried about increasing the deficit but still want to put that global savings glut to good use, there is another alternative. Simply restore a more confiscatory tax structure so you can tax some of these savings and use the resulting surplus to actually grow your economy, either through investments or simply passing the cash on to poorer citizens who will actually spend the money. If the financial markets can not fulfill their role, then it is time for government to do the job for them.

Despite Hefty Premium Hikes Most Obamacare Enrollees Will Be Able To Find Very Affordable Plans

The New York Times has a front page story today that opens with the sentence, "Premiums for midlevel health plans under the Affordable Care Act will increase by an average of 25 percent next year, while consumers in some states will find significantly fewer insurance companies offering coverage, the federal government said Monday." It isn't until you get far down in the article and to its continuation on page 18 in the print edition that you find out this only applies to those people on the federal exchange. As Dean Baker points out, these increases will apply to about two-thirds of the people on Obamacare which amounts to just 3% of the total population. Additionally, health care costs per insured person have fallen dramatically in the last five years and, even after these increases, premiums will almost exactly in line with the original CBO estimates.

The variation of rate hikes across all states is kind of astounding, whether they are on a state-run exchange or the federal one. In California, premiums are expected to rise by only 7% and in Massachusetts they are  actually going to fall by 3%. On the other hand, rates are expected to rise by 145% in Arizona and many states with smaller populations are seeing increases of 50% or more. These increases will not affect a majority of those insured under Obamacare as nearly 85% of the people enrolled receive some kind of assistance and nearly three-quarters of enrollees will be able to find a silver plan for an out-of-pocket cost of less than $100 per month. Lastly, it is important to remember that Obamacare is essentially a high-deductible catastrophic health care plan. If every enrollee chose the lowest priced bronze plan, premiums would drop by about 20%.

Monday, October 24, 2016

Tweet Of The Day

Grassley Claims He Can't Hold SCOTUS Hearings Because It Would Be Expensive

The pathetic Chuck Grassley, ranking member of the Senate Judiciary Committee, has put forward the most preposterous theory on why Merrick Garland could not be given a hearing for his nomination to the Supreme Court. Apparently Chuck says he could do it but that it would be too expensive. Grassley told the Des Moines Register, "Sure, sure. Umm, I suppose, the tradition is – and I’m not sure I would follow this tradition because I know who I have on my staff, I know how deep you have to go into going through a person’s record, in order to hold a hearing that’s worthwhile. And so you appropriate – you get special, not appropriations – you get ‘special’ from the rules committee; additional money to hire additional legal people. My staff tells me that’s about a half a million to $750,000 to hire people to maybe work for three or four months to do it." As Steve Benen points out "I think this is the first time I’ve heard such an argument: senators could to their job and meet the constitutional obligations, but the process is too expensive to bother."
It just seems that Republicans have ceased to understand their Constitutional responsibilities.

(h/t to Washington Monthly/Political Animal blog for this one)

A Broadside Against The Corporate Monopolists And The Oligopoly

Guess who said this:

"Over a hundred years ago, a pro-business Teddy Roosevelt busted up more than 40 oil, railroad, steel and other 'trusts' that were wielding their rapacious monopoly power to gouge consumers and interfere with the efficient functioning of the American economy. [I] will break up the new media conglomerate oligopolies that have gained enormous control over our information [and] intrude into our personal lives...NBC, and...MSNBC, were once owned by General Electric, a leader in offshoring factories to China. Now NBC has been bought by Comcast, which is specifically targeting the Chinese market...AT&T, the original and abusive 'Ma Bell' telephone monopoly, is now trying to buy Time Warner and thus...CNN. [I] would never approve such a deal because it concentrates too much power in the hands of the too and powerful few. The New York Times strings are being pulled by Mexico’s Carlos Slim, a billionaire who benefits from NAFTA...Amazon, which controls the Washington Post, profits from the flow of illegally subsidized foreign products through its distribution channels. Lower costs mean higher margins -- no matter if bad trade deals lead to massive unemployment in America. This oligopolistic realignment of the American media along ideological and corporate lines is destroying an American democracy that depends on a free flow of information and freedom of thought..."

It could be Bernie Sanders or even Elizabeth Warren. But it is actually a press release from the Trump campaign detailing how the media conglomerates are all in collusion to destroy him and keep him from the presidency. When you have the Republican presidential candidate going off on the oligopolists and corporate monopolists, you know that times have changed. The days of business having a free hand without oversight are ending shortly.

Corporate Monopolists Try To Squeeze In More Mega-Mergers

I'm not sure that business leaders have fully understood how much the climate has turned against them in just the last year or so. The emergence of Bernie Sanders and Donald Trump, who both had the fact that American workers had been exploited and taken advantage of by their business and political leaders as central parts of their appeal, should have given them a pretty good hint. And Hillary Clinton has joined the bandwagon and is promising a crackdown on industries with undue concentration. But the heads of AT&T and Time Warner don't seem to care with the announcement of their $85 billion merger. Trump has already come out against the merger and Bernie Sanders has said the deal should be killed. Hillary Clinton has been a little less forceful saying that "regulators should look at" the deal but both the Republican and Democratic ranking members of the Senate antitrust committee put out a joint statement saying the merger "would potentially raise significant antitrust issues".

The NY Times today tries to spin this merger and the announcement of two other mega-mergers, British American Tobacco buying the remaining shares of Reynolds American that it does not already own and Qualcomm buying NXP Semiconductors, as examples of business leaders showing confidence in the future. That article also mentions the proposed mergers of Anthem and Cigna and Aetna and Humana, as well as the massive merger between Bayer and Monsanto. The health care mergers are currently opposed by the Justice Department and the Bayer deal has generated strong opposition in Europe.

Rather than expressing confidence in the future, it looks to me as though these companies are trying to rush through these mega-mergers before the door on these gigantic transactions close. The opposition to TPP, the collapse of the EU-Canada trade deal, and the rising opposition to these mega-mergers all indicate that the public no longer will give carte-blanche to business. For decades, the business elites over-promised on "free trade". Dani Rodrick summed it up best when he says, "The elites minimized distributional concerns, though they turned out to be significant for the most directly affected communities. They oversold aggregate gains from trade deals, though they have been smallish since at least NAFTA. They said sovereignty would not be diminished though it clearly was in some instances. They claimed democratic principles would not be undermined, though they are in places. They said there'd be no social dumping though there clearly is at times. They advertised trade deals (and continue to do so) as "free trade" agreements, even though Adam Smith and David Ricardo would turn over in their graves if they read, say, any of the TPP chapters." Business leaders to this day continue with the job-creator myth, saying that giving them a free hand will lead to an explosion of new jobs. Instead, the average median wage is exactly where it was in 1998, nearly 20 years ago. Meanwhile all the income gains have gone to the 1%, business executives, and corporate shareholders. And we have created an economy dominated by oligopolies. Since the Reagan era, business leaders have been given incredible leeway by both politicians and regulators. But that era is ending. The next few years will see increasing skepticism on any new trade deals and a heightened awareness of the need for better antitrust enforcement. It's about time.

Amazon's Sales Fell As It Started To Collect Sales Tax

Kevin Drum has an interesting post on the effect of sales taxes on Amazon. On average, Amazon's sales fell off nearly10% and sales increased in competing brick and mortar stores by about 2% when the company began to collect sales tax. For big ticket items in a high-tax state like California, Amazon saw an over 30% drop in sales. When Amazon started up as a true internet shopping firm, it did not have to collect sales tax as it had no physical presence in most states. As the company grew and expanded its warehouse and distribution presence across the country, that changed. It now collects tax in 29 states that hold over 80% of the US population.

The Supreme Court had ruled that a physical presence in the state is required in order to be subject to sales tax but specifically said that Congress could change that through legislation. That legislation has yet to pass. So, as usual, brick and mortar stores that played by the rules got screwed by a company that exploited a loophole and our legislators did nothing to protect them. Yes, of course, internet shopping was going to take off, but at least Congress could have created the semblance of a level playing field. Additionally, states lost millions of dollars in potential revenue because of their inability to collect sales tax on these sales. And this kind of exploitation of the rules is exactly the same modus operandi that Uber and Airbnb are using today. This time, at least, some communities are fighting back.

Banks Prepare To Leave London In Brexit Fallout

The head of the British Bankers Association warned that major banks will be starting to exit London early next year in response to the supposed restrictions imposed under Brexit. Anthony Browne said, "Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it. Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year." The response from the government has been an attempt to assure the City that it will somehow protect the interests of the financial sector and one idea that has been floated is an equivalence deal with the EU that will allow both Britain and the EU to recognize each other's regulatory systems. Browne dismissed the idea of an equivalence deal as "a poor shadow of passporting" which allows UK banks to sell banking services on the continent. Browne also put a shot across the bow of the EU, pointing out the UK banks currently lend over 1 trillion Pounds to the EU, "keeping the continent afloat financially", and that Brexit threatens this arrangement.

Meanwhile, the Belgian region of Wallonia looks like it will be able to scuttle the EU-Canada trade pact. EU trade deals must be ratified unanimously by every member and Belgium is not allowed to ratify a treaty without the agreement of all of its five regions. Chrystia Freeland, the Canadian trade minister, walked out of the talks on Friday, saying, "It seems obvious that the EU is now not capable of having an international agreement, even with a country that shares European values such as Canada, even with a country that is so kind and patient". If the EU can not even pass a trade agreement with Canada, it will be even more difficult to get all members to agree to the terms of Brexit. And, if no agreement is reached, then all the treaties that govern the relationship between the UK and the EU will expire. Right now, with the chaos in the EU and especially the rise of the right-wing in Germany and France, that outcome is looking increasingly likely. That would leave Britain without any relationship with the EU and increasingly isolated. Theresa May and her government seem almost oblivious to this possibility as well as the damage that the uncertainty of the future is having on the long-term prospects for the UK economy. Anthony Browne tried to provide them with a dose of reality.