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Saturday, September 29, 2012

Inside the In Crowd's Bubble

Bill Maher has a segment on his eponymous show called Inside the Bubble, and it's based on the premise that Republicans live in a bubble where everything in it would make little sense to outsiders. Every week, he shows a clip of Republican rhetoric that he thinks the majority of the country would disagree with.

But Republicans aren't the only people living within a bubble. This guy is living in a bubble too. He's saying that Romney has already lost the Presidential debates because his political team is setting impossible expectations for Romney to match. For the past week, everybody in the political world has been talking about debate expectations, and both campaigns' actions to lower expectations for their candidate while raising it for the other.

These expectations, as they pertain to the actual American voter, are completely meaningless. The game that they're playing relates to the media at large to influence the post debate coverage and the subsequent news cycles. But even then, I can't see how it affects anything but the barest of margins.

Some writers have already trotted out the "do debates matter?" argument because it appears that they don't. The reason why is obvious. People who watch the debates are already people who are extremely politically inclined and those who are politically inclined are just watching to reinforce their confirmation bias. Their votes are already, more or less, decided. Even the small pool of truly undecided voters are unlikely to swing greatly in either candidate's favor. So a debate can only influence the outcome of an election is if it's an extremely close election.

Polls suggest that President Obama is breaking away from Romney. As political partisans rekindle the flames of fanaticism with less than 6 weeks before Election Day, it seems like this election is Obama's to lose. And the debates aren't going to alter the course dramatically. But don't take my word for it. Intrade has Obama at over a 3 to 1 favorite to win the election. If you think Romney's debate performance will drastically alter the state of the race, the prices currently quoted will drop precipitously (and Romney's price will rise just as dramatically).

But here's the thing. Media spin counts for very little. The people who follow the political horse race are very few and they aren't going to change their votes based on how the political press spins each candidate's campaign. I've quoted something from Boss before in a blog post, but I feel obligated to trot it out again:
"What is this? A fucking children's crusade? This is a primary. Pri-mar-ry. We're talking about political obsessives. Medicators. Nothing to doers. Geriatrics. Who the fuck else cares about primaries?"
 Governor Mac Cullen - Boss, Season 1
Replace "primary" with "horse race political journalism" and you have exactly the same thing. These people aren't going to be swayed by spin, because the candidate they're backing is already tailored to align with their views. For example, urban districts are extremely likely to be represented by black and other minority politicians because that's where they are most likely to win. The fact that they ran for those particular seats is not an accident.

This is just another article where the media trumpets its own self importance. Whether they do it knowingly or not is another question. But sometimes you just have to end the charade: setting debate expectations means absolutely nothing.

The Distressing Math of Human Worth

A week ago, a 14 year old girl smothered her newborn infant son shortly after giving birth to him. The Polk County Sheriff's Office apprehended her and charged her with first degree murder and child abuse. Those are the facts.

There are two societal takeaways from this.

The first thought that immediately popped into my head was abortion. Had the girl simply had an abortion, this monstrous crime would have been averted and we never would have heard about it. At the same time, it's hard not to think that abortion and the event that transpired have essentially the same outcome: a nascent human life exterminated.

They also have the same motive as well. A potential mother decides, for one reason or other, that she can't have the child. She then remedies the problem by eliminating it. As far as the victim (for lack of a better term) goes, I have no clue whether embryos inside the womb can feel pain, but it's likely that the baby did, however brief it was.

This is why I struggle with abortion. The problem is compounded because I'm male, and therefore I haven't the slightest idea of what being pregnant is like and I don't truly know what women go through (emotionally, physically) when they're pregnant. But I do know that potential life gets snuffed out. And that's something that the pro-lifers have completely correct.

And it's something that should cause cognitive dissonance for many people who are pro-choice. I suspect that they also have softer views on other human rights issues. But this is the ultimate human rights issue, whether somebody has the right to terminate human life simply because they don't want to deal with it.

I am still pro-choice. But increasingly, I find the belief hard to hold. In our current society, where so many people agree that human life has intrinsic worth, many people who are pro-choice have no problem with the idea universal financial safety nets and health care, I can't see how they reconcile those views with their views on abortion.

From a societal standpoint, I propose the following: abortions are not allowed, but the mother has the right to decide whether she wants to claim the baby. If she chooses not to, after she gives birth, the mother forfeits her legal rights to the child and the child becomes a ward of the state, who is guaranteed room and board and a standard education until they are 18. After which they become adults and are therefore on their own.

If the mother becomes pregnant again and decides she doesn't want to keep the baby, she can still turn him/her over to the state, after which she must consent to voluntary sterilization. To help defray the cost to society, the mother has to pay a "birth excise" (not financially ruinous, but not insubstantial either) in full or in installments (with interest).

This is the most humane way to deal with the issue, in my opinion. The pro-life movement is correct that life is precious and it should not be ended simply because the mother decides it's in her best interest to do so. The pro-choice movement is correct that motherhood is a huge emotional and financial investment, and that the mother should not have to bear the burden of being a parent if they don't want to. The burden will be borne by society.


The second issue is that of human worth. As I said previously in this writing, this would have been a non-issue had the girl simply gotten an abortion. The fact that she immediately murdered her baby after he had been born is horrendous and despicable. But it still raises the specter of human worth. Consciously or not, we assign more value to human life based on who that life is. Factors include age, appearance, socioeconomic background, proximity, personal history, etc.

For example, take the unenviable task of choosing who gets a life saving organ transplant. Every year, tens of thousands of people die waiting to receive a life saving organ transplant. The decision on who gets what is determined by a hospital board. It's not hard to surmise the factors that go into their decision. Age, socioeconomic background, criminal history, family, and probability of success are the most important.

But that's not the only area where people determine the relative value of human life. We do it in our laws for human casualty and even quality of life measurements (government bureaucrats, for example, will calculate the value of clean air versus the cost of a polluting factory and decide whether it should lower emissions or should down completely). In the real world, there is no such thing as "every life is priceless". We have to put a price tag on life to function as a society.

Many people rail on and on about the perils of moral relativism, but we do it all the time. It's a fact that's implicit in our traffic, criminal, casualty, and tort laws. As a country, we need to admit that this stuff exists, because we can't have a productive conversation about effective public policy until that happens.

Thursday, September 27, 2012

The Middle Class is a Meaningless Term

Recently I was reading a forum thread in which a person rails against the reset of the estate (death) tax* as another way that the government is screwing over the middle class. It occurred to me that this particular person has no clue what the middle class is. And I can't really blame him. There is no concrete socioeconomic definition of the "middle class".

But even if the death tax resets to 55% on any amount over 1 million dollars within an estate, it still doesn't hit the middle class. Unless you define the middle class to include the top 10% of households by income. Take a look at the distribution of household income in the United States:

Source: Federal Reserve Survey of Consumer Finances, 2010
 As you can see, there's a pretty big disparity between the richest households and the poorest households in terms of annual income. But there's an even bigger disparity when you measure the richest and poorest households by wealth:

Source: Federal Reserve Survey of Consumer Finances, 2010
I've blogged multiple times about the importance of saving and why there's a huge wealth disparity. Put simply, most households don't save nearly as much money as they should. And most of their savings is in the form of home equity, which has low liquidity.

But let's not pretend that a household in the top 90 to 93% of society is in the middle class. They are far from it. And yet if you polled members in that household, they'd undoubtedly say they are middle class. Our image of the upper class is that of people who don't work, make millions off of passive income from their gigantic portfolio of securities, and own multiple homes in multiple countries. But there's a better term for those people than just "upper class": phenomenally wealthy.

It's time to get rid of the term "middle class" and get more accurate socioeconomic grouping terminology. Here's what I propose**:

1. The Unwell: This group is comprised of people who have no wealth and very little income of their own. They also do not have any meaningful support network (family and friends who can help them out). Because of their plight, it is virtually impossible for them to engage in society in any socially or economically productive way. Most people in this group find themselves here due to mental or physical illness that render them unable to function in society. They make up approximately one half of one percent of the population.

2. The Disenfranchised: This group is comprised of people who, by the unhappy circumstance of luck, find themselves living in extremely poor areas. Unemployment in this group is extremely high and the lack of good public infrastructure (good schools, good roads, safe housing and public spaces, etc) leaves them on the fringes of society without little or no access to the more prosperous areas of society. Most people in this group are in an ethnic minority. They make up approximately 15% of society.

3. The Working Poor: This group is comprised of people who have low paying jobs, low levels of education, and have very little saved up in terms of liquid wealth. Their wages allow them minimal disposable income and they cannot afford to take extended periods of time off work and have marginal access to anything other than core public infrastructure. They make up approximately 20% of society.

4. The Working Class (aka: the "middle" class): This group is comprised of people who have jobs that pay a wage where there is room for a "normal" amount of disposable income, most of which is promptly spent and not saved. They may or may not have gone to college, although most have not. They have access to just about every part of society and access to credit, which they will use to purchase real estate.

The vast majority of their wealth is their home equity. Most members in this group will retire with just enough to scrape by with a semi-comfortable retirement possible only because of their real estate wealth and the Federal transfer programs of Social Security and Medicare. Members in this class can quickly find themselves as members of the working poor should unfortunate events occur (such as a catastrophic physical accident, unplanned pregnancy, debilitating illness, etc). They make up approximately 40% of society.

5. The In Crowd (aka: the upper middle class): This group is comprised of people who enjoy the full benefits of modern society. Access to good schools, good communities and good parents allow them to attend and graduate college. Once they enter working life, they will quickly find career-track jobs (where their incomes will outpace inflation for many years and then level off at a high percentile bracket). They have large amounts of disposable income. Depending on their personal finances, they easily move one bracket up or down. They make up approximately 18% of society.

6. The Working Rich: This group is an extension of the In Crowd. After deciding to save a lot of their money, many people in this group can actually afford to take long periods of time off work or retire early. They just choose not to. Depending on where they are in their career, they may or may not derive most of their income from passive sources (as opposed to wages). They comprise about 5% of society.

7. The Leisure Class: This group is comprised of people who are often the direct descendants of the working rich. They are well educated but the jobs (if they choose to work) they obtain are often only possible to acquire due to their extraordinary connections and (inherited) wealth. They are spoiled, nasty people who have never worked a real day in their life. I hate these people. Sadly, they make up the rest of society.

There it is. Your new major socioeconomic groups. I'm glad we finally got rid of that politically correct catch-all "middle class" and substituted a hierarchy that makes sense and is depressingly accurate.

* I'm staunchly opposed to the estate tax. But I'm not going to pretend like it doesn't solely affect rich households. 

** This stuff may or may not be directly inspired if not outright copied from Paul Fussell's work

Wednesday, September 26, 2012

The Long View

If you were giving an economics speech in March of 2009 and said "the United States has the most dynamic and resilient economy in the world", people would have looked at you like you were crazy and then boo you off the stage. Ditto had you done that at any time in 1931 at the trough of the Depression.

And yet... the DJIA is now over double its value in March 2009 and less than 10 years after the worst economic crisis in the history of the country, the US would embark on a 20 year economic boom of unparalleled prosperity that lifted over a hundred million Americans into the middle class.

Unfortunately, the average American can't comprehend the slow moving nature of the economy. In the midst of our campaign season, both parties wait with bated breath over the release last month's jobs report on the first Friday of every month. Wall Street hangs onto Fed Chief Bernanke's every word to get an idea of what the target rate will be 6 months into the future. And everybody who was ever asked a question similar to "where do you see yourself in 5 years" is conditioned into thinking that 5 years is a long time in their working life.

Campaigns, markets, and working lives might be all short term, but the economy is a long game. It always has been, pithy quotes from Keynes notwithstanding. And this is the perennial problem that plagues the Federal government, because it poses a huge conflict of interest for policymakers.

Elected officials have to balance short term against the long term. And as long as political cycles are shorter than economic (and business) cycles, it will be impossible to reconcile the mismatch between feel good short term policies politicians implement and wise and prudent long term policies that politicians should implement.

The most recent economic crisis, for example, had two major policy thrusts. Both of which had short term benefits and (and as of yet, unknowable) long term consequences. The first was undertaken by the Federal Reserve, which, over the course of a year, injected over 1.6 trillion dollars into the monetary base (M0), an increase of a factor of 2.

Graph of St. Louis Adjusted Monetary Base
Source: Federal Reserve Bank of St. Louis
This will undoubtedly have serious long term consequences because there is a ton of money waiting to be converted into bank loans. M2, which is a measure of the velocity of money (the rate at which M0 changes hands) is still at a relatively tame 9 trillion. But given the amount of money we've poured into the monetary base, it has a potential of reaching to 27 trillion, which would send us into something that's pretty close to hyperinflation, which is something that we need to avoid at all cost. 

We haven't gotten to that point yet because banks are keeping most of their money at their accounts at the Fed. The short term solution to the financial crisis (give the banks a lot of money) staved off a revolution in the financial sector, but now we don't know what lies ahead.

The other major policy change was ARRA (aka the stimulus) and its effect on permanently boosting baseline Federal spending. In 2008, we spent 2.9 trillion dollars and in 2009, we spent 3.5 trillion dollars. The year after that we spent 3.5 trillion again. This year, we'll spend 3.8 trillion. It's as if we passed a stimulus package every year since 2009. 

The Federal government did that in the name of protecting local and state governments from mass layoffs (more severe the ones they suffered) and to pump money into poor and unemployed households to keep buying consumer goods. The result is an increase of 5.4 trillion dollars in the net Federal debt, an increase of 90% since the beginning of 2009.

That money has to get paid back eventually. But it seems like we keep pushing "eventually" further and further away. The Fed is doing its part by buying up long term Treasury debt at extremely low rates. At this point, I'm not sure if we'll ever see a robust "recovery" because any marked pickup in economic activity will force the Fed to hike interest rates, which will immediately make government borrowing much more expensive, which will cut government spending, and send us back into a recession.

The problem is we're fighting long term problems with short term solutions. The decline in real average and median household wealth was over 30 years in the making. Part of it came from companies eliminating their defined benefit pensions in favor of defined contribution retirement accounts. Retirement accounts that most Americans neglected to contribute to. Another part of it came from the stagnation of the workforce's skills in an increasingly globalized world, which happened because of problems in the secondary education system that were 40 years in the making.

Those problems, combined with the inability of the Federal government to reform its entitlements programs, have seriously eroded the country's fiscal position. The things that the government has done only address the short term issues by artificially boosting consumer spending. In medical terms, we're treating the symptoms and not curing the underlying disease. Politically speaking, we can't do it because the electorate is too focused on the short term. 

Think of it in terms of a human being. Nowadays, we don't expect our kids to contribute to the economy in any significant way until they've graduated with a bachelor's degree. Think about what that implies. That means from birth to age 22 (actually for the majority of graduates, it'll be age 23-25), they will essentially be mooching off the toil of the productive members of the economy. That is a hell of a long time to see the beginning of a payoff.

Why then, do we expect our political leaders to be able to turn around the economy within an election cycle?

Tuesday, September 25, 2012

The Chattering Class and Those Who Listen to Them

"What is this? A fucking children's crusade? This is a primary. Pri-mar-ry. We're talking about political obsessives. Medicators. Nothing to doers. Geriatrics. Who the fuck else cares about primaries?"
Governor Mac Cullen - Boss, Season 1

It's been less than a week since the infamous Romney fundraiser video surfaced. And it has sent the political world into a frenzy. And, for the briefest of moments, I was actually worried about the impact that the video would have on his electoral chances. The polls came out and the numbers haven't budged. If anything, they showed President Obama's convention bump fading. There was no signal. All noise. So much for that.

And then it reinforced my view that Americans aren't plugged in to this. The average American, were he/she forced to read this blog, they'd be snoozing within a minute because this stuff just doesn't interest them. Elections aren't about choosing political ideologies. And they aren't about voting for the best interests of the country. That stuff only matters to the people cited above.

The cold hard truth is that, as inelegantly as Mitt Romney put it, each side has about 45-47% of the vote essentially locked up, no matter what. And it's the 6-10% who are possibly undecided, who probably really make up their mind the day or the week they cast their vote, who determines which party will occupy the White House come January.

And the vast majority of the country isn't going to follow the daily horse race journalism. The 24/7 news cycle made it impossible for politicians to hide things. But it seems that unless it's a truly Big Deal (sex scandal) type affair, the news cycle is so ADHD that a serious gaffe (god, I hate that word) can erupt and blow over within the space of half a week.

The general public doesn't know about Politico, RCP, Intrade, TPM, or any of those sites that do nothing but cover the horse race. Each political convention will garner the ratings of a typical Monday Night Football game. The 3 debates will be watched by a total viewership that's 33% smaller than the Super Bowl. And half of the eligible population (about 33% bigger than the Super Bowl audience) will cast their vote on Election Day.

When things like weather, sports team records, ballot ordering can swing an election one way or the other, somehow I question why people like me spend an inordinate amount of time wondering how things will play out in the media.

That being said, I don't plan on making another (solely) political post until after the first debate. I'll stick to economic musings and Real Time counterpoints blog posts until then.

Saturday, September 22, 2012

Real Time With Bill Maher: Counterpoints and Retrospective (9/21/12)

Okay, so this episode really ground my gears, because it had everything that I hate: extremely talkative and overbearing left leaning talk show host (I'm reasonably confident Chris Mathews does 10 lines of coke before coming on the show), mealy mouthed and simpering left leaning journalist, and an inarticulate and unintelligent Republican.

But there are a few counterpoints to write, because it's important for people to get a sense of perspective that you can't get from watching the show live.

The Globalization Trope: Every time some pseudo-academic wants to sound intelligent and thoughtful when it comes to the decline of the middle class, they always talk about how globalization has disrupted and eliminated the traditional livelihoods of middle America. And as much as Democrats and their left leaning cohort love to accuse Republicans of pandering to ignorant fears of ordinary Americans on foreign people living in the country, they rely just as much on their ignorance when it comes to foreign people living out of the country.

I won't deny that globalization has disrupted many parts of the US economy. Economists have a term for this: creative destruction. Economic progress is always uneven and also contains hardships for certain areas of the economy. But the end result is a net plus which is why we call it progress.

Globalization's political problem is that the downsides are obvious and symbolically powerful. Images of shuttered factories and people losing their jobs is more moving than a t-shirt that's 50 cents cheaper than it would have been. Things like free trade have made goods a lot cheaper than they otherwise would have been, but it's hard for a consumer to spot a difference while the factory worker who lost their job definitely feels the difference.

Declining Real Incomes: Another talking point that Democrats (and, more recently under the Obama Administration, Republicans) love to trot out is the fact that, according to the Bureau of Economic Analysis, real household income in the United States has essentially been stagnant since about 1970.

There are a few things wrong with that analysis. If you go purely by CPI and "real" wage growth over that time period, then it's correct. But the problem with defining "real" income growth is the gigantic leap in quality of the goods that people buy. The average car built today is an order of magnitude more safer, luxurious, and efficient than a car built in the 70s. Health care is of vastly higher quality today than it was 40 years ago. And we can buy things now that couldn't be had at any price back then. Like cell phones.

Gordon Gekko: Financier and all around baller

That phone is the Motorola DynaTAC, which was the bleeding edge gotta-have-it tech item of the 80s. It first came out in 1983, weighed 3 pounds, couldn't store phone numbers, and cost 4000 dollars to buy. In 1983. Something like the iPhone 5 or the Galaxy S3 was beyond the imagination of the most forward thinking technological visionary at that time.

People today live better, more prosperous lives than at any time in the past. Just because a gallon of gasoline was cheaper in "real" terms 40 years ago doesn't mean as much to the average American household as things like the widespread availability of smartphones, personal computers, computerized tomography, satellite navigation, stainless steel appliances, granite countertops, and boner pills.

It Could Have Been Worse™: One thing that constantly annoys me about the Democratic defense of President Obama is the counterfactual "it could have been worse" argument. Yes, things were bad. Yes, things are now much better. But credit primarily goes to Fed Chief Bernanke and then Treasury Secretary Hank Paulson for stabilizing the financial sector and restoring confidence in the markets, publicly assuring us that the world was not, in fact, going to end.

The absolute bottom of the recession was in mid March, less than 2 months after Obama was inaugurated. And less than 1 month after ARRA (the stimulus program) was signed into law, the bulk of which would be spent in late 2009 and early 2010. The measures taken in the waning hours of the Bush Administration prevented collapse. The stimulus gave us a lackluster recovery (which has since petered out, resulting in 2 additional rounds of large scale quantitative easing by the Federal Reserve), nothing more.

And that doesn't even begin to take in account the colossal mismanagement of expectations by the Obama Administration, who promised that without ARRA, unemployment go above 8%. Well it hit 10% in 2009 and it hasn't been below 8% since Obama was inaugurated.

If supporters of the President want to claim that it could have been worse, then the Administration's detractors can claim that it could have been better. And history is on the side of the detractors.

The Drug War: Don't look to me to defend this morally bankrupt policy. I have no problem with the decriminalization and legalization of any and all substances currently prohibited by the government. Just don't ask me to pay for the junkies' health bills. Heavy excise taxes should be imposed on all the drugs that we legalize in order to pay for their inevitable cost to society, like we currently do for cigarettes and (to a lesser extent) alcohol.

Rana Foroohar: Is it just me, or did it look like she wanted to fuck Chris Matthews every time he opened his mouth? Actually, I think she just has one of those faces.

Thursday, September 20, 2012

On the GDP Gap and the New Normal

Yesterday, a reader asked why I thought QE3 wouldn't do much to spur the economy (specifically consumer demand). I answered that investors would lift prices on commodities (as they move to protect themselves from prospective inflation), which would ultimately raise prices on consumers, who can't react as quickly as investors can from changes in monetary policy. I want to expand upon that, because he also brought up a concept called GDP (output) gap, and it's something that really bothers me.

GDP gap is the difference between actual output (what we produce in a given amount of time) and what we can potentially produce in that same time frame. In normal times,GDP growth is considered synonymous with capital/wealth growth because there is no perceived gap in actual GDP and potential GDP. After a recession (when output contracts), immediate GDP growth is considered "catching up" to what we were previously making. Once we bridge the gap, any new growth is assumed to be more wealth creation.

The only problem is GDP gap is a terrible concept. It can't be accurately measured. Even in the best of times, there is still a theoretical GDP gap because, collectively, we could all work more hours or a greater percentage of the population could be working or both. The gap is measured by taking labor metrics (workforce participation, labor utilization, average hours worked) from a time that is considered healthy and comparing it to a time when the economy is considered to be performing poorly.

People can always work more hours. More people can join the workforce. There is always more work to be done. When you consider it from that standpoint, output gap is essentially meaningless because it doesn't measure anything that we didn't already measure before.

So how does that relate to the current state of affairs? Back in 2008, GDP stood somewhere around the range of 14.4 trillion dollars. By the end of this year, it will be around 15.6. The reason why some economists still consider our economy to be in the midst of a GDP gap is because all that growth in GDP occurred during a time when employers were slashing payrolls and making the remaining employees work harder for longer periods of time.

In other words, we increased GDP by increasing productivity faster than we decreased employment. The thinking is that we'll get back to the good times when everybody rejoins the work force at a level before September 2008 while keeping as much of the productivity gains as possible.

Other economists say "hold up a second, the labor statistics we see now seem to indicate that this is the new normal". Which is to say we can't go back to the employment and productivity numbers we saw in early 2008 (or, for that matter, 1999) because the economy has been altered permanently in some way. The old cliche rears its ugly head: the truth probably lies somewhere in between.

The reason why I say looser monetary policy (QE3) won't get us closer to 2008 is because monetary policy isn't the right tool to tackle the problems that our economy is facing. The three most consequential phenomena that occurred between 1980 and now are the diverging real savings rates between the top 10% of households and the rest of society, increasing socioeconomic stratification among emerging adults (teenagers who are past high school and twenty somethings), and the yawning gap between what most kids learn in secondary education (essentially nothing) and what is required in the modern workplace (which is actually a lot different from what you probably think it is).

Fiddling with the money supply isn't going to change any of those factors except exacerbate the first one. When the Federal Reserve buys Treasurys (real word, honest) and injects money into the financial system, the first group to be affected by it are the primary dealers (aka the large banks who make the Treasury market). The second group that it affects are the participants in the secondary Treasury market (funds of all various colors and large non-financial companies). Everybody else (small businesses and employees) feel the effects downstream, when it's too late for them to take any meaningful action.

If we've learned anything in the past, it's that Wall Street will make its money whether interest rates are low or high. They pay much more attention to monetary policy. It's their job. Everybody else learns what happened the next time they go take out a loan or fill up their car. And that's why I think QE3's effect on the broader economy is going to be minimal, at best.

Bernanke has admitted as much. But the reason why he feels compelled to act is because the Federal government won't. Policy making essentially grinds to a halt during the campaign season. And there is a lot of economic uncertainty looming (1 year away from the full implementation of the PPACA with the rules yet to be fully determined, the tax rate resets, sequestration) that is a direct result of both Congress and the President's unwillingness to act.

Wednesday, September 19, 2012

On Romney's Remarks

Well, the political news cycle really jumped on Mitt's remarks at a private fundraiser. If you are the type of person who reads political blogs, you've probably already got to the soundbite friendly bits. Here's the full video:





If it weren't for the whole 47% thing, these videos would be unremarkable. They show a very perceptive, intelligent candidate for President fielding questions about political strategy, the economy, and foreign policy from very rich donors. But the media and the partisans aren't content with that. The 47% remark was what got Romney into hot water yesterday.

Already, many politicos are already declaring that this was the day that Romney sunk his candidacy. And if he does lose the election, journalists and politicos will mark this event as the decline and fall of the Romney campaign, along with such gems like Bush 41's tax pledge, the Dukakis tank ad, and Romney's father's own "brainwash" quote.

Well, it certainly isn't going to wind up as a net plus for Romney. But I don't think his goose is cooked just yet. While the video is going to be replayed endlessly throughout the remainder of the campaign, there's a few things to consider:

Voters are not intelligent:  There will be plenty of people who look at that video and think "you know what? That sounds about right. About half of this country is mooching off the government teat". A significant minority within that group is actually going to be part of the 47% that Romney was referring to that don't pay Federal income taxes.

The thinking goes something along the lines of "hmm, I wouldn't have put it like that, but I see where he's going with this". Will it cost him some votes? Definitely. But the amount isn't going to be nearly as large as people think. Why?

Voters don't vote: Romney is right in another respect. The President has a floor of anywhere from 47 to 49 percent of the electorate who will pull the lever for him come election day. Romney has a floor of approximately 45 to 47%, which is why his path to victory was always harder than President Obama's.

If you actually saw the bit after that controversial bit, Romney talks about the 5-8% of undecided voters that he needs to win the election. So in order for this brouhaha to affect him electorally, the following has to happen:

1. The undecided voters watch/read/hear the remarks made by Romney
2. They are repulsed enough by them to not vote for Romney
3. The undecided voters reside in OH/VA/NC/FL/WI/NV/CO/IA/NH
4. They decide to vote

So a lot of things actually have to fall into place for something like that to happen. It'll be impossible to say what will drive the vote, but I have a feeling it'll be something along the lines of...

The economy: And there are significant headwinds on the economic front. Although the Fed has announced QE3, it is unlikely it'll improve economic prospects. Banks and corporations aren't lacking cash. They're lacking demand, which is unlikely to improve anytime soon.
But one thing an easy money policy does is promote price spikes in commodities like oil. Although it remains to be seen whether there is any significant inflationary pressures caused by QE3, it is more likely to occur than not. Higher gas and food prices can be felt within weeks and that typically doesn't bode well for the incumbent.

The debates: Everything gets thrown into much sharper focus in September and especially October. Why? Because of the debates. About half of all households will tune in at least some portion during the debates. And many will watch the whole way through.

Considering that the airwaves will be saturated in political ads, most voters are going to tune them out. What they want to do is see their guy go up against the opponent. The debates are also good for the challenger because it puts him on equal setting with the President, which has a profound psychological impact on the electorate.

I'm spinning the best out of a bad situation. I think Romney really screwed the pooch on this one. But I also don't think it's his death knell. The reality is it is extraordinarily difficult to unseat an incumbent and I was going in expecting a Romney loss. But I'm excited to watch the debates. I don't think Romney is going to floor Obama, but I think he'll surprise a lot of people.

Saturday, September 15, 2012

Real Time With Bill Maher: Retrospective (9/14/12)

We had a good show tonight, folks. All of the guests were well spoken, intelligent, and there was a lot more reasonable push and pull. That being said, there are a few points on the show that I'd like to flesh out, which is why I do this segment. So let's get to it:

Voter suppression: The supposed strawman that Maher set up "You need an ID to buy alcohol, why not vote?" was actually a decent argument. Because even if voter fraud isn't an issue (and I'll be the first to admit that the incidence rates are extraordinarily low and have zero chance of affecting a national election), you can't just let anybody show up to the polls and take their word on good faith that they are eligible to vote.

If you've ever worked retail at a place that sells alcohol, your company has policies in place that basically say "unless the dude looks like he could be your grandparent, check his ID before you sell him alcohol". The reason why is because the government will contract secret shoppers to buy alcohol and see if they can get away with it without having to show ID. That store or company then gets slapped with a burdensome fine.

So why is the government imposing a different standard on voting? Even though John Legend is right, and that individual voter fraud has zero material benefit for the voter, most people consider voting more important than buying alcohol. It makes sense that you should be able to prove you're eligible to vote before you vote.

That being said, I will freely admit that Republicans probably are trying to suppress the vote. But considering the fact that the voter ID stipulations are no more burdensome than the actual requirements to register to vote, I fail to see how this is a huge deal.

The Chicago Teachers Union Strike: I was heartened by the fact that John Legend adopted many of arguments that school reformers like Michelle Rhee, Joel Klein, Davis Guggenheim, etc that this is different than the Wisconsin controversy (which was more of a budget issue than an education issue, considering Wisconsin's students perform much better than students trapped in the dropout factory that is Chicago Public Schools).

I think Maher has spent a little too much time in ultra left-leaning circles and bought into the PC hype about schools. Yes, of course parents are the biggest determinant of a child's academic success. But that doesn't mean that teachers have no effect either. And the extraordinary cost that the public pays for education isn't worth it in many respects, especially if you really believe that it's all about the parents and not about the teachers, or, as Legend said, you might as well call them babysitters and not teachers.

Principals need more power in determining who gets to teacher in their schools. And teachers need to be able to be fired easily when it's clear that they're not performing on the job or have extreme, criminal behavioral issues.

Arguing About Polling Numbers: To set the record straight, the moving average for the Obama-Romney matchup, provided by Real Clear Politics, is (at the time of this writing) 3.1%, with only Rasmussen showing Romney with a lead.

Opinions and polls about the candidates harden during the debates in most elections, because that's when everybody is paying attention. Anything you see now is really noise considering the state of electoral politics (and our economic situation) today.

Nate Silver (of the NYTimes' excellent electoral mathematical analysis blog 538) has written many times on the "House Effect" of polls. It's probably true that Rasmussen is overstating the amount of support for Romney, but as John (the Republican talking head on the show, not John Legend) pointed out, there's still a lot of time left in the election, and a 3.1% national lead is not something to crow about 2 months before election day with unemployment over 8% with a stagnant labor market.

Which brings us to Maher's outrageous point....

Maher: The only way for Republicans to win, if they win, is by cheating: This kind of incendiary claim is made when the bravado doesn't match their actual confidence level. I remember in 2008 when we were running up to election day where Maher made a similar claim to the effect of: "If Obama loses, it's because America is still secretly racist".

But as far as things go, if the race remains static until election day, President Obama will win reelection in a not-that-close final result. There are two potential gamechangers: the debates and any sudden disruption in the economy. For Mitt Romney to win, he needs the economy to be about where it is right now and then smoke Obama in the debates, or he needs for the economy to begin to nosedive and have a decent performance in the debates. That's the only way for the Republican candidate to win this election.

Maher: Bush never paid for anything and Republicans never called him out on it: The libertarian wing did call him out on it, but it never gained traction under the Bush Administration because the largest deficit under Bush was fiscal 2008 with a 459 billion dollar deficit at 3.2% of GDP. The public debt (different from the total national debt, but the more important figure) was just 6.369 trillion dollars at 44.8% of GDP. That is a very healthy debt picture for the United States.

Things have changed during the Obama Administration. The highest deficit ever recorded under a full year of President Obama was 1.3 trillion dollars in fiscal 2010 at 9.9% of the GDP. Our current public debt to GDP ratio is 72.4% (at the time of this writing), which isn't disastrous (Greece at the time of its fiscal collapse was over 140%), but it's still much worse than the worst year under Bush.

Democrats love to pounce on the "Reagan proved that deficits don't matter" line uttered by Dick Cheney because they use it as political cover for the deficits that were incurred under the Obama Administration. But the fiscal picture when Reagan was in charge was much better, and the economy was growing at an extraordinary clip. The increase in debt doesn't matter when the economy grows at a faster rate. If I make 100k per year and suddenly I make 120k while my debt grows from 50k to 55k, I'm still better off financially even though I took on more debt.

You can't look back and apply the standards of yesterday to today because everything is different. No decision or action is ever taken in a vacuum, which is why it's impossible to prove causality in public policy. But at the same time, let's not be politically opportunistic when it comes to real issues. That might be impossible for a politician, but it's less impossible for a political pundit.

Chris Hayes: And here's why. Chris Hayes at least admitted that he thinks taxes have to go up on everybody (not just the rich). You will never see a Federally elected Democrat admit to that during this election cycle.

Overall, he played the traditional very left-leaning pundit, but he wasn't annoyingly so. We need more Chris Hayes on the show and less Chris Matthews and Rachel Maddows.

Zanny Minton Beddoes: I really wish she answered whether she thought the current level of regulation was too much for businesses instead of just saying that there is the "general perception" of it among businesses themselves. She touched on the issue further in Overtime but still never gave her opinion. I would have paid money for her to publicly state her honest opinion.

Overall, an intelligent, well spoken, polite centrist. I would expect nothing less from an editor at the Economist.

John Feehery: I think this guy is suffering from Mitt Romney syndrome. I know a lot of Republicans privately cringe at the rampant anti-intellectualism and overt and subtle racism of certain elements of the Republican Party but feel compelled to finesse the issue because, as Rick Santorum put it, politics is a team sport.

Overall, I think he did a good job presenting the Republican point of view on things. The fact that it's a left-leaning crowd just didn't give the impression (if you were a Democrat).

John Legend: Good interview guest. The guy is very well spoken, intelligent, and isn't a slave to the Democratic party line on education, which is great. I think education is going to be the next real battleground for the two parties, and I truly believe that Republicans are on the right side of this particular issue. But it might take a Nixonian pivot from guys like Legend to help make it so.

Bob Costas: I remember him on the show a couple years back and I was surprised at how a sports journalist could be so intelligent and thoughtful on issues that had nothing to do with sports. Costas is the rare breed of sports journalist who appreciates sports, but also appreciates everything else and is disciplined enough to apply the same rigor to every subject he talks about. The world needs more Bob Costases.

Thursday, September 13, 2012

My Republican Friend

Most of my friends are Democratic leaning. The vast majority will almost certainly vote for President Obama in the fall. And, as a rule, they despise most Republicans, the Republican Party, and what the Republican Party supposedly stands for.

I have a friend who works for the City of Atlanta. He once invited me to a cocktail hour gathering and introduced me as his "Republican friend". This has not exactly been a new experience for me. For years I've been that "Republican friend" to a lot of people. Apparently we're quite a minority among the upper middle class twenty something demographic.

The funny thing is, I'm not even a Republican. I've never registered to vote as a Republican. I've never even registered to vote. I just like to follow politics and am interested in public policy. I'm pretty unusual in that respect. It had nothing to do with my major in college (computer science) and isn't relevant to my job now (software developer). It's just an interest of mine that I follow very closely.

And the set of views I have toward politics and public policy is, for the most part, very libertarian. Many people like to proclaim that they are "fiscally conservative, socially liberal" but they either have no clue what that means or are lying to themselves. I don't. That's exactly what I am. I actually believe in small government.

That means I think we should end the War on Drugs and legalize marijuana, cocaine, and other prohibited substances. I also don't have a problem with gays getting married (actually I think the government should get out of the marriage business altogether). Nor am I particularly fazed if a woman decides to get an abortion (preferably non late-term). These kind of issues would normally put me squarely in the Democratic Party.

But I also favor lower taxes and flattening the tax code. I think corporations get a bad rap and that regulations on them should be a lot lighter. I also believe that Citizens United was the right call and that we have a Constitutionally protected individual right to own a firearm. I also think we should gradually phase out Social Security and Medicare, and drastically reduce the Federal government's role in welfare (which should be primarily a local issue).

This is why most of my Democratic leaning friends call me their "Republican friend". And it's quite revealing, in a lot of ways. Because you'll have a lot of people who proclaim (and many of my friends have done so) that things like gay rights, women's rights, and drug legalization are more important to them than things like taxes and regulation. But when they know all of my views, they still view me as more Republican than Democratic. Which means that they subconsciously believe that things like the economy and an individual's economic situation are more important than an individual's social and civic freedoms. Either that, or they say it so that they are politically correct but when the chips are down, they know what's really important.

So they'll actually listen to what I have to say. And when I make a good point, they can concede it because most of the times because when I point it out, it's not quite the same if some archetypal Republican who's either a racist redneck or an avaricious, rich WASP. It's not quite Nixon to China but it's a similar dynamic.


Anyways, I don't have a real point to this post. It's just something I thought I'd share. After all, that's why you're reading this blog, right?

Wednesday, September 12, 2012

Two Ways to Spin Unemployment

Before I begin, let it be known that all statistics have been taken from the Bureau of Labor Statistics and the Bureau of Economic Analysis.

The latest jobs report came out last Friday and the numbers are pretty middling. But the headline numbers (number of jobs added, unemployment rate) aren't what concern me. What concerns me is the mathematical link between the employed and the unemployed.

The total number of adults in this country is about 243 million people. The total number of adults in this country who are part of the workforce (either employed or seeking work) is about 154 million people, or 63.5% of the adult population. Of that 154 million, 8.1% are unemployed. The rest are employed.

Going by those statistics alone, that means there are 12.3 employed adults for every unemployed adult. That doesn't seem like too bad of a statistic. But of course, that's not the whole story. If you rewind the clock back to January of 2008, the workforce was 66.2% of the adult population. The reason why it was higher back then was because more adults were looking for work. In a bad economy, if you give up looking for a job, the government doesn't count you as unemployed. They count you as out of the labor force (it's hard to see the difference, I know).

If you add all the millions of Americans who decided to leave (or not to join) the labor force and the new millions of Americans who just turned into adults who can't find a job, the "normalized" unemployment rate, going by early 2008 standards, is 12.1%. With that new number, there are now 8.3 working adults for every unemployed adult. Now things look decidedly more grim.

But wait, there's more. Because there's more than one way to count "employment" and its counterpart "unemployment", we have a new statistic to consider: the number of part time workers (who are considered "employed") that want to work full time but can't because they are unable to find full time work. They number 8 million strong, or roughly 5.6% of the employed population. So if we only consider full time workers, the full time unemployment rate (the BLS actually measures this, it's called the U-6 unemployment rate) judged by early 2008 standards is roughly 17%.

That means there are 5.9 full time workers for every unemployed person out there. Now things look downright bad. This illustrates how you can manipulate numbers to say what you want them to say, as long as you qualify your assumptions on how terms are defined. So let's define the first spin:
The "true" unemployment rate is above 15% of the workforce while the full time employment rate is just 55% of the adult population. This represents a disaster for the country economically, culturally, and socially.

Now some new statistics are needed for my second spin. So let's get to it.

US GDP at the end of 2008: 14.2 trillion
US GDP at the beginning of July 2012: 15.6 trillion

So here's spin number 2: 
In January of 2008, the employed population had 4 million more people than what it is now, and yet our real GDP today is 9.9% greater. What that means is we built 10% more stuff with 2.7% less workers. In economic terms, the economy has never been better. And if we are finally able to add new workers at the same employment rate back in January of 2008, our economy will absolutely soar. 

Together, both spins represent the most pessimistic and the most optimistic view of the economy. This is why ordinary people don't trust statistics. An intelligent person can manipulate the data (or add in new data sets to create a new analysis) to say whatever he or she wants to say.

Tuesday, September 11, 2012

The Chicago Public Schools Strike

There is no right to strike against the public safety by anybody, anywhere, anytime. 
- Calvin Coolidge

 Yesterday, Chicago Public Schools teachers went on strike after negotiations with the City of Chicago collapsed over a new collective bargaining agreement. Here are some facts:

From 2008-2009, the average salary of a CPS teacher was 74389 dollars. For CPS administrators, it was 120659 dollars.


In 2012, the operational budget for Chicago Public Schools was 5.1 billion dollars. 2.71 billion dollars went to CPS employee salaries. Another 870 million dollars went towards CPS employee benefits (roughly 23000 per capita).


In 2012, the City of Chicago's operational budget (which does not include Chicago Public Schools) was 3.1 billion dollars, which is 480 million dollars less than the salaries and benefits of CPS employees.


The graduation rate for high school students within CPS schools is projected to be 60.6%. The nationwide average in 2009 (the latest for which information is available) was 75.5%.


There's not much more to say. CPS teachers are the highest paid in the nation (or the 2nd highest, if you believe the Chicago Teachers Union) and produce some of the worst results for kids. Their strike is not only cowardly, but a public menace.

For the sake of the students, I hope Mayor Emanuel resolves this strike as soon as possible. For the sake of the city, I hope the Chicago Teachers Union is dissolved while every public school teacher in Chicago can be directly accountable to the mayor's office.

Saturday, September 8, 2012

Real Time With Bill Maher: Counterpoints (9/7/12)

Welcome to another edition of counterpoints. This time, the show is gonna be Real Time With Bill Maher. And despite the fact that he isn't that great of a comedian and isn't nearly as knowledgeable as he secretly thinks he is, it's still the best political discourse show on TV right now.

But many times, he simply has a bad argument and many times the Republicans and libertarians on his show don't do a good job of articulating their own arguments. That's where I come in. So without further ado...

1. Citizens United vs FEC didn't kill democracy as we know it.

It's the unpopular decision that both Republican and Democratic strategists like to (publicly) denounce. Supposedly by uncapping the amount of money that individuals (or groups of individuals) can spend influencing a Federal election, we've effectively sold our government to the highest bidder.

Except we haven't. In 2010, Meg Whitman spent 180 million dollars, 6 times as much as Jerry Brown did, to try and win the California gubernatorial election. She lost. Linda McMahon spent 50 million dollars trying to win a Senate seat in Connecticut and outspent her Democratic opponent over 15:1 and still lost. Money doesn't buy elections. It simply gives challengers a more effective platform to communicate to voters.

If the voters don't like what the challenger has to say, they won't vote for them. Votes determine elections, not money. The single greatest determining factor in an election is usually incumbency. The person in office wins reelection the vast majority of the time, at every government level.

Finally, let's look at how much additional money is being spent. Republicans and Democrats are projected to spend 5.8 billion dollars this election cycle. In 2008, they spent 5.3 billion. That's an increase of less than 10%.

So it doesn't seem like big business is flexing their muscle this election cycle. And there's a good reason for that. Corporate donations to election campaigns have very little ROI. Businesses spend more time and money lobbying elected officials (not politicians seeking election) because they are already in office and in a position to benefit a business.

Plus they also work the bureaucracy. Oftentimes, it doesn't matter who's in elected office. The (unelected) regulators overseeing the private sector usually matter a lot more to a business's day-to-day affairs than an elected politician. So when a company lobbies a bureaucrat, regulatory capture happens.

Simply put, Citizens United doesn't change a single thing in American politics. It's wrong for people to try and argue that it does.

2. Katrina van Heuvel is an annoying, sycophantic blowhard who is the perfect example of what is wrong with the American intelligentsia.

There was a moment on the show where one of the guest panelists, Katrina van Heuvel, was trying to burnish her "liberal" credentials by observing how "pale and old" the RNC crowd was. It was essentially left-leaning code for "look at how white, angry, and old these people are in the Republican Party!"

The irony is that she is an old white person herself. As are most of the prominent politicians in the Democratic Party. And it's classic white guilt at its finest. In academia, journalism, and media, the best way to "prove" that you are a progressive Democrat is by saying "I am white, privileged and not only do I recognize that, but I (publicly) reject that privilege".

Because academia, journalism, and media is overwhelmingly white. And most of them are Democrats in their political ideology. And it's no hard thing for them to say that they recognize and want to repair the inequities in life (achievement, education, and socioeconomic gap between whites and the rest of the population) because they already occupy the top of the socioeconomic stratosphere.

Okay, this is kinda going off the rails here. I'm going to complete this thought with a much longer, dedicated blog post. But please bear in mind that Katrina van Heuvel is a terrible, hypocritical person.

3. David Simon is right in that our problems are rooted in things set in motion decades ago, but he's wrong on what we need to do to fix those problems.

Ultimately, the President alone has very little power to shape the economy. And while he's right that it's unrealistic to expect a much improved economic picture in just 4 years (when things in the economy often take decades to fully develop), it's amazing that he doesn't realize how impressive business has been in developing this country.

Globalization is a good thing. So is free trade. And the decline of labor unions (after most of their original objectives have been enshrined in culture and codified into law). The society we have now is much more prosperous and tolerant than anything we had in the 20th century.

Okay, this is something else that needs to have its own dedicated blog post. The ideas I'm trying to communicate can't be adequately expressed in a few measly paragraphs.

4. Democrats are as bad as Republicans.

Bill Maher wanted examples? How about the Joe Soptic ad where he (and the ad's creators) essentially blame Mitt Romney for killing his wife? Or their own gleeful and willful misrepresentations of Romney's speeches ("I like being able to fire people"). Or how about the ad where a Paul Ryan lookalike shoves granny off a cliff (seriously, that's a real ad)?

Republicans and Democrats both do despicable things to try and win elections. And it's because voters are dumb. It's that simple. And the only reason why Bill Maher can't recognize it is because he suffers from a massive case of confirmation bias.

A Quick Hit on Real Time With Bill Maher (9/7/12)

A full write up will happen sometime later today (after I sleep and wake up), but for now I just want to say that Christine O'Donnell is either a moron or public speaking causes her to say a bunch of stupid things she wouldn't normally say. I had my suspicions before, but now they've been confirmed. In her interview with Bill Maher before the panel discussion part of the show, she said something to the effect of: "For every job gained we've lost four".

Bill Maher basically said "really? I don't believe you" and then she went on to say how the jobs created aren't real and that the latest jobs report (released the same day by the BLS) prove that we're actually losing jobs.

This is the perfect example of a politician who hasn't got a clue on what they're talking about. She just got briefed on a couple talking points that she doesn't really understand, and it just shows completely and utterly.

What Christine tried (and failed) to say is this: For every private sector job we gained in August, four people exited the work force. The reason why the unemployment rate went down last month was because more people exited the workforce than entered it. When the unemployment rate goes down, it either means people are getting jobs or people are getting so discouraged about finding a job that they stop looking altogether. The unemployment rate inched down because of the latter and not the former.

In a country of 310 million people, our total employment rate is 58.3% (58.3% of all adults are employed). Our population grows at around 1.1% per year, so in a full year, we can expect 3.41 million more people to exist within these borders. 85% of the country is 18+ in age, so that means we can expect about 2.9 million more adults to live in this country by the end of the year.

2.9 million at 58.3% is 1.69 million. Spread that out amongst 12 months and that means the economy needs to add 140,000 jobs per month just to keep up with population growth at current labor force participation rates. Since we only added 96,000 jobs last month, but the unemployment rate down, that meant just under 400,000 people left the work force last month as well, which drove the unemployment rate (which only counts people who are actively looking for work) down .2% to 8.1%.

Later on in the show, Maher and that insufferable Katrina van Heuvel were going on and on about how awesome it was when Bill Clinton said that Republicans don't understand basic arithmetic. I'm starting to get the feeling that they were right.

Tuesday, September 4, 2012

The Medicare Cuts in the PPACA

Lately, Republicans have been decrying the 716 billion dollars of spending cuts in Medicare. Politifact rates that claim as "Mostly False". And it's a terrific example of political bias. You can actually see the blatant contradictions within the actual "refutation":

Ryan’s comments are highly misleading. Neither Obama nor his health care law literally cut funding from the Medicare program’s budget. Still, the number has a slight basis in fact.

The health care law instituted a number of changes to try to bring down future health care costs in the program. The total anticipated savings comes to $716 billion over the next 10 years, as determined by the nonpartisan Congressional Budget Office.

We should note that both parties agree Medicare spending is increasing too fast as baby boomers retire and medical costs increase. The government needs to find savings so those costs don’t overwhelm the federal budget in the future.

So, yes, Obama’s law did find $716 billion in spending reductions. They were mainly aimed at insurance companies and hospitals, not beneficiaries. The law made significant reductions to Medicare Advantage, a subset of Medicare plans run by private insurers. Medicare Advantage was started under President George W. Bush, and the idea was that competition among the private insurers would reduce costs. But the plans have actually cost the government more than traditional Medicare. The health care law scales back the payments to private insurers.
If you read the entire article, the comments they are "fact checking" don't contain "spending cuts" or "cut funding". That's their interpretation. And yet, three paragraphs later, they admit that there were "spending reductions".

The issue revolves around Federal accounting practices. Because many Federal programs have plans that span years (even decades), their budgets are more or less on autopilot. So for certain programs (like Medicare), the Federal government already knows what it's going to spend next year. And it'll be more than what it spends this year. In nominal terms, Medicare spending will grow next year.

A spending cut in this circumstance can then be defined as a reduction in future spending. The reason why Politifact is saying Ryan's comment is false is because Medicare spending still grows. It just doesn't grow as much as it would have grown without the law. Under CBO scoring rules, Politifact is actually incorrect.

What's even worse is that they justify those "spending reductions" as things that don't matter to beneficiaries on Medicare, since those 716 billion dollars in "spending reductions" raid money mostly from Medicare Part A (hospital trust fund) and Part C (Medicare advantage).

Reducing payments to hospitals and insurers will directly hurt beneficiaries. Think about what they are saying: "Reductions in payments to insurers and hospitals will not harm beneficiaries on Medicare".

Apparently they think that hospitals and insurers are making so much money on Medicare that they'll be able to take less in payments over time. The actual answer is they'll just drop Medicare patients.

Because Medicare has strict payouts for services to physicians and hospitals, if they reduce those payouts (due to health cost inflation), it will force more independent practices and hospitals to stop accepting Medicare patients. If that doesn't hurt beneficiaries, I don't know what does.

A Heart Broken

My alma mater, Georgia Tech, just suffered a heartbreaking defeat. Snatching defeat from the jaws of victory has never been easy to stomach, so I'm going to postpone today's writing to the afternoon instead of midnight.

Sunday, September 2, 2012

The Newsroom Retrospective

The first season of The Newsroom is over. HBO, being who they are, immediately greenlighted a second season after the premiere of the first episode, so we will get a second season. So let's begin with what season 1 got wrong.

The focus on the TEA Party movement: The news media skews Democratic. But Sorkin's Will McAvoy constantly reminds his colleagues, News Night's viewers, and us that he's a Republican. But not those crazy TEA movement American Taliban. An old school Republican. But nary a Democrat is mentioned in The Newsroom except for President Obama, and only in passing.

If Sorkin wants to maintain the fiction that McAvoy is indeed a Republican, he should at least address the White House and the Senate (both controlled by the Democrats) and criticize them with at least a tenth of the rancor he had for the TEA movement.

Too many characters:  Will, Mckenzie, the old news chief guy (forgot his name, too lazy to look it up), Neal, Jim, Maggie, Maggie's roommate, Don, Sloan, Leona Lansing, Leona Lansing's obnoxious son, Will's shrink, Will's bodyguard, tabloid writer chick, NSA guy, the black guy and blonde girl that also work in the Newsroom.

All of these characters had multiple lines in multiple episodes. And it looks like they're adding that clueless blonde "sorority girl" Camelot kid to replace nutty NSA guy who offed himself. There are too many characters and too many relationships (romantic, platonic, and professional) to keep track of. The narrative keeps getting bogged down.

That being said, they still got some things right:

Will McAvoy: He's simply an entertaining and compelling protagonist. The Newsroom is at its best when he's on the screen.

The Writing: Going into the show, we all knew it would contain Sorkin's signature fast paced manic dialogue. While it can be distracting and excessive at times, it's still a net positive.

The Political Slant: If you're a Democrat. I'm betting most subscribers to HBO are. So if they have to be preachy, it's kinda obvious why they'd err on the Democratic side.

I'm looking forward to season 2. And, to be perfectly honest, if they just retread most of the narrative style of season 1, I'll still be happy to watch it because it's an entertaining middlebrow show. That being said, if it could cut down on what made season 1 less than awesome, I wouldn't complain.