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Yglesias

Balance Sheet Recessions

Mark Thoma writes that we need to get better at responding to balance sheet recessions:

When a balance sheet recession hits, one of the keys to a quick recovery is to use the federal government’s balance sheet as a means of offsetting the deterioration in the private sector’s financial position. But we shouldn’t just focus on banks. Household balance sheet problems are every bit as severe, and in total every bit as systemically important as the balance sheet problems of banks. We’ll recover faster from balance sheet recessions if we pay attention to all private sector balance sheets instead of focusing mainly on the problems of banks.

The perception that the government bailed out undeserving wealthy bankers while leaving households to fend for themselves is a big part of the backlash against the policies put into place to help with the recession. That perception is correct, for the most part, and it will stand in the way of repeating this policy the next time there is a financial collapse. When the next balance sheet recession hits, and another one will hit no matter how hard we try to avoid it, we need to do a better job of helping households. Not only is this good economics – we will recover faster with this policy – the politics of helping households are far superior to those associated with bailing out banks.

I agree with the conclusion, but I actually disagree with this analysis. Imagine a recession that begins at a time when nominal interest rates are 9 percent. What’s the right response? Cut nominal interest rates to lower real interest rates and spur growth! Everyone knows that. And this analysis holds true whether or not you think it’s a balance sheet recession, since lower real interests rates are in fact a way of helping households. So if you enter the recession with high nominal rates, the prescription is the same whether or not it’s a “balance sheet recession.” Of course we entered the current recession at a time when pre-recession nominal interest rates weren’t high. That meant nominal interest rates went to zero while still leaving real interest rates higher than they should be. What to do about this has proven to be controversial. But that—the existence of controversy over how to handle the low nominal interest rate situation—is what’s different about this recession.

Now to agree with Thoma’s conclusion, I think the best thing we could do is helicopter drops of money onto households. But that’s not because of special features of a balance sheet recession, it strikes me as in general the best way to respond when the “conventional” monetary toolkit is out of tools.

Politics

Kirk On Detainees To IL: A ‘New Mecca For Terrorists,’ Al Jazeera Reporters Could Show Up In The ‘Heartland’

As part of the Obama administration’s efforts to shut down the “lawless enclave” at the Guantanamo Bay prison camp, there was discussion of possibly moving detainees from the island prison to be incarcerated stateside (just like many other terrorism suspects). Sen. Dick Durbin (D-IL), local politicians, and city residents welcomed the idea of bringing the detainees to a virtually empty maximum security prison called the Thomson Correctional Center in Thompson, Illinois. However, Republicans have repeatedly blocked any attempt to close Guantanamo Bay. On Friday, the Chicago Sun-Times’ Lynn Sweet reported that the Illinois Republican delegation successfully stripped a provision of the National Defense Authorization Act that would have allowed a transfer of Guantanamo detainees.

Recently-elected Sen. Mark Kirk (R-IL) has been one of the staunchest opponents of moving detainees to the United States. In a letter he circulated last year, he claimed: “If [the Obama] Administration brings Al Qaeda terrorists to Illinois, our state and the Chicago Metropolitan Area will become ground zero for Jihadist terrorist plots, recruitment and radicalization.” Kirk took his hyperventilating to a new level on World Net Daily’s radio program on Monday. Speaking with host Greg Corombos, Kirk said that moving the detainees to a supermax prison in Illinois would make the American heartland “a new mecca for terrorists.” Kirk also said that he feared that Qatar-based news agency Al Jazeera might send reporters to Illinois, and such a development would somehow “lower the security of the entire United States”:

COROMBOS: We’ve seen over time this idea of potentially moving some of these detainees is that a prison facility in Illinois is right at the top of the list. As the new senator now representing the whole state, what’s your reaction to the possibility that that could happen?

KIRK: We should not bring Guantanamo terrorists to the heartland. It would make us a new mecca for terrorists, for Al Jazeera and other network attention and I think would lower the security of the entire United States. Having Guantanamo Bay far away from the continental United States is very helpful in that that’s the center of attention rather than any American community. Bringing this to the heartland I think presents a clear and present danger to the security of the American people.

Listen here:

Kirk’s freak-out over Guantanamo detainees and Al Jazeera news is not rooted in any rational line of thinking. Prominent Republicans, like Newt Gingrich and Rep. Ron Paul (R-TX), have granted interviews to Al Jazeera; are these politicians welcoming a “clear and present danger to the security of the American people,” as Kirk would say? If Kirk was worried about the influence of extremist news agencies, did he know that he was speaking on a radio program owned by the “Birther King” Joseph Farah? Kirk’s irrational fear of journalists does not comport with the liberties granted by the First Amendment.

Moreover, while serving as a member of the House of Representatives last year, Kirk voted for a different bill authorizing funds to bring detainees stateside. By Kirk’s logic, he voted to create a “new mecca for terrorists.”

Alyssa

Christmas By Myself This Year

Nah, no grumpy Christmas for me. The blog will be off tomorrow while I bake a Merck’s Cake, smell deep drafts of pine, and give an array of pop-culturtastic presents to the people I love the most. But I’ll leave you with my new favorite Christmas song, courtesy the lovely and talented Amanda Mattos:

May all your Christmases bring such happy surprises. I’ll see you all on a reduced schedule next week, and we’ll continue with Cryptonomicon then.

Yglesias

Census Boost to GOP is Thanks to Midterm Results

An awful lot of the commentary I’m hearing on why the reaportionment of congressional seats in the wake of the census will help the GOP strikes me as confused. A lot of the commentary is based on a simple “ecological fallacy” that reasons Texas is a Republican state, Texas is gaining seats, ergo Republicans are gaining seats. The world doesn’t work like that. But the problems with this naive analysis are being papered over by the fact that the conclusion is right. Redistricting will in fact help House Republicans. But that’s simply because the 2010 election means Republicans control most state legislatures and governor’s mansions.

Reaportionment helps whichever party controls the process. In most states, that means Republicans. But that’s the issue here, not the demographic shift toward the sunbelt.

Politics

Returning Democratic Senators Unanimously Push For Filibuster Reform

As the 111th Congress enters the history books, most retrospectives point to its major accomplishments, including health care reform and repealing the military’s Don’t Ask, Don’t Tell policy. One overlooked – though just as important – story of this Congress, however, is the rise of the filibuster and its role in killing legislation, blocking appointments, and often times bringing the legislative branch to a standstill.

Long gone are the noble Mr. Smith Goes To Washington filibusters where senators were forced to actually defend their obstructionism for hours on end. They have been replaced instead by record-breaking gridlock where a 41-member minority effectively wields veto power over all legislation. Look no further than the following chart from Ezra Klein to see just how rapidly the filibuster has become a mainstay in the Senate:

However, as the beginning of the 112th Congress draws near, there are hopeful signs that Senate obstructionism may be relegated to the past. This week, the National Journal reports that returning Democratic senators unanimously signed a letter to Majority Leader Harry Reid (D-NV), urging him to change the Senate’s filibuster rules when Congress reconvenes in January:

The letter, delivered this week, expresses general frustration with what Democrats consider unprecedented obstruction and asks Reid to take steps to end those abuses. While it does not urge a specific solution, Democrats said it demonstrates increased backing in the majority for a proposal, championed by Sen. Tom Udall, D-N.M., and others, weaken the minority’s ability to tie the Senate calendar into parliamentary knots.

Among the chief revisions that Democrats say will likely be offered: Senators could not initiate a filibuster of a bill before it reaches the floor unless they first muster 40 votes for it, and they would have to remain on the floor to sustain it. That is a change from current rules, which require the majority leader to file a cloture motion to overcome an anonymous objection to a motion to proceed, and then wait 30 hours for a vote on it.

Udall hopes his plan, known as the “Constitutional Option,” or a similar filibuster reform proposal will be considered when the Senate votes on its parliamentary rules come January 5. Ian Millhiser of ThinkProgress explains how 51 senators have a brief window at the beginning of a new legislative session to implement rules changes, but if they fail to act, they are “essentially locking [the old] rules in place for another two years.”

Though filibuster-defenders often argue that it is a necessary check on the power of the majority, Ezra Klein points out that ridding ourselves of the filibuster would actually lead to greater bipartisanship. “In a world without a filibuster, where legislation can pass if the majority wants it to pass,” Klein writes, “it would be easier for members of the minority to break ranks, as a strategy of relentless obstruction wouldn’t work, and their unyielding opposition would no longer decide where legislation lived or died.”

Indeed, the filibuster was never even originally intended to exist. “It’s a mistake,” notes filibuster historian Sarah Binder. And not even a popular one, at that. A poll last month found that nearly two-thirds of voters favored scrapping the filibuster altogether, including 57 percent of Republicans and 61 percent of Independents.

If Democrats do succeed in reforming the filibuster next Congress, headlines like “DREAM Act Fails in 55-41 Senate Vote” may soon be a thing of the past.

Climate Progress

Exorcising Gale Norton

Our guest blogger is Tom Kenworthy, a Senior Fellow at the Center for American Progress Action Fund.

It’s been too long in coming, but today Interior Secretary Ken Salazar is repealing a sneak attack on millions of acres of pristine public lands in the West launched by his Bush administration predecessor Gale Norton.

In a lamentable tenure that included corruption and ethics scandals, attacks on scientific integrity, and a campaign to turn federal lands into a playground for the oil and gas industry, Norton’s backroom “no more wilderness” deal with a Utah Governor in 2003 was among her most egregious betrayals of the public trust. In it Norton repudiated the Bureau of Land Management’s long accepted authority to protect public lands possessing characteristics that would qualify them as wilderness under the 1964 Wilderness Act.

That authority, accepted by every previous administration — Democratic and Republican — since the mid-1970’s, allowed Bureau of Land Management (BLM) to shield special places among the 245 million acres it manages from development, giving Congress the opportunity to decide whether to include them in the national wilderness system. Once developed, such as by roads constructed for oil and gas activities, such areas are rendered forever ineligible for wilderness designation.

Though it affected federal lands in several western states, the Norton policy had by far its biggest impact in Utah, where it removed the umbrella of protection from millions of acres of BLM-managed land. It was a disastrous policy mistake, recognized as such by moderate western newspapers such as the Salt Lake Tribune and Denver Post, and thoroughly repudiated by dozens of legal experts on public lands law.

The anti-conservationist right will no doubt launch predictable attacks on Salazar for undoing the Norton policy. They will describe it as a Washington “land grab” that “locks up” vast areas of public land, hamstrings local economies, kills jobs, and keeps us from achieving energy independence. As usual, they will ignore the facts in their rush to shill for narrow interests intent on plundering our public lands. Their voices are a modern echo of those who in generations past opposed the creation of most of our iconic national parks and monuments, places that today are revered by most Americans and are powerful tourism-based economic engines throughout the West.

Norton’s rejection of Interior’s authority to protect special places on federal lands from development was a radical departure: Even James Watt’s Interior Department during the Reagan administration agreed that the BLM has the authority to continually update its inventory of wilderness quality lands and safeguard them so they remained eligible for permanent protection by Congress.

Salazar’s overturning the Norton policy won’t affect many public uses of these lands including hunting, fishing and livestock grazing. Off-road vehicle use could be curtailed in these special places, but vast areas of western public lands remain open to motorized recreation.

With a new, more conservative Congress taking office next month, and with retrograde lawmakers like Rep. Doc Hastings (R-Oregon) and Rep. Rob Bishop (R-Utah) assuming leadership of key panels that oversee public lands, the oil and gas industry is already firing up its propaganda machine to demand a “drill baby drill” resurgence.

Earlier this month, the Western Energy Alliance, a regional oil and gas trade association, lamenting a recent drop in oil and gas leasing and development in the West, implied it was the result of Obama administration policies. Two months ago, the alliance’s Utah representative Lowell Braxton charged that “Federal land policies are stifling oil and gas activity and preventing $1.8 billion of investment and about 7,500 associated jobs in Utah.”

The Western Energy Alliance totally overlooks simple facts: The decline in oil and gas activity on western public lands is largely due to market forces, and producers have millions of acres of federal land under lease that they have yet to develop.

With vast new quantities of shale gas recently discovered in fields stretching from Texas to New York State, producers are much less interested in exploring hard-to-access places on public lands in the remote west, such as those affected by Salazar’s new policy.

The charge that oil and gas companies are being denied reasonable access to federal lands is ludicrous. At the end of fiscal 2009, the latest year data is available, more than 45 million acres of federal land were under lease to the oil and gas industry, but only about 13 million of those acres were actually under development, leaving the industry an already-leased-but-not-developed inventory of 32 million acres. That’s more than enough for the foreseeable future by any reasonable measure. Ken Salazar’s new directive on wilderness quality western public lands is rightly tilting the scales back toward a proper balance between protection and development.

Alyssa

Underrated Holidays

I find Love, Actually about as effective as emotional crack, but if I had to pick my favorite holiday movie of recent years, I’d probably actually name the unfairly overlooked The Family Stone:

The movie’s somewhat forgotten as part of Sarah Jessica Parker’s efforts to find a role other than Carrie Bradshaw to carry her into the future. And there’s an extent to which it’s a goofy, fish-out-of-water movie. But it’s also a surprisingly raw movie about the complicated emotions we all have about the holidays and our families, a movie that insists that mastectomy scars can be beautiful, and that isn’t afraid of the ugliness and sadness inside of all of its characters. As a bonus, it features quite a fine performance from Rachel McAdams playing somewhat awful, and I think it’s good for her. Anyway, highly recommended if you need to sneak away from your own family a bit, or if you could all use a good laugh and welling-up together.

Yglesias

The Lameness of the Duck

I think the only reasonable way to play the American politics game is “by the rules as written.” That’s why it made sense for the Republican minority to spend so much of the 111th Congress exploiting the possibilities for obstruction in an unprecedented way, and that’s why it made sense for the Democratic majority to use the “lame duck” session to pass a bunch of good bills.

But one should also reflect on the quality of the rules. As I’ve argued many, many, many times having all these tools of obstruction at the hands of the minority is a bad idea. And having the extended “lame duck” period also seems like a bad idea. The lengthy presidential transition period is problematic, but it’s a bit difficult to know how to avoid it given the other parameters of our system. With congress, by contrast, I don’t see any logistical barrier to the new congress going into session within days of the election. I think it’s important that we not say “no business can transpire in November or December” but that doesn’t mean the old congress needs to handle it.

Climate Progress

The year of living dangerously. Masters: “The stunning extremes we witnessed gives me concern that our climate is showing the early signs of instability”

Munich Re: “The only plausible explanation for the rise in weather-related catastrophes is climate change”

A year of deadly record-smashing weather extremes from Nashville to Moscow, from the Amazon to Pakistan, ended with staggering deluges from California — “Rainfall records weren’t just broken, they were obliterated” — to Australia:

More than a year’s rain fell in Carnarvon in just 24 hours this week.  A monsoonal low hovering over the Gascoyne dumped a 24-hour record 204.8mm, smashing the previous record of 119.4mm set on March 24, 1923.

NASA reported that it was the hottest ‘meteorological year’ [December to November] on record and likely to be the hottest calendar year.

Uber-meteorologist and former NOAA Hurricane hunter Dr. Jeff Masters of Weather Underground reported, “The year 2010 now has the most national extreme heat records for a single year–nineteen. These nations comprise 20% of the total land area of Earth. This is the largest area of Earth’s surface to experience all-time record high temperatures in any single year in the historical record.”

This was a year that the scientific literature became clearer that global warming is driving more extreme weather, hell and high water (see Study: Global warming is driving increased frequency of extreme wet or dry summer weather in southeast, so droughts and deluges are likely to get worse) — and it is likely to get much, much worse if we stay anywhere near our current emissions path (see “A stunning year in climate science reveals that human civilization is on the precipice” and “Must-read NCAR analysis warns we risk multiple, devastating global droughts even on moderate emissions path“).

But this was also very much a year of living dangerously right now for people around the globe:

As Craig Fugate, who heads the U.S. Federal Emergency Management Agency, put it last week, “The term ’100-year event’ really lost its meaning this year.”  Tamino calculates (at length) that global warming made the Moscow heat wave roughly eight times more likely:  “Without global warming, this once-in-a-century-or-two event would have been closer to a once-in-a-millenium event.”  On our current emissions path, Russia’s grain-export-ending heat wave and drought could be a once every decade event — or even more frequent.

I queried both Masters and Dr. Peter Hoeppe, Head of the Geo Risks Research Department at Munich Re, one of the world’s leading reinsurers, about this astonishing year.  Here’s what Masters wrote me:

Read more

Climate Progress

Energy and global warming news for December 23: More scrapped coal plants, oil hits $90, and Big Oil works to whitewash the history of BP disaster

More scrapped plans, retirements for U.S. plants in 2010

Over the course of this year, more U.S. coal-fired power plants were tapped for retirement and more proposed plants were canceled than in 2009, according to an end-of-year report by the Sierra Club, which is fighting the continued use of coal.

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