Morgan vs. Cantor
Forgot to include that quote from J.P. Morgan, explaining why he didn’t short stock (who knows if he really did?): “Don’t sell short the United States of America.” Eric Cantor evidently disagrees.
Cantor short Treasuries
The Wall Street Journal reported the other day (here it is, but it’s behind a paywall) that as of his last disclosure form, House Republican leader Eric Cantor owned shares in a mutual fund that is short long-dated U.S. Treasury bonds. He is, in other words, betting that interest rates will rise, and hoping to make money off the fall in prices that would cause. (For my ancient primer on why bond prices fall when interest rates rise, see here.)
Cantor is in a position to help the U.S. default on its debts by blocking an increase in the debt ceiling. That would be very good for a short Treasury trade—rates would spike and prices would plummet. Even stoking the fear that that might happen could cause milder panics. Is this legal? Is anyone else doing this? Is the Republican flirtation with default a form of talking their and their donors’ book?
Note: following the WSJ story, I wrongly called Cantor the “whip” at first. He’s the majority leader.
Wisconsin: game over?
I wish sometime that I’d be proven wrong in my pessimism. But it looks like the great upsurge in Wisconsin has petered out. Listen to my interview with Abe Sauer in the June 25 radio show I just posted. Or read Progressive editor Matt Rothschild’s gloomy assessment from a week ago: Wisconsin Demoralized, Demobilized.
It’s the same damn story over and over. The state AFL-CIO chooses litigation and electoral politics over popular action, which dissolves everything into mush. Meanwhile, the right is vicious, crafty, and uncompromising. Guess who wins that sort of confrontation?
Please prove me wrong someday, you sad American “left.”
Fresh audio posted
Freshly posted to my radio archive:
June 25, 2011 Abe Sauer, writer for The Awl, on what’s been going on in Wisconsin since the great February upsurge • Abby Rapoport of The Texas Observer on Texas gov Rick Perry • Jon Bakija, co-author of this paper, on how and why the rich have gotten richer
June 18, 2011 Ken Morris, co-author of Blind Allegiance to Sarah Palin, on that overexposed curiosity • Julia Ott, author of When Wall Street Met Main Street, on big finance’s attempts to appear democratic
Krugman’s lazy apologia
Paul Krugman can’t stop attacking the McKinsey survey. His filed his latest apologia this morning (“McKinsey Pulls Back the Curtain”). It’s not his finest moment.
He dismisses the report as a mere “poll,” which is presumably a less reliable thing than the economic models that everyone else has been using. But why should a detailed survey—over 50 questions asked of over 1,300 respondents, mostly decision-makers—be less reliable than statistical extrapolations from not very comparable historical data?
Krugman quotes a stat from a Time reporter, Kate Pickert—not from the original document, curiously—with what he thinks is a clincher. The respondents didn’t know what they were talking about!
When asked how much their companies spend on medical and prescription drug benefits per full-time employee – something you might expect a health benefit pro to be intimately familiar with – 58.3% said they didn’t know.
Yes, that’s in the survey (question 15, for those scoring at home). The full question is actually more complicated, and might require a little spreadsheet work to figure out precisely:
Approximately what did your company spend on medical and prescription drug benefits last year per each active, full-time employee (averaged across both single employees and employees with spouses/families)?
I think it’s certain that the “don’t knows” know that they’re spending more than $2,000.
And the respondents weren’t just “health benefit pros.” Only about 10% were human resources execs; far more were owners and CEOs (question 2).
That aside, Krugman forgot to quote this observation from Pickert, from the same article:
Its poll of employers was not a GOP-funded shoddy survey meant to gin up criticism of Obamacare. Rather, the poll was long, complicated, conducted by a well-established polling firm and weighted to reflect the American business community as a whole. (This weighting helps compensate for the fact that the survey was conducted online, which can lead to problematic self-selection.) There are more than 50 questions in the survey, many of them multi-part questions, and the data collected is organized into easy to read cross tabs and breakdowns….That McKinsey initially seemed to release only the most headline-grabbing data subset is disappointing – the full results are full of all sorts of interesting nuggets like that, compared to very small businesses, about half as many large businesses would probably or definitely drop coverage post-reform. But its initial decision to keep its full data trove secret doesn’t mean the company’s motives were evil or partisan.
By contrast, Krugman’s motives, though not evil, sure look partisan.
McKinsey: more right than wrong
Administration apologists, from the White House official blog to Paul Krugman (“McKinseyGate”), have all lined up to denounce the McKinsey survey I wrote up here the other day (“Bye-bye employer health insurance”). McKinsey found that a large share of employers who now offer health insurance benefits will drop them once ObamaCare comes into effect in 2014. At first, McKinsey didn’t release the questions or the methodology, prompting reactions like Krugman’s:
It’s hard to escape the conclusion that the study was embarrassingly bad — maybe it was a skewed sample, maybe the questions were leading, maybe there was no real data at all. Whatever [sic].
A few days of criticism of this sort was more than the consulting firm could take, so it released the full survey and the underlying data. Turns out the sample was not skewed, the questions were entirely reasonable and factual, and there’s plenty of data.
At the core of it is this: McKinsey gave the surveyed employers details on what would happen if they dropped coverage—how much it would cost their employees, after government subsidies, to buy insurance on the new exchanges (e.g., $4,437 for a family of four with an income of $55,125), and what it would cost them in penalties for not insuring employees ($2,000 per worker after the first 30 workers). McKinsey presumably did not have to tell employers what their present coverage cost them, but the numbers are stunning. According to the Kaiser Family Foundation, typical coverage costs almost $14,000 a year, with employers paying about $10,000 and employees about $4,000. No wonder a third to half of employers would seriously contemplate dropping coverage—their cost savings would be enormous. And their workers might not have to spend all that much more than they’re contributing today. But their coverage is likely to be a lot crummier than what they’ve got now.
Forbes blogger Avit Roy—who appears to be rather conservative, but also smart and serious—has written some convincing defenses of the McKinsey survey (like“The McKinsey Health Insurance Survey Was Rigorous, After All”). One of his commenters, Heritage Foundation economist Paul Winfree, notes that studies like the Congressional Budget Office’s, which show many fewer employers likely to drop coverage than McKinsey does, are based on extrapolations from minor, year-to-year changes in the cost of health insurance that may not be relevant to an enormous transformation of the sort that ObamaCare represents. This seems like a sound point: a massive institutional change like this is more likely to produce a major rethink than minor twiddling.
Single-payer advocates should be embracing the McKinsey results, not jumping on the Democrats’ apologetics bandwagon.
Courts: the popular angle
My pal Elise Hendrick posted this excellent comment on the “robed ghouls act in character” post to Facebook:
I’d say that part of the obsession, outside of élite circles, is due to a combination of : a) An educational system that hammers into people’s heads the notion that The Constitution and the Supreme Court are the representatives and defenders, respectively, of all that is good and right in society; b) A general lack of understanding of the history of the Warren (and early Burger) courts. People look at the decisions of the day – Brown v. Bd. of Ed., Brandenburg v. Ohio, etc. etc. etc. – and not at the social context. The Warren court was operating in an atmosphere of mass popular upheaval, and followed – not led – the public’s demands for change. The difference between Plessy and Brown is not so much the court’s composition as the public mood – segregation was already highly unpopular, particularly in the north, by the time the Brown decision was issued. The free speech cases that actually created the free speech rights that people now falsely believe have been applied since 1776 were handed down in the face of an insurgent public that was going well beyond the long-established limits of its accepted sphere (spectators, not protagonists).
Breaking news: robed ghouls act in character
So the Supreme Court handed down its decision on the Walmart (né Wal-Mart) sex discrimination case. It can be summarized in three words of Brooklyn dialect: “get outta here.” I will defer to my wife, Liza Featherstone, who wrote the book on the case, for detailed analysis. But I am overcome with the need to denounce, so please indulge me.
Liberals will anguish endlessly over this decision, parsing it in that tediously fetishistic way that has become all too familiar. But really, the Supreme Court is a fundamentally reactionary tool of bourgeois power. Liberal opinion still seems to think that the Warren court was something other than a 15-year anomaly in its mostly awful history.
Why this boring and annoying obsession with The Court? Is it because liberals think that the people are fundamentally dolts, and turn to unelected judges to accomplish what democratic agitation can’t? This seems to be the strategy of the reproductive rights movement, which does little but litigate and lobby while access to abortion dwindles, and popular opinion moves in unpleasant directions. And the labor movement looks to have been doing similar things: when you can’t organize, file suits. But for most of American history, judges have done the work of elites—which isn’t surprising, given their social origins and professional training.
Give up on the courts. They’re hopeless.
Quoted in the NYT – tendentiously
It’s always flattering to be quoted in the New York Times, but the context looks designed to refute me—and the reporter calls me a “liberal.” Ouch.
AARP Is Open to Future Cuts of Social Security Benefits
But other advocacy groups that are pushing to preserve Social Security benefits accused AARP of effectively abandoning its core constituency.
Doug Henwood, the Brooklyn editor of a liberal business blog and Internet radio program who has written on Social Security, said AARP’s willingness to consider cuts in benefits “reads like a sign that this former lobby for the interest of older Americans has now transformed itself completely into an insurance company.” He continued, “Surely they can’t be persuaded by the merits of the arguments, since the alleged Social Security crisis is a phantom that can’t survive a serious round of fact-checking.”
The most recent estimates from the Social Security Administration, issued last month, indicate that under currrent law the program’s trust funds will be exhausted by 2036, and that $6.5 trillion in additional money will be needed over a 75-year period to pay all scheduled benefits.
Help wanted (cont.)
Several people asked if the LBO assistant position had to be done by someone local. Yes, it requires on-site work in lovely Clinton Hill, Brooklyn.
Help wanted
LBO needs a new assistant/intern/researcher. Tasks include maintaining the subscription database, responding to sub queries, making bank deposits, doing various sorts of research. Working conditions are charming, hours short and flexible (5-10 hours a week), and pay is modest but hardly scandalous. If you’re interested, send a query with resume to dhenwood@panix.com.
Lots of fresh audio product
Four shows newly posted to my radio archives:
June 11, 2011 Vincent Reinhartat the Council on Foreign Relations on Greece and the political trick of austerity (thanks to the CFR for allowing broadcast; full event here) •Greg Grandin, author of Fordlandia, on all the great political developments in South America
June 4, 2011 Another Hoover interview: Morris Fiorina on American public opinion and the nonexistence of the “culture war” • And in non-Hoover content, Yanis Varoufakis updates the Greek and EU crises
May 28, 2011 Hoover Institution special. Two interviews from my week as a Hoover media fellow. Paul Gregory on Russian politics (Putin vs. Medvedev) •Terry Moe on school “reform” (i.e., charters, testing, unionbusting, etc.)
May 14, 2011 Deepa Kumar, author of this article, on political Islam [The last 20 minutes of the broadcast version of this show was devoted to fundraising for KPFA. This has been excised for the web version. But if you like what you hear, please donate.]
And now the show has a new Facebook page: Behind the News, with Doug Henwood.
Sidwell Friends teacher: tests are unreliable
Sidwell Friends faculty member: “We don’t tie teacher pay to test scores because we don’t believe them to be a reliable indicator of teacher effectiveness.” That’s where Obama sends his kids.
Education Secretary Arne Duncan sends his kids to Arlington County, Va., public schools. They don’t use tests in evaluating teachers either.
Thanks to Amy Offner for pointing me to this on Facebook: Teacher evaluations at the schools that Obama, Duncan picked for their kids.
LBO News from Doug Henwood 
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Posted on June 17, 2011 by Doug Henwood
Latest on Social Security
Following on the NYT quote, I thought it’d be good to post LBO’s most recent take on Social Security:
Is the real problem Social Security?
Also, this is from my radio commentary for tomorrow:
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