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June 10, 2011


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Joe S

THe Krugman piece relates to and refers to a Bob Kuttner piece which is also very good.

kathy a.

oddjob, the subject is so dismal, the bad effects of shrub's policies so obvious, that i wouldn't call lowrey's good and understandable analysis "brutal."

Sir Charles

I love the fact that Pawlenty wants to -- dare I say it -- double down on the Bush tax cuts. Another serious conservative.


I think Krugman is using 80% as a baseline for life expectancy. In other words, you don't expect many populations to exceed 4/5 (plus deposit growth) making it to the date they're pulling their pension. While the individual survival rate and growth of the equity will vary, there should be a 95% of pensions not falling behind point that will be under 100%.

I'm more worried about the Republicans and Villagers willing to walk us off the cliff, personally, and am tired of reading about it. I know they're intentionally ignorant!

kathy a.

by "serious," of course, you mean "seriously out of touch." i'd joke that delusions and magic numbers are a requirement for potential GOP candidates, but it's not so funny when that appears to be the actual litmus test for candidacy.

Sir Charles


No -- what he is talking about is having the fair market value of the assets in the pension plan being 80% of the value of the actuarially vested liability of the plan. So, in other words, if the estimated AVL of the plan is $100 million -- a figure determined by looking at the benefits earned to date plus the projected benefits to be earned -- then the 80% figure would mean that the market value of the assets is $80 million. Sooner or later you actually need to come up to that $100 milion figure even if that is a long term liability.

Another thing that Krugman does not make clear -- and this is highly technical stuff -- is whether the 80% is based on using fair market value of assets or the actuarial value of assets. Actuaries engage in a process known as asset smoothing -- usually over rolling five year periods -- in order to avoid excess volatility in pension funding. So when a plan has big gains or losses in a given year, the actuary will only recognize a 20% portion of the gain or loss. The result is that in a period of down markets, the actuarial value of assets will be greater than the free market value of assets. This means that a plan may be described as 80% funded -- and perfectly legitimately -- when the market value of assets is less than 80%. You just need to be very mindful of the fact that those assets may not ultimately arrive if investments continue to decline.

Lastly, all of these funding assumptions are based on the plan continuing to meet whatever its annual actuarial assumption for investment return is -- usually somewhere in the neighborhood of 7% to 7.5%. When your investment return is less than that -- sya you make 6% in a year -- that is actually an experience loss for the plan.

Okay, I know way too much about this stuff.


At least I understand why the rentiers want to inflict pain on the masses -- it puts money in their pockets. Why the likes of David Brooks and Ruth Marcus think that such pain is good policy remains a mystery to me.

For the same reason. Brooks and Marcus are paid by the rentiers to help sell the damaging policies to the American public.


The republic may have survived Hamilton's junk, but I'm really starting to question whether it will survive the current GOP. The research on how polarization destroys presidential democracies is seriously worrying me, as we're seeing all the signs in our current situation. Historically, the progression is paralysis followed by a coup. 1970's Chile is the most recent example, and we know how that turned out.


I just read Alterman's piece. I can see why you liked it, Sir C; not only is it an excellent analysis, but it's also full of Talking Heads lyrics. What more could you want?


Friday musings--open thread part. Am reminded by the Pink Floyd embed. A word of advice: don't donate your almost entire vinyl collection to your local public radio fundraiser. "You gave away what?!" Dark Side of the Moon. Thriller. Led Zeppelin. Imagine. On and on. And on. How would I have known?--we dumped the eight-tracks and most of the cassettes over the years. I thought the vinyls (along with the turntable and speakers) were relics. Not so apparently. As far as I knew this collection (of hundreds) was just taking up space. Now I find that the young people are "collecting". So, save your music and pass it on.

kathy a.

nancy, my beloved's vinyl and turntable are intact. we have rather too many tube amplifiers, too, since he likes to build them. son collects vinyl. the former family room is now "the dog room and electronic workshop."

Sir Charles


I actually knew Alterman way back in the day. His first wife worked with my wife -- we went to their wedding (at which George Stephanopolis [pre-Clinton] was the best man). Eric was kind of obnoxious in those days -- but I could handle him, so we were the only friends from his wife's side with whom he socialized. They didn't last very long -- I get the sense that he may have grown up a bit.

He had good musical taste though and was a very smart (albeit very arrogant and slightly socially inept) guy. I quite like his stuff.


I simply couldn't part with my vinyl -- which I stuck with for a few years after CDs came on the scene. My son listens to it now with some frequency. I have quite a few things on vinyl into the late 1980s, including some great 10" dance records.

As punk/new waver in the late 70s I felt the need to kind of distance myself from my Floyd loving ways for a while, but they really produced some great stuff. I was perusing some of it on youtube and was remembering it quite fondly.

One of the most moving things I saw was David Gilmore talking about the late keyboardist Rick Wright and how much he would miss him -- as big bad wolf and I were discussing about Ray Davies the other week, so many of these guys have lost valuable time and energy feuding and I think it dawns of the wiser of them that this has been a mistake.

Krubozumo Nyankoye

Given that we are faced with several major issues, questions you might say, what is the prime issue we should be addressing?

I will ease the burden of answering somewhat by saying that it is not the deficit.

kathy a.

KN for the win. that's a good way of narrowing it down.

Sir Charles


I think it is twitter abuse by Weiner. :-)

It seems to me that jobs, jobs, and jobs should be issues 1, 2, and 3. And at the same time, getting the guys out of Iraq and Afghanistan -- there's some pretty nice savings to be had there.


No question jobs should be the immediate issue, and getting us out of the 2 wars should be a priority also (even though it might cost me and my husband our jobs), but preserving the republic needs to be on there somewhere too. I'm getting very worried about where all this is going.

low-tech cyclist

Given that we are faced with several major issues, questions you might say, what is the prime issue we should be addressing?

I think it depends a great deal on whose agency you're mentally borrowing here.

What this nation of ours should do seems painfully obvious, but the GOP is in position for the next year and a half, at least, to block anything and everything.

What the Democratic Party should do seems painfully obvious as well: they should stop talking about the deficit, saying there will be plenty of time to deal with that once people are back to work in large numbers, present a concrete plan to put people back to work, and let the GOP argue against it.

When it comes to something as basic as many millions of people being unable to find work, we need a real "whose side are you on?" debate. At least then the people could choose between two clear, vastly different visions for America next November. And that would be a Good Thing.

The thing that hurts me more than anything else when I think about the sorry state of our politics is that the Democrats aren't currently a party that's willing to take the pro-jobs side of that debate.

One thing Obama should do right now is to argue - whether he really buys into the logic of the arguments being made right now or not - that the debt limit is unconstitutional under the 14th Amendment, and declare openly that he plans to act on that interpretation. We simply cannot afford the present situation where the full faith and credit of the United States of America is being held hostage by a determined minority, and this would resolve the matter.

The GOP and the Villagers would scream holy hell, but fuck 'em - the result would be that the government would keep operating as normal, at least through the end of FY11, i.e. midnight on September 30.

Of course, that would require, erm, audacity from our President, and he seems to have far less of that quality than he advertised upfront. Would be nice if the current crisis caused him to change his stripes here, but again, that's not something that anybody but him can make happen.

So then there's us. How do we, as progressives, change the Democratic Party into something that will once again fight for the interests of working people? As far as I can tell, that's the only meaningful question that we, as liberals or progressives or what have you, have to answer.

Sir Charles


I am not that worried about losing the republic. I think the military culture is such in this country that there is virtually no threat to civilian rule.

I can imagine a scenario in which fringe elements of a marginalized right wing engage in acts of violence of some kind. But the U.S. has had such moments before and survived them -- in the 1890s, the 1920s, and the 1960s for instance, just as we have had periods in which civil liberties have been curtailed -- during the red scares of the 1916-20 period and in the 1950s.

The republican form of government in the U.S., however strained and flawed at times, has proved enduring. Hell, we had an election in the midst of the Civil War --an election that could have completely changed the course of the war.

The incredible turbulence of the 1960s and early 70s -- which really featured all kinds of breakdowns in the rule of law -- including murderous right wing acts in the southern U.S., delusional "revolutionary" violence from elements of the left, mass rioting in a huge swath of American cities, and acts of repressive violence by armed authoritiy at places like Kent State, Jackson State, and at the Democratic Convention of 1968 in Chicago, did not fundamentally shake the culture's belief in democracy. I don't see a situation arising that would be worse in terms of turmoil than that period.

At some point, I think the right wing madness of the Republicans will subside -- but it is going to require a period of prolonged electoral losses -- similar to what they experienced between 1932 and 1948, when they lost the presidency five consecutive times and finally nominated a moderate, Dwight Eisenhower, who reconciled the party to the New Deal.

l-t c,

I think you are right -- I think the battle is going to be to try to move the Democratic Party left on matters of economics. If, as I think will happen, the GOP marginalizes itself in the demographically changing America of the next couple of decades, the real ideological tussle may occur between the traditional labor-left of the Democratic Party and the business wing.


You're right about the military culture being very resistant to taking power in this country, Sir C, and that is indeed a good thing. And you're also right about how this nation has had plenty of turmoil in the past; I also lived through the 60's and 70's. What's different, now, though is that for I think the first time in our history we have completely polarized political parties, and the GOP especially is extremely polarized. Historically this state of affairs has always doomed presidential democracies, because the non-presidential party finds it in their interest to oppose EVERYTHING the president does, and nothing can get done. Eventually the resulting paralysis and chaos leads to a fed-up public demanding a takeover. As I said, the last example was Allende being overthrown in Chile. My understanding is that pre-Pinochet Chile and the US are the only examples of presidential democracies that have lasted for any significant length of time (I'm not sure how France fits in here). Basically, parliamentary democracies can handle polarization, because the executive is always from the majority party, and they don't have lots of veto points like we do. I've lived through a lot of craziness and disruption in this country (I'm 53), and I've been worried before, especially during Watergate, but I've never seen anything like what we've been seeing these last few years, and I've never been this concerned about our future.


P.S. "Eisenhower reconciled the GOP to the New Deal." No, he didn't, or at least, it hasn't lasted. All of the GOP's budget cuts are aimed straight at the New Deal, and they won't stop until they get at least some of them. I read somewhere a day or 2 ago that the Dems have become very worried about Medicaid's survival, as well they should be.

big bad wolf

i think it is historically accurate to say that eisenhower reconciled the republicans to the new deal. political parties, like sports teams, change identity over the year, while keeping the same name (the repubs were the good guys in the 1860s and 70s and many, many of the great judges who stood fast with the constitution in the 50s and 60s were republicans.) eisenhower did get the repubs of the 50s, 60s, and 70s to accept the new deal. a relatively small revanchist wing joined by a large number of southern democrats eventually took over the republican party and in different times and with different circumstances started to refight some of the battles of the past. for all the rhetoric and nastiness, they didn't actually do much to dismantle the new deal state. the craziness of the current congress is likely to be over as quickly as 18 months from now. the vast majority may not know what they want, but they know what they don't want---they don't want what the current republicans are offering. they may misinterpret stalemate, but they are likely to break it in 2012 (hopefully for the better) and in breaking it break the temporary stalemate that impedes progress, but does not, i think, threaten the government itself. the day-to-day operation is mundane and hard to shake and not very much affected by the 24-hour hysteria fest of the old and much of the new media. or so i believe (and hope)

Sir Charles


I don't think that the U.S. today is analagous to the Chile of the early 1970s, where Allende was able to assume the presidency, despite having won with less than 35% of the vote. He then attempted to implement an ambitious agenda -- trying to "make haste slowly" as was said -- in the face of having roughly two thirds of the electorate not necessarily supportive of it. Chile also had a much more immature political system and culture. Oh yeah, and an international hegemon engaged in massive subversion of its government.

(The lowest percentage of the vote I can think of received by a successful candidate in the U.S. was that received by Lincoln in 1860 -- and we all know how that ended up.)

But for all of its flaws, the broad based respect for democracy and civilian rule in the U.S. is, in the end, extraordinarily baked into the culture.

Having said that, I do think that we are in slightly new territory in terms of the absolute obstructionism of the Republican Party over the last three years. But I think the end result of that will be that things like holds and filibusters will ultimately be reined in.

The Republican Party has from the period from 1953 through 2010 largely been reconciled to the New Deal (and even aspects of the Great Society, like Medicare and even Medicaid), even if they have paid lip service to roll back or repeal of certain programs. Hell, Bush pushed through a pretty substantial expansion of Medicare not all that long ago and quickly backed off the notion of Social Security privatization. It is only in the post 2010 environment that you are actually seeing a Republican Party directly attacking Social Security and Medicare with concrete legislative proposals -- proposals that I am confident will prove electorally disastrous if they continue to be pursued.

The GOP has succeeded for these last forty years by being the party of white backlash. In so doing, it has constructed attacks on government that have been laden with dog whistle racial politics. But it has never really pushed for significantly smaller government in terms of the core concerns of its base constituency -- especially as that constituency ages.

The older, middle class whites that form the heart of the Republican electorate are deeply reliant upon Social Security and Medicare to maintain that middle class status. These people are not ideologues -- they may not be the most rational of voters in the sense that vote against their economic interest frequently for what I would describe as tribal reasons -- and they are not going to commit economic suicide in the name of Ayn Rand.

If the Republicans go the Ryan/Krauthammer route, they are going to find themselves a distinctly minority party, whose losses have only just begun.


bbw, SC--18 months and the pendulum swings back to sanity? You guys are much, much more optimistic than I am. When I see the insanity, venality and viciousness of today's GOP political landscape all laid out in one page , in addition to knowing that idealistic young Democratic politicos, circa 2008, are rapidly checking out, (or are too busy trying to find work while fearing the student loan payment schedule which looms ahead for them) I'm not sanguine at all.

Sir Charles


I think a lot of it comes back to two factors -- one, the demographics of a presidential election where somewhere between 55 and 60% of the electorate will vote versus an off year like 2010 where only 40% of the electorate will turn out -- an electorate that skews whiter, older, more married, more religious, and more conservative.

I think that the turnout is going to be closer to 60% than 55% -- I think it will be awfully close to what turned out in 2008 -- because 1) African Americans are deeply angry at the way Obama has been treated and are going to turn out for him in force; and 2) Hispanic Americans are angry about the way that they have been kicked around by Republicans and are also likely to turn out in force. If that is the case, the only issue will be Obama's margin of victory.

The second factor is that I think the white youth vote will turn out in numbers as well -- their huge problems notwithstanding -- because the Republicans offer them nothing -- less than nothing. The Republicans are going to run on a platform of intolerance and greed -- it will have zero appeal with the young, who will return in droves to Obama, his weaknesses notwithstanding, because he is an intelligent and decent man.

In other words, I don't believe the notion that idealistic young Democratic politicos will check out -- not once they've had two years to glimpse what GOP rule would mean.

Sometimes voting against the other guy is damned compelling -- even if we would like to think otherwise.

If older whites peel off a bit from the GOP due to the Ryan plan, then we are looking at a very big win.

Sir Charles

I've been following elections with great care since 1980 and the only one I've ever called wrong was 2004, when I expected Kerry to narrowly beat Bush by taking Ohio or Florida.

I am very confident about the way the demographics are likely to shake down here.

Paula B

My fear is that young people won't vote, and neither will a lot of liberals who say Obama has fallen short on his promises.

But, I hope you're right.

Sir Charles


Of the liberals you know, how many can you imagine really sitting out the election once they see an actual Republican nominee emerge from what will no doubt be a freak show convention?

Generally speaking, the politically engaged vote -- even when they aren't thrilled about it.

If liberals don't vote -- and I say this as a liberal -- they are even bigger fools than I often imagine them to be. This is going to be an astonishingly important election.


I lost a comment, but Paula already said it well re young folks and the vote.

Here's additional ominous news delivered to middle-class young folks and their parents yesterday. From the Seattle Times. This comes after the announcement several months ago that in-state students (even of the valedictory sort) may very well not get into the freshman class of 2015 at the beacon state university because out-of-state and international students will be admitted first--- they are far more "profitable".

That's what happens in a state with no income tax--the legislature is out of cures. But, yes, let's keep those student loans going strong. Another shift of the tax burden to middle-class parents and their progeny which senselessly mortgages the future.

Sir Charles


What is going on at state universities is really heartbreaking -- this is the crazy burning of our collective seed corn.

As is what we are doing to this generation of young people. I really don't understand why the Democrats do not see the wisdom in trying to pass a jobs program for people in their twenties. This really is a huge mistake from both a political and a policy perspective.


SC--I'm wondering if what you might be mis-predicting--there are older liberals like us, yes; but young liberals will be needed for this election and their numbers are being taken for granted. How do you keep them hopeful? And do you know that lots of them are headed overseas to teach ESL? Lots. In our circle the number is remarkable. They are checking out quickly and for good reason. They are worried, broke, and they aren't hearing directly from the President they worked to elect.

So they're off to their own version of the 1974 mini-bus tour. Will that matter? I think it will.

Sir Charles


I suspect that the ESL group is more of a demographic anomaly rather than of a size that will impact the election.

(Remember, only about half of 18-21 year olds go to four year colleges. It's easy to have a skewed view of things depending on your own socio-economic surroundings.)

Obviously there could be a depressed youth vote in 2012, which would hurt Obama -- I am inclined to think it won't happen because the Republicans cannot offer anything to the young. Moreover, a large portion of the youth vote is African American or Hispanic. I think when people reference the youth vote they are often talking about young white liberal activists -- but we should remember that minorities are a huge swath of the under 30 population in the U.S. (and now constitue half of the children under 5). Again, I think these young people are going to be quite motivated to vote.

If there is a large Black and Hispanic turnout in 2012, Obama should be in very strong shape.


I was just told (by a UW prof) that UW will be expanding its student body to accommodate out-of-state students without hurting the in-staters. Hopefully that's true.

I share Nancy's concerns about young people dropping out of the 2012 election. The Dems haven't given them much reason to vote.

big bad wolf

sanity, yes. progress, perhaps not. i thought in 2006 and 2007 that whichever dem won the presidency in 08 would have to first start to fill in the hole that the bush administration had been digging us. that proved optimistic, as the recession meant that obama had to try to deal with a huge financial crisis and unemployment in addition to the huge hole that needed filling. getting back to even is a huge job, but i think sanity---in the sense of recognizing that it is a job and that it needs to be done---has a very good chance of being back by january 2013. thus i see no real chance of structural implosion.

i think, and certainly hope, the young will vote. if they don't they have to take responsibility for that, for they will bear the consequences longer than we will. the choice is stark, even if it is between hideous and less than we'd all like.

Krubozumo Nyankoye

Wow, what do you folks do for a living, I guess having saturday "off" really means a lot of free time. I am frankly a little embarassed that I can't even keep up with the comments. But that never stopped me before so without having thoroughly digested everything else that has been said, I will respond to my responders.

Kathy a. Ok. I'll take that as a yes. Let me expand a little. The sane people need to explode the narrative. The deficit fear mongering is bullshit. The brinksmanship over the so called debt limit is more of the same. If they want to play chicken and I were in Obama's shoes I would call the thugs together and say, okay, you think you have some traction with this shit. Well, if you don't raise the debt limit free of riders in the next two days, I will start to nationalize the banks that fund you. Not one by one, but ten by ten. And I will also sic the DOJ on everyone of you sons of bitches for graft and influence peddaling. Make a choice, get back to me in oh say, 20 minutes.

I wish he had those kinds of balls. It might actually work.

SC - absolutely, jobs. The think that is confounding and strange is that the banksters are still making piles of money even though 18% of the work force is in limbo. The reason is pretty obvious actually but hard to explain, more of voodoo economics. At the moment the money people are hard at work pumping up a huge commodity bubble that when it bursts will probably do even more damage than the real estate bubble. All this trading is just junk.

Hype is another term that might apply.

The reality is that labor is the foundation of the economy but if it can be so severely coerced as it has been the last three decades, it is easy to see how such an impasse as we have now could come about.


There is a whole lot of good stuff said later in the thread that I would like to address and generally also agree with but I just don't have the energy to answer to it all.

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