New CBO Director

Doug Elmendorf is the new director of the CBO.  Hopefully he keeps the Director's Blog up and running.

WORDS: "Taint"

Speaking in defense of Blagojevich's appointment of Roland Burris as Senator of Illinois, Bobby Rush said of him that "Roland Burris is worthy. He has not, in 40 years of public service, had one iota of taint on his record as a public servant." Rush's subsequent remarks were designed to distinguish Blagojevich's tainted name—tainted by the "allegations" lodged against him by Patrick Fitzgerald—from Burris's supposedly untainted record. TV commentators seized on the word "taint" to talk about what has become of Blagojevich's reputation in Illinois politics. Though they seemed to be doing so for lack of a better term, this one actually fits the bill pretty well. One definition in the OED of the verb to taint is "to accuse of crime or dishonour." In this regard Blagojevich is clearly a tainted man on both scores.

A Festivus for the Rest of Us

Here is Ta-nehisi Coates on Kwanzaa and the holiday season in general:

"Meh, I don't celebrate Kwanzaa. My Dad was a Black Panther, so I wasn't exactly brought up to think of Karenga (call that Negro "Ron") as heroic. I didn't celebrate Christmas either, and the general consensus in my home was that Kwanzaa was throw-away for people who couldn't deal with not getting gifts. 

But so what? Seriously, this idea that Kwanzaa is fundamentally different from other holidays is silly and unreflective. Debating the holidays, is like debating sex acts. Dude, there's no clean or dirty, only what you're into or what you're not. Do we really want to do the knowledge on Christmas here? Seriously??"

Debating sex acts would be an improvement over spending a couple pay checks on gifts people don't like. Engaging in the sex acts would probably raise social utility even more.  

The Debate over Festivus

A small debate is raging on the Internet over the worth of celebrating "Festivus" in the wake of a Festivus pole that was put up in the Illinois capital. Critics (e.g. here) say it's not a real holiday because it was invented to mock Christmas. They say it's meaningless, not about anything, indeed, invented in a 1997 episode of Seinfeld ("The Strike"), a show that is itself about nothing (FYI: it was really invented much earlier; read the details on Wikipedia's festivus page).

Most of these critics have in mind some idealized image of what Christmas is supposed to be all about. To wit, "a good, merry winter celebration with the tree, the turkey, and the presents, customs mostly borrowed from pagan traditions." Compare Bill McKibben's description: "Christmas is a school for consumerism—in it we learn to equate delight with materialism. We celebrate the birth of One who told us to give everything to the poor by giving each other motorized tie racks.” This reflects a certain cynicism, but at least it is not blind to the way in which Christmas is super-saturated with the imperative to buy, buy, buy. The point is put with neutral understatement on Wikipedia's page on Christmas: "Christmas has become a major event for many retailers."

Against this frenzy of consumerism Festivus was born according to the Seinfeld episode:

Frank Costanza: Many Christmases ago, I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him, I realized there had to be another way.

Cosmo Kramer: What happened to the doll?

Frank Costanza: It was destroyed. But out of that a new holiday was born: a Festivus for the rest of us!

Festivus, like all holidays, is what you make of it.

The Next Move

Brad DeLong links to a post from the Baseline Scenario on the Glen Hubbard article in the WSJ. The Hubbard plan is basically two plans: 1 part freddie/fannie nationalization, 1 part Bailie Mae. The plan is to reduce mortgage rates to 4.5% for everyone, new home buyers and those who want to refinance. Basically, we are going to subsidize housing to get us out of the mess that we got into in large part because housing was generously subsidized. I tend to think a better way of bringing housing supply and demand into balance would be to increase immigration, both skilled and unskilled, massively. Unskilled immigration might be a difficult sell, though, we could always re-encourage illegal immigration by returning to more lax enforcement. However, increasing skilled immigration shouldn't be as tough a sale.

To the People of Illinois: There is No Presumption of Innocence in the Court of Public Opinion

"To the people of Illinois, I ask that they wait and be patient, sit back and take a deep breath, and please reserve judgment. Afford me the same rights that you and your children have. The presumption of innocence. The right to defend yourself. The right to your day in court. The same rights that you would expect for yourselves."
—Rod Blagojevich, 12/19/08

The legal right to be presumed innocent until proven guilty does not apply outside the courtroom. Let me repeat that: if you are not the judge or the jury in Blagojevich's criminal case, the presumption of innocence doctrine is irrelevant and has no bearing on what you say or think. Outside the courtroom, you are allowed to make judgments about the guilt or innocence of the accused, and to profess your views any way you like, make signs, go on television, whatever. The presumption of innocence, as Dick Cavett reminds us, "has nothing whatever to do with you and me. We can talk, write, broadcast and even put up a billboard (if so foolish) stating that the accused is the one who did it. It has to do with our system. If you find yourself accused of a crime, you do not have to prove your innocence. The burden is on the other side. The prosecution has to prove your guilt. That’s about it. And it is not even a rule of law. It is a rule of evidence, relevant only to the judge and the jury."

Auto Bailout

Bush is going to release TARP money for GM and Chrysler.  The terms are actually pretty good for the taxpayer and it appears that the conditions set for receiving the money are similar to what would occur in a Chapter 11 Bankruptcy:

"—Reduce debts by 2/3 via a debt for equity exchange. 
—Make one-half of VEBA payments in the form of stock. 
—Eliminate the jobs bank. 
—Work rules that are competitive with transplant auto manufacturers by 12/31/09. 
—Wages that are competitive with those of transplant auto manufacturers by 12/31/09."

This is probably better than the unions would have gotten in a bankruptcy in so far as it requires the automakers to pay into the VEBA fund (as a result of contract negotiations between the unions and the automakers last year health care benefits for retirees were taken over by the unions but the automakers had to make significant one time contributions to the health care trust fund- VEBA).  I am guessing in a bankruptcy proceeding the judge would tell the unions that there is a neat thing callled medicare and to go enroll.  So this is maybe a little more even handed.

Bonuses

This is brilliant!  Credit Suisse is giving their executives bonuses in the form of Mortgage Backed Securities.  Seems fitting.

This Plutocracy and Nepotism stinks to everybody

It's a good sign for small-d democrats that more and more people are voicing their concern over the rampant nepotism and plutocracy in American politics. Whatever happened to skill and merit? Look for more posts on this issue in weeks to come.

Nicholas Kristof takes account of the scene in these words:

And frankly it is discouraging to see the way the system so often elevates particular families into politics, generation after generation, because of their names, bank accounts and Rolodexes. Bill Clinton and Barack Obama are self-made exceptions, but we now have a president who rose in part because of who his father was, and there are many such cases. After all, Beau Biden seems poised to succeed Joe Biden in the senate from Delaware, once his military service is completed. Ken Salazar’s senate seat from Colorado may be filled by his brother John. And here in New York State, we have a governor who is a second-generation politician who is choosing a senator from among such front-runners as a woman who is the daughter of a former president and a man who is the son of a former governor.

Here's a Letter to the Editor worth noting from a reader of the NYT on the subject:

To the Editor:

It is amusing that Andrew M. Cuomo, who owes his whole career to his dad, may not get the Senate seat of Hillary Rodham Clinton (who owes her whole career to her husband) because David A. Paterson (who owes his whole career to his dad) may give it to Caroline Kennedy (who owes her whole career to her dad).

You would think a state as large as New York could find someone who deserves something on his or her own.

David Machlowitz
Westfield, N.J., Dec. 16, 2008

Ag

Tom Vilsack has been slotted for the Ag Secretary. This an awful but predictable pick. I tend to think this will mean Obama will be inclined to piss more money away on Ethanol.

Update: I might have spoken too quickly. Apparently Vilsack is on record as opposing tariffs imposed on Brazilian sugar based ethanol which is much more efficient than corn based ethanol. I still think this nomination is less than optimal but maybe it is not as bad as I initially thought.

Iraq, shoes, and insults

When Bush was the target of an Iraqi journalist's thrown shoes, most of the major TV news outlets called attention to the insulting meaning of the act. Which is true, of course. But perhaps it would have helped to put the act in a political context: when Saddam Hussein's statue was pulled down in the Spring of 2003, Iraqis pounded it with their shoes.

Inflation

It will be interesting to see what the Fed does now that it has gone ZIRP (Zero Interest Rate Policy).  Obviously cutting interest rates is no longer on the table.  There is more discussion of printing our way out of this mess.  Here is Ken Rogoff on increasing inflation.  Here's Greg Mankiw with more of the same. Here's Paul Krugman.  Arnold Kling Dissents.

We're not that stupid Mr. President

As Frank Rich observes in his book, The Greatest Story Ever Sold, the media has it all wrong about Bush. The problem with W. is not that he's stupid, but that he talks to the rest of us as though we are.

Case in point: his interview with Candy Crowley which aired on CNN today. He said:

"You know, the military looks at the president and wonder whether or not the president's going to make decisions based upon victory. Or, whether or not the president would be making decisions based upon its political skin. And if you ever make decisions based upon your political skin where troops are in harms way, you as commander-in-chief will have a lot of problems keeping the respect of the military."

Frank Rich isn't the only one who knows that this is a total lie - many in the military know this as well. Rich writes:

It was all too predictable that even when the administration was forced into rebuilding Iraq, it would time every pivot point, from the creation of a constitution to the scheduling of elections, to deadlines dictated by Rove's political goals at home (whether a State of the Union speech or a domestic election), rather than to the patience-requiring realities of forging a post-Saddam government. That cynical priority was what had dictated the timing of the rollout of the product in the first place: it wasn't a mushroom cloud that was imminent as the White House pressed for a congressional resolution in the fall of 2002, it was the midterms....Shouldn't it have raised alarms that a war was being rushed on an arbitrary and reckless timetable that was in sync with an American election campaign? (222)

Journalist Crowley: have you not learned anything about the ways of this White House? Shame on you for letting the President's remark pass without question as though it were true.

The Word of the Year

Here's a bit of belated new: The Oxford English Dictionary's Word of the Year is hypermiling.  You learn something new everyday.

The Fed Cuts Rates

They have cut it down to .25%.  The Lost Decade has arrived.

Depression Economics

Over at TPM Cafe they are discussing of Paul Krugman's recently re-released book "The Return of Depression Economics".  Brad DeLong, Dean Baker, Paul Krugman, and Robert Reich are leading the discussion.  Brad DeLong has several insightful posts as is his norm but this sentence jumped out at me: 

"We clearly need to separate capital adequacy regulation from rating agencies that can be gamed in order to eliminate regulatory arbitrage..."

Everyone is constantly calling for regulation to prevent future crises, which is valid.  But we also must look at the extent to which the present regulatory framework fueled the crisis.  One of the things that has clearly emerged is that the securitization of mortgages was favored from a regulatory standpoint as opposed to the traditional model where a bank both originated and held the mortgage.  This in large part fueled the leveraging of the financial sector.  That and the fact that every banker in America was seemingly stupid.

Reducing Wages

I really don't get why bringing the UAW workers wages in line with the rest of the industry is considered beyond the pale.  It is in many senses overly generous. The big three have a horrible reputation for quality.  In order for them to compete they will not only need to build cars of comprarable or superior quality but be able to compete on price.  To me that means that workers' wages need be below that of their competitors.  There are consequences of failure, and those consequences shouldn't be solely borne by the taxpayer.

Czars

Why do we always have policy Czars as opposed to Tsars?

"Double Shot at Love"

Is this for real?

American Bailout

Eliot Spitzer proposes that Washington sets up a competition among the big 3 for who receives the bailout.  Whichever 2 companies present the best business plans get to divvy up the bailout monies.

BTW, Eliot Spitzer is now a columnist for Slate.  Not a bad gig for a disgraced governor.  Maybe Rod Blagojevich could get a weekly column/diary- "Letters from Levenworth".