Ezra Klein


A lot of labor-types will be unhappy that Andy Stern told the Washington Post editorial board that card check might not pass and unions might need to find an acceptable compromise. But I find it heartening. Card check almost certainly won't pass this Congress. You can't do it through reconciliation, Specter was the likeliest Republican supporter and he defected, and conservative Democrats like Webb and Lincoln are now talking the legislation down. Making card check the only bill that labor will support -- denying, in other words, the possibility of compromise -- might slightly increase its chances of passage, but only from extremely unlikely to very unlikely. Opening up the subject of compromise, however, makes it more likely that labor will end the year with some sort of victory rather than a very noble defeat.


The New York Times reported yesterday that the government is likely to begin converting the government’s existing loans to the nation’s 19 biggest banks into common stock. Paul Krugman is not a fan of this strategy, and he makes that clear by analogizing it to yo' momma (you think I'm kidding. I don't kid.). Felix Salmon is more positive . Reports, however, have suggested that the Treasury Department is embracing as a way of stretching the remaining TARP dollars rather than as a policy to better the health of the banking system. That, as some have noted, doesn't make a whole ton of sense. But the theory, as I understand it, is a little bit different. This doesn't increase the bank's access to public dollars. Rather, it increases the bank's access to private dollars. Here's how it works: The government has used a lot of its TARP funds taking out preferred shares in the banks. The banks, in theory, will pay that money back once they are healthier. But healthier might take awhile...


According to The Wall Street Journal , Timothy Geithner has indicated that the health of individual banks won't be the sole criterion for whether financial firms will be allowed to repay bailout funds. But as Felix Salmon writes , it's not clear that he has the authority to impose new conditions on TARP participants. The relevant line in the law isn't too hard to parse: Subject to consultation with the appropriate Federal banking agency (as that term is defined in section 3 of the Federal Deposit Insurance Act), if any, the Secretary shall permit a TARP recipient to repay any assistance previously provided under the TARP to such financial institution, without regard to whether the financial institution has replaced such funds from any other source or to any waiting period, and when such assistance is repaid, the Secretary shall liquidate warrants associated with such assistance at the current market price. So we're watching a collision between Timothy Geithner's preferences and...


James Webb, it seems , will not be supporting the Employee Free Choice Act, and won't even say if he'd support efforts to break a filibuster and let it get to the floor for a vote. That's a significant blow to EFCA, and something of a surprise given Webb's carefully cultivated image as an economic populist.


Over at the Congressional Budget Office, they've announced the composition of this year's Health Advisory Panel. "We host periodic meetings of the advisers at our office and solicit their views between meetings via e-mail exchanges and conference calls. Through these interactions, we benefit from the advisers’ understanding of cutting-edge research and the latest developments in health care delivery and financing. As a result, the quality of CBO’s analysis of health policy is greatly enhanced." It's a good group -- sort of a who's who of heath wonks. Notable participants include David Cutler, the architect of Obama's health care plan in the primary, and Jonathan Gruber, one of the key contributors to the Massachusetts reforms.


Over at the OMB's Blog, Peter Orszag gives a warm welcome to Cass Sunstein, who's nomination as head of the Office of Information and Regulatory Affairs is now official. Over the course of his career, Sunstein has done a lot of work, some of it mildly controversial, in the area of cost-benefit analysis. That's a pretty natural intersection with the duties of OIRA. But that's not where Orszag focuses: One of the most important intellectual developments of the past several years that has had a huge impact on my own thinking has been the rise of behavioral economics. By taking the insights of psychology and observed human behavior into account, we now have a fuller picture of how people actually behave – instead of just reducing them to the hyper-rational utility-maximizers of Econ 101. Cass Sunstein, while not an economist, has been at the forefront of this intellectual vanguard – most recently, with his acclaimed book Nudge, co-authored with Richard Thaler – and I am pleased to...


Tangentially-related to the question of whether Wall Street types deserve their compensation packages is the yearly phenomenon in which actively managed mutual funds underperform the market. Between 2004 and 2008, 66.21% of domestic funds did worse than the S&P Composite 1500. In 2008, 64.23% underperformed. In other words, if you had a fund manager and his employees bringing their skill and knowledge to bear on your portfolio, you probably lost money as compared to the market as a whole. That's not to say you lost money in all cases. Just in most. Full numbers here .


I'm less enthused than Jon Cohn by Carrie Budoff Brown's Politico story suggesting Republicans are in disarray on health reform. Brown's argument is that Republicans are in desperate need of a plan. I agree with that. But Budoff thinks they need a Republican plan. I think that's backwards. What they need is a Democratic plan. And soon enough, they'll get one. Jon, I think, indirectly makes the point, drawing the contrast to 1994: Just days after Clinton formally delivered his plan to Congress, strategist Bill Kristol delivered his now-famous memo urging Republicans to oppose any universal coverage proposal rather than work on compromise. It quickly became the Republican leadership strategy, one they carried out in close coordination with an array of health industry groups. Meanwhile, Democrats squabbled among themselves and the big interest groups expected to support reform--labor and retirees--largely sat on the sidelines until it was too late. (Labor was still angry about Clinton's...


• America can be...wrong? • A.P. Economics vs. Real Life. • The precedent for using the reconciliation process. • Are we safe from terrorism yet? • "GOP stumbling in health reform fight." • The administration's latest strategy for stretching the TARP money.


That's the question quietly lurking amidst Gabe Sherman's exploration of banker rage. The bankers, of course, are baffled. "There’s a vast woundedness now on Wall Street," writes Sherman. "Just months ago, the masses kept what anger they had to themselves, and the bankers were close-lipped about what they thought they were owed by society. There wasn’t much of a dialogue about the haves and have-nots and who was entitled to what. For the privileged, it was a lot more comfortable when things remained unspoken." But just because words are spoken doesn't mean they're heard. The bankers see efforts to limit their pay as vengeance masquerading as public policy. “People just don’t get it,” says one banker. “I’m attached to my BlackBerry. I was at my doctor the other day, and my doctor said to me, ‘You know, I like that when I leave the office, I leave.’ I get calls at two in the morning, when the market moves. That costs money." Bankers unlike doctors, work really hard . And so should be...


McSweeney's gave him room to opine : The other day, Nurse Toadstool and I talked in the break room over reheated mushroom casserole. She appeared sad. She mentioned turning a Goomba away because his health insurance wouldn't give him enough gold coins for treatment. Then I realized why the same viruses continue to appear again and again. Each time we turn a patient away for financial reasons, not only are we denying care to the poorest creatures, who often need it the most, but we're putting the disease back into the world, where it continues to spread. Furthermore, the patients I do treat get hooked on my expensive medicine. Mushroom Kingdom's health-care system has turned into a sick, addictive game. Are we under one of Bowser's spells? A basic human need like health care should not be monetized. Even our pack dinosaurs and humanoid mushrooms deserve coverage—a healthy workforce generates more points and 1-ups, increasing the chances of long-term gameplay for everyone. Clearly, a...


I'm probably going to do another post on Gabe Sherman's exploration of Wall Street's rage. But this story is worth quoting on its own: It should come as no surprise that being a banker—indeed, simply being rich—is going to be a lot less fun under an Obama administration. In winter 2007, as the Democratic-primary contest got under way, Obama showed up at a Goldman Sachs client meeting to explain his economic agenda to a conference room full of potential campaign contributors. When he opened up the session to questions from the audience, one attendee lobbed the question that was surely on the mind of everyone in the room. “Are you going to raise my taxes?” Obama looked out across the millionaires sitting around him. “Yes,” he answered, without a flicker of hesitation, according to a person familiar with the meeting.


PK does the math: Let’s say the administration finds $100 million in efficiencies every working day for the rest of the Obama administration’s first term. That’s still around $80 billion, or around 2% of one year’s federal spending. Which is why it's smart for Obama to wrest some headlines by promising $100 million in efficiencies. He's playing on the electorate's inability to distinguish types of "illions." Most people will never see a million dollars. Fewer will see $10 million. $100 million is getting into unimaginable sums. It's the rare human being who can really conceptualize a billion dollars. And trillions? That's a joke, right? The government thinks on the scale of aggregate national income. Voters think on the scale of individual income. You can get away with a lot of mischief exploiting the vast distance between the two. Cutting a program with $100 million is much easier, and no less politically rewarding, than cutting a program worth $2 billion. I wouldn't be surprised, in...


The Pulitzers are out. Verdict: The New York Times is a good newspaper. Question: When will there be a blog Pulitzer? Or at least an online Pulitzer? If newspapers with a particularly sharp editorial cartoonists can win the prize, surely newspapers with particularly innovative online operations should be in contention. This stuff matters!


Correlation, as they say, is not causation. But the two sure do go together an awful lot. Which is why this chart makes the rounds in certain circles: But though sunspot activity correlates with recessions, it doesn't correlate with financial crises. The Great Depression was the only economic downturn on the graph to happen in a sunspot trough. But the graph only stretches till 2003. The Connecticut Examiner, however, gives us the details on 2008: 2008 was considered a very deep solar minimum where no sunspots were observed on 266 days out of the year (73%). Only one year during the last 100 years observed a lower sunspot activity, 1913 (85%). As of April 19th, there have been no sunspots observed on 96 out of the 109 days (88%) so far this year. So we can say, with very little confidence, that lots of sunspots mean recession and no sunspots mean much worse recession. Everything, as they say, in moderation. Even sunspots. ( Via .) Image used under a CC license from DSearls .