On TAP: Kuttner + Meyerson

Dayen

Facebook's Faltering on Libra. I previewed the week's hearings for Big Tech today on the website, and I wondered whether Silicon Valley would have any allies on Capitol Hill left. It turns out they have a few, but not nearly enough. 

David Marcus, a vice president of Facebook, testified at the Senate Banking Committee today about Libra, the proposed digital currency. And it became clear from the opening moments, when Sherrod Brown in his opening statement compared Facebook to a toddler playing with matches and committing arson, that Marcus was in over his head.

It took Marcus four asks from Brown on whether he would accept his own compensation in Libra before saying he would. Mike Crapo, the Republican committee chair and not exactly a knee-jerk anti-business zealot, pointed out a contradiction in Marcus' testimony: He stressed that Facebook must be allowed to create this currency or "some other country" (read: China) will, but Facebook set up the association for Libra in Switzerland, home of famously lax banking laws.

Republican Martha McSally bluntly said "I just don't trust you guys." Democrat Brian Schatz wondered why Facebook was starting on currency when it hasn't fixed all the other problems with its regular operations, perhaps out of "Silicon Valley grandiosity" and "boredom." Republican Pat Toomey, one of the more supportive senators, wondered how Libra could be called a nonprofit when the reserves would generate substantial revenue that would be distributed as dividends to initial investors. Democrat Kyrsten Sinema, perhaps the most pro-bank senator on that side of the aisle, laid out how Libra would be a paradise for scam artists. When the folksy John Kennedy cited the "flagrant displays of bullshit" on Facebook, the referee should have stepped in.

It was a bloodbath. Marcus was woefully unequipped to explain how Libra would comply with regulators, how it would prevent bank runs, or really anything beyond a surface level. After the hearing, Crapo said that Libra should be a catalyst for a comprehensive data privacy bill. The strong likelihood is that the currency never rolls out and the proposal spurs additional regulation on Facebook. Slick work, Zuck.

Kuttner

Legal, Safe, Rare—and Bad Advice. The Times just published another piece urging Democrats to temper their support for reproductive rights. This piece, “Democrats Shouldn’t Be So Certain About Abortion,” by one Michael Wear, a political consultant on religious issues, is a classic of cherry-picked poll numbers and disingenuous reasoning. Read it with care.

In fact, as Pew’s polling shows, support for keeping abortion legal has actually increased slightly in recent years.

As I explained in a post last month in response to another misleading Times piece, Americans are ambivalent about having abortions but a healthy majority supports a woman’s right to choose whether to have one.  

The longtime phrase—legal, safe, and rare—still describes how most voters feel about abortion and the right set of public policies. As I wrote in that post:

Americans have been personally ambivalent about whether and why to have an abortion ever since Roe v. Wade. Nobody is eager to have an abortion.

At the same time, majorities of Americans have long believed that the decision of whether to have an abortion, however reluctantly, belongs to the woman. Most Americans are not ambivalent about the policy.

Is this all that complicated? The only thing that has changed is that anti-abortion groups, looking to far-right courts, have come up with one subterfuge after another to make abortion almost impossible to obtain, and have thus muddied the waters.

Republicans have succeeded in making abortion less legal, less safe, in the hope of abolishing it altogether. They’ve also been successful at persuading some strategists and commentators that progressives and Democrats should try to meet anti-abortion activists halfway on the premise that this is where public opinion is.

That would be a huge mistake. It would be giving in to salami tactics, and the anti-abortion right will only keep moving the goalposts.

Most voters are squeamish about late-term abortion. But the idea that we need to ban late-term abortions, on the premise that some women use them as a form of belated birth control, is a total canard. Late-term abortions are invariably performed because the fetus is horribly deformed or the woman’s health is at risk. 

But fake imagery spread by the right and Trump’s claim of a baby “ripped from the mother’s womb moments before birth” animates efforts like Wear’s op-ed to persuade progressives to meet conservatives halfway. 

Wear, who served as Obama’s emissary to religious groups, wrote this: 

If a Democratic presidential nominee held and communicated views that reflected the median Democratic voter, that nominee would support and defend Roe v. Wade, but express moral reservations about abortion itself; offer openness to additional restrictions on abortion, including a ban on late-term abortions with limited exceptions; and call for a set of policies with the purpose of reducing the abortion rate in America, such as paid family leave, workplace protections for parents and pregnant women, increased access to birth control, and a strengthened social safety net.

It’s a huge mistake for progressives to “express moral reservations about abortions,” which only plays into the hands of the religious right. Wear is evidently a foe of abortion, though he is cagey about coming right out and saying it. That makes him an unreliable strategic adviser to Democrats.

Almost inadvertently, Wear is right about one thing. Democrats, when asked should not just flatly declare they are pro-choice. They should take the occasion to explain “legal, safe, and rare,” and what it takes to make abortions rare consistent with a woman’s right to choose, as well the opposition of much of the anti-abortion lobby to birth control. And they should explain the Republicans’ insidious tactics of chipping away at Roe v. Wade as well as the class consequences (rich women will still get abortions.) 

Beware of zealots pushing their own views posing as friendly strategic advisers.

Dayen

Large Crowd Rallies to Stop Private-Equity Hospital Closure in Philadelphia. Health professionals, patients, and lawmakers savaged private-equity baron Joel Freedman for the proposed closure of Hahnemann University Hospital at a noontime rally in Center City, Philadelphia, today. What looked to be over a thousand supporters and activists turned out, shutting down part of Broad Street and condemning Freedman as a "coward" and a "disgrace" who is prioritizing a lucrative real-estate scheme over the lives of patients.

The Prospect has a feature story today about this closure. Hahnemann, a 171-year-old hospital that primarily serves low-income patients (over half of them are on Medicaid), has been marked for closure 18 months after Freedman bought it. He split the hospital from the real estate and is poised to sell the buildings to the highest bidder, presumably for the conversion into luxury condos in a "gateway" community for gentrification.

I spoke with several health-care workers at the hospital who were furious with Freedman for scooping up Hahnemann and selling it off so quickly. "It's just so messed up that this is all happening," said Lauren McHugh, a registered nurse for 17 years with Hahnemann. "The city needs this hospital. I just heard that there are 800 pregnant women that have to find a new place to deliver their babies. We have frequent patients that have cried, 'Where am I going to go?' They don't know. No one knows."

Dawn Andonian, a career nurse, has spent four years in the Hahnemann operating room. "I thought it was strange how quickly the plug was pulled, only a couple weeks ago we were business as usual," she said, holding a sign about Freedman that said 'lock him up' on it. "Maybe [Freedman's] real estate firm is pushing him."

Speakers at the rally excoriated Freedman as heartless. "How many lives will we sacrifice over a business decision?" asked one doctor who spoke. Members of the Philadelphia City Council and the state legislature pledged to do whatever they could to stop the closure.

The situation is among the first instances of a private-equity firm selling off hospital property for real estate. This could feed a trend by the industry to find hospitals in urban areas attractive to developers and strip the assets.

"I don't know how he sleeps at night," said McHugh. "This seems to have been his plan all along, to buy this place, let it fail, and shut it down. It's sick, is what it is."

I also spoke with Maria Garcia-Bulkley, a cancer patient who has been receiving chemotherapy treatment at Hahnemann since February. "I would like to complete my last round of chemo in August so I could be with the people that I trust and that have taken very good care of me." Through tears, she told me about the amazing care she's received at the hospital. "They're the best."

 

Dayen

Another Stop Sign for Self-Driving Cars. Elon Musk is unhappy: Somehow his grand vision of allowing every Tesla owner to sleep in the back of the car while they're whisked around to work and play hasn't come to fruition. According to an article at The Information, Musk has fired several top managers working on Tesla's "Autopilot" feature, including the group's leader, over frustrations with the failure to create a fully self-driving car.

Maybe the problem isn't with the engineers but the concept. I have a file of links going back a year with false starts and missteps on self-driving cars. The concept seems rather simple, but not all roads are created equal. In particular, Musk's anger stems from the software being slow to adapt from highway to city driving.

It may not surprise you that it's easier to program in driving 65 miles per hour on a long straight road, rather than moving through one-way, narrow, jagged-angled streets in a busy urban environment, with delivery trucks and Ubers and pedestrians and everything else getting in the way. "The system often doesn't know how to recognize parked cars because it is not a common feature of highway driving," the article notes, which seems somewhat necessary.

My concern has always been that Tesla or other self-driving car barons will sell cities and states on putting public money into the mother of all infrastructure projects to accommodate the vehicles, basically rebuilding cities from scratch, or dedicating special lanes to the products of private companies. There are lots of better things we can be doing with the enormous sums that would have to be put to that task. Meanwhile, all the major self-driving car companies are consolidating, narrowing to a few leaders that will maintain outsized economic and political power. That makes the nightmare of a public bailout for private automated vehicles more likely.

Musk has promised a fully automated, self-driving Tesla by 2020, and now he's starting to realize that he cannot deliver. It's becoming a problem for a company whose stock has fallen 25 percent this year. Maybe a big-talking techbro who never follows through on his grandiose claims isn't the savior America needs?

Kuttner

Trump’s Clumsy Dance With the Federal Reserve. It’s hilarious to watch the three-way dance between the economy, the stock market, and Trump’s hapless effort to fill two open seats on the Federal Reserve. Or, it would be hilarious if the stakes were not so high.

Alert readers will recall that Trump has been badgering the Fed to push interest rates even lower, despite the fact that they are near historic lows, as is the unemployment rate. The stock market, which behaves perversely relative to the real economy, has been hitting new highs, because of the expectation that the economy will soften, giving the central bank a rationale for cutting rates.

But, oops, the June jobs report, released this morning, showed a healthy gain of 224,000 jobs, which means that the Fed is less likely to cut rates, and of course the stock market tanked.

Meanwhile, Trump has turned to two nominees to fill the open seats, after his two earlier nominees, Stephen Moore and Herman Cain, suffered humiliating rejections by Senate Republicans, as crackpots. The two new nominees are Christopher Waller of the St. Louis Fed, a supporter of low interest rates, and Judy Shelton. 

Of these, Shelton is not just a crackpot but a shameless opportunist. A chum of White House economist Larry Kudlow who served on the Trump transition team, Shelton is best known as an advocate of a return to the gold standard. But she has been born again as a proponent of very cheap money.

The two positions are completely contradictory. The gold standard is the epitome of tight money. Nations went off the gold standard in the 20th century because it artificially constrained the money supply and prevented the economy from reaching its potential.

The combination of crackpot, self-contradictor, and opportunist makes Shelton a perfect fit with the Trump White House. But she is not likely to be confirmed. Pro-Wall Street Republicans may also be opportunist and willing to make a pact with the devil (Trump) on most issues, but they don't like crackpots on the Fed.

So the Fed, unlike the Supreme Court, continues to survive as island of semi-autonomy from Trump. He can tweet until he is blue in the face, but that’s not likely to change soon.

Kuttner

The Medicare for All Red Herring. Some pundits have taken to warning supporters of Medicare for All that it is a gift to Republicans in the general election. Supposedly, Medicare for All would dismay the vast majority of Americans who are broadly satisfied with their employer-provided insurance. 

And as Representative John Delaney declared in the first of the two Democratic debates, if you got rid of other forms of insurance and reimbursed hospitals at Medicare rates, hospitals would soon go broke because private insurance pays hospitals higher rates and in effect subsidizes Medicare. As Jeff Greenfield observed in a piece for Politico, Delaney made that point in the first debate taking a shot at Bill de Blasio, but the real targets are Elizabeth Warren and Bernie Sanders.

Sounds plausible, but let’s think a little harder. The premise is that if we enacted Medicare for All, we could simply cover everyone under existing Medicare and not change anything else in the system. But that’s not how the actual reform would work.

For starters, we’d have to rid the system of much of its commercialism—all the other middlemen who add costs, and not just the insurance companies. Secondly, we’d have to change the way physicians and hospitals are compensated, to get rid of the incentives to raise costs. Third, we’d retain the right of people to purchase supplementary insurance.

Somehow, all of the nations with universal health insurance manage to achieve these feats. Hospitals get enough funding to deliver good care; consumers have ample choice; doctors have decent compensation and much less arduous conditions of practice; no parasitic entrepreneurs get filthy rich off of other people’s suffering; and the entire system operates at far less cost.

In short, the transition to Medicare for All or some other variant or single payer does present policy imperatives as well as a tricky political narrative. But neither challenge is insurmountable. 

People would end up with better, cheaper, and more reliable insurance. And you can’t get to Medicare for All without reforming other aspects of our broken system. As the techies like to say: That’s not a bug; it’s a feature.

The argument that we can’t get to Medicare for All without massive damage to the health system or the health of the Democratic Party is simply a red herring. Shame on the opportunistic Representative Delaney. And the pile-on pundits need to dig deeper and think harder. 

Dayen

The House Border Supplemental Debacle. While we’ve spent the past two days watching candidates who want to win the next election, we’ve neglected a disaster from the winners of the last election. For the past week, the House has been working on a $4.5 billion emergency border supplemental appropriation, responding to the inhumane conditions in migrant holding cells. Progressives wanted to condition aid so it only went to improving standards for migrants, and wasn’t stolen by the president to finance deportation raids or a border wall.

The Progressive Caucus worked closely with Nancy Pelosi to craft those conditions. Alexandria Ocasio-Cortez played the inside game to improve the policy. The bill would have specified the delivery of food, water, sanitary items, and medical care to migrant children, would have limited stays in holding cells to 90 days, and would have terminated the contracts of all for-profit management companies who violated the standards. The process was hard-fought and progressives didn’t get everything, but they advanced the policy.

And then it all fell apart. Senate Republicans neglected the House bill and got widespread Democratic support for its own $4.6 billion measure, which had none of the conditions to limit the funding to emergency aid, and even earmarked some of it for continuing President Trump’s draconian immigration policies, including funding for ICE that the House left out, and money for the Pentagon likely to go to tent camps to warehouse more migrants.

With Chuck Schumer failing to coordinate with Pelosi and enabling such big bipartisan support, McConnell could just jam the House and leave town, telling Pelosi to take it or leave it. She took it. The last straw was a rebellion by House centrists led by Josh Gottheimer, who organized enough votes to block the House from putting back in the safeguards. Pelosi caved, putting the Senate bill on the floor for an up or down vote. It passed strongly, with 129 Democrats supporting it.

This was an all-around debacle. Schumer did nothing to back up the Democratic position. The centrists fought to give Trump a blank check. And Pelosi got herself backed into a corner to such a degree that she simply accepted a bill her majority had no hand in writing. House Democrats had leverage over the process that they squandered. In the end, a week of disgusting images at the border that repulsed a nation ended with Trump getting more money to carry out the same abuses, without accountability.

It calls into question whether last November’s victory signified any real change, and raises ominous questions about next year’s efforts. If Democrats don’t have the backs of children sleeping in cages, whose backs will they have?

Kuttner

When the Grown-Up in the Room is Trump. For two years, the grown-ups in the room restrained Trump. He managed to get rid of all of them—an attorney general in Jeff Sessions who wasn’t willing to do all of Trump’s bidding; some White House chiefs of staff such as Reince Priebus who acted to protect him from himself; the traditional generals who served as homeland security secretary, and national security adviser, and secretary of defense. 

Trump managed to get rid of them all. Now he has in Bill Barr, Mike Pompeo, and John Bolton senior advisers who are even more reckless than he is. Plus Mick Mulvaney as White House chief of staff, and Steve Miller as all purpose wing-nut.

So last week, we were treated to the spectacle of Trump reining in his advisers. And almost behaving like a normal president as he sought a diversity of views before pulling the trigger on war with Iran. 

Thankfully, Trump watched Tucker Carlson on Fox, warning him that an Iran war would be fatal to his re-election campaign, rather than tuning in to Sean Hannity egging him on. In the Trump era, this passes for restraint. 

Meyerson

Why Willie Sutton Is a Sounder Guide to Taxing Wealth Than Chuck Lane. Today, the Economic Policy Institute and the Institute for Policy Studies are holding a conference entitled “Taxing the (Very) Rich,” featuring such luminaries as New York Times columnist Paul Krugman, author Barbara Ehrenreich, Senator Chris Van Hollen, Congresswomen Pramila Jayapal and Jan Schakowsky, and a veritable minyan of economists. Moreover, a number of certifiable gazillionaires, including George Soros and Abigail Disney, just released a letter calling for a wealth tax, a cause that their fellow gazillionaire Eli Broad also embraces in a Times op-ed today. In his article, Broad argues, persuasively, that all the charitable giving that he and his peers have undertaken, and all the progressive economic policies that his state (California) and city (Los Angeles) have enacted, still fall woefully short of remedying our stratospheric levels of economic inequality. Taxing the nation’s great fortunes, he concludes, is required if we are ever to seriously seek to rebuild our middle class.

In an endeavor to halt this rush to social decency and economic viability, a host of right-wing and centrist commentators have punditized that wealth taxes don’t work. In today’s Washington Post, columnist Chuck Lane argues that the Nordic countries tried wealth taxes and then abandoned them (well, actually, Norway didn’t; it still has one), and that expanding social programs requires major tax increases on the middle class. He advances this argument the better to pooh-pooh Senator Elizabeth Warren’s proposal to levy such a wealth tax.

What Lane’s argument misses is that the level of income and wealth inequality in the United States is many times higher than those in the nations of the Nordic north. Comparing the Gini coefficients (in which zero equals perfect equality of income and 1 equals all of a nation’s income going to just one person) of the Scandinavian nations to that of the U.S., the coefficients of the four Scandinavian nations range from 0.25 to 0.28, while that of the U.S. is 0.39. The Nordics are not nations where median incomes (particularly when their generous social benefits are factored in) have stagnated since the 1970s, as is lamentably the case here. Nor is ours a nation where the great mass of taxpayers are accustomed to getting their full money’s worth in social benefits, as most Nordic taxpayers are. Polling shows that taxing wealth is a popular, and hence, potentially enactable, idea, should an anti-plutocratic government emerge following the 2020 election. A lot more popular and enactable than raising taxes on the middle class.

In short, neither the economic nor the political preconditions for levying a tax on great wealth in the United States are comparable to those in Scandinavia. A look at our nation’s comparative levels of inequality and the political perceptions shaped by those levels suggests that Broad and his cohort are right. We should tax wealth here for many reasons, most particularly that which Willie Sutton advanced in explaining why he robbed banks. “That’s where the money is,” he said. Indeed.

Kuttner

Trump: The Wrong Version of the Right Policy, Take Two.  As we’ve seen, Trump has moved into the vacuum on trade policy left by globalist Democrats and Republicans who care more about corporate interests than about working Americans. Trump has also made far more of an issue of China’s abusive mercantilism than previous administrations of either party. 

The trouble is that Trump is royally screwing up the delicate carrot-and-stick diplomacy with Beijing, and may yet roll over for token concessions by the Chinese that he can depict as a great victory.

That’s Exhibit A. Exhibit B is interest rates. 

Trump has been crudely strong-arming the Federal Reserve to cut rates. He’s threatened to fire Fed Chair Jerome Powell, even though the president lacks the power to do that. But his threats have had some effect. Interest rates have stayed very low and Powell has indicated that they will be cut further if the economy encounters headwinds.

Other presidents have played games with the Fed, though usually with far more delicacy and finesse. But Trump has a point. The Fed, with its built-in creditor bias, would rather risk a recession than the faintest whiff of inflation. 

The Fed chronically errs on the side of overly tight money at the expense of the real economy. The main exception to this pattern was in the aftermath of the 2008 financial collapse, when the Fed opened the spigots. Why? Because in these dire circumstances, the banks, playing against type, were the advocates and recipients of the cheap money.

But in the aftermath of the collapse, the Fed reverted to its own type and tightened money too quickly after 2010, needlessly slowing the recovery, even as Fed economists fretted that the inflation rate was too low. So once again, even if Trump violates the usual norms of relations between the president and the supposedly nonpolitical (read pro-Wall Street) Fed, Trump is right to warn the Fed to keep rates low. 

His action may be totally self-serving—having a strong recovery in the election year—and it may be short sighted. But once again, as on trade, he has stolen the Democrats’ clothes.

Left-Democrats have criticized the Fed for its overly tight money bias, but the centrist Democrats and their financial advisers who have held the White House mostly share the Fed’s excessive inflation phobia.

For the most part, Trump is a corporate stooge, as well a congenital liar, an aspiring dictator, and a corrupt kleptocrat. But every once in a while, his populism has real content. That’s another of the things that makes him so dangerous.

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