Lawrence Summers as Fed Chair: The View From Climate Policy

Lawrence Summers: Does The Emperor Have Any Clothes?
Lawrence Summers: Does The Emperor Have Any Clothes?

Lots of debate in Blogistan and elsewhere about President Obama’s apparent desire to appoint Larry Summers as Fed Chair.  We know (or at least we think we know) that he is brilliant, but he has a strange tendency to get matters of judgment wrong.  He supported the abolition of Glass-Steagall, endorsed deregulation of the financial industry, and seems to have little desire to admit that he got these things wrong.  Plus, there are sexist overtones to the seeming refusal to want to appoint current Fed vice-chair Janet Yellen, an outstanding economist in her own right.

All right.  But what does this have to do with climate policy?

Interestingly, a few years ago, Summers participated in a Council on Foreign Relations task force regarding climate policy options.  Like all CFR task forces, this one was self-consciously centrist, chaired by former New York Governor George Pataki (relatively moderate Republican, especially on climate issues) and former Iowa Governor (and now Agriculture Secretary) Tom Vilsack (moderate Democrat).  Its report, Confronting Climate Change: A Strategy for US Foreign Policy, is a quite comprehensive view of the stakes of climate policy, at least as of June 2008, when it was written.  It recommends putting a price on carbon, reducing emissions to the Kyoto level, and several other policy options.  Summers signed it.

But interestingly, Summers also appended a very short “comment” to the report, which says something about potential behavior as Fed Chair (how much is up to the reader).

Here are the two key graphs of his comment:

I have signed this report because it makes the need for urgent action on climate change clear and presents a smart and thoughtful agenda for reducing U.S. emissions, building international consensus, and promoting international action, with which I broadly concur.

The Task Force rightly notes that the costs of addressing climate change are highly uncertain, but I remain concerned that many policymakers do not sufficiently appreciate how large these uncertainties are or the consequences of paying them insufficient attention. Environmental certainty enjoys much attention while uncertainty over the cost of cutting emissions receives too little. This balance is wrong, particularly in the short term, since emissions in any given year matter little, while high costs, even for a short period, can cause substantial economic harm, particularly to the most vulnerable.

A few things jump out here:

1)  Summers gets the politics of climate change exactly 100% wrong.  The gravamen of his argument, i.e. “we are hurtling toward overregulation in the climate sphere” was wrong at the time and has been proved to be completely inaccurate.  To the extent that a Fed Chair has to be cognizant of political trends, this is not a good sign.  Anyone can get political prognostication wrong: but to go out of your way to get it wrong is a black mark.

2)  Summers makes no real substantive contribution in his comment.  He seems simply to want to emphasize, “I am thinking about things that no one else is.”  This on a task force with some of the leading thinkers in the field.  This does not bode well for a position like Fed Chair, which requires building consensus.

3)  He was wrong about what other people are thinking about.  Scholars and policymakers have been thinking about uncertainty all the time and had done so for more than a decade.

4)  To the extent that his emphasis on short-term costs and long-term benefits is a sub silentio call for a carbon tax, he was also wrong about its salience: the carbon tax idea was being promoted literally by dozens of scholars and policymakers.

5)  To the extent that his emphasis on short-term costs and long-term benefits is a restatement of the need of a high discount rate, it is not backed up by any facts or reasoning.  It also is wrong on the absence of short-term costs.

I keep hearing that Summers is a very brilliant man, and would do a wonderful job as Fed Chair.  To the extent that his intervention in climate policy is any indication, there is absolutely no evidence of this, and in fact the evidence demonstrates the opposite.  I’m assuming for the time being that the Emperor has clothes: but it would be nice to see them eventually.

The democratic elite and the white working class: only connect

Andrew Levison’s book on the White Working Class is a great piece of political strategy. It’s also a great piece of self-help for the professional-managerial class who know less than they think about how ordinary people think and live.

I just finished reading Andrew Levison’s The White Working Class Today. (Uptight disclosure: Levison, as editor of The Democratic Strategist, has published a couple of my pieces and is a cyber-friend of mine.) The take-away blurb is, yes, buy the book if you’re at all interested in political strategy, rhetoric, or the future of the Democratic party. But it’s worth saying a bit more about what the book teaches, and in particular what books like this can teach the kind of out of touch, self-appointed opinion leader that I used to be. Continue reading “The democratic elite and the white working class: only connect”

Why does David Brooks want to take the politics out of politics?

If Republicans want to vote against reasonable and popular ideas about guns, immigration, women’s rights, and public finance, why shouldn’t that cost them votes? Their alternative is to vote for those ideas.

David Brooks’s latest column reminds me of the definition of an “independent” as someone who wants to take the politics out of politics. Except that by “politics” Brooks means, not merely corruption or patronage, but the clash of rival ideas about the public good.

Brooks is horrified by the idea that the Democrats might - OMFG! - try to win the 2014 elections. And do so the dirty, slimy way, by proposing reasonable and popular policies that Republicans will nevertheless oppose. He imagines some Rasputin whispering in the President’s ear: “Twice a month, Democrats should force Republicans to cast an awful vote: either offend mainstream supporters or risk a primary challenge from the right.” Brooks identifies guns, immigration, women’s issues, social mobility, and the budget as issues where Democrats might corner Republicans.

And then Brooks wonders how the Republicans will respond.

Well, they have two choices, don’t they? Act like the lunatics only some of them really are but most of them play on C-SPAN, and risk losing their seats to Democrats in November, or act like sane patriots and risk losing their seats in primaries to other Republicans crazier or more cynical than they are.

And of course the plutocrats who bankroll the party will have to make up their own minds about how to deal with the challenge.

Either way, the country wins: we get some sensible legislation through and recapture the Party of Lincoln from the Confederate/Know-Nothing coalition, or we have a chance, despite the Great Gerrymander, of having a House of Representatives that reflects the will of the voters (which might shock the GOP out of its dogmatic slumber).

So why is this not the Washington David Brooks wants to cover? Does he really find the question of an infrastructure bank so utterly compelling? Or is he just appalled by the idea that the voters should have clear choices?

Fan Mail


Although I sometimes disagree with Jonathan Chait (as in this RBC post), I’ve been a big fan since his days at The New Republic.  He now writes for New York Magazine, which published his remarkably prescient mid-October essay about the fiscal cliff. Directly or indirectly, that essay shaped much of the subsequent public debate on the subject (and inspired one of my own recent NYT columns).

If you don’t know Chait’s work, a good place to start is yesterday’s post about Republican rage at the trillion-dollar platinum coin proposal. If I were the business owner whose argument Chait deconstructs, I’d go immediately into hiding.

If you don’t like this piece—well, there’s no accounting for taste.  But if, like me, you can’t think of anyone whose writings about the recent fiscal wrangling have been more reliably informative and readable, you’ll want to bookmark his NY Magazine archive and read him first thing each morning.


Obama’s New Leverage: Implement The Defense Sequester

There is much bemoaning in Blue Blogistan that by agreeing to the fiscal cliff deal, President Obama relinquished his leverage of the sunsetting Bush tax cuts.  (Markos says that the higher tax rates are the President’s “ONLY leverage.”).  Even those who aren’t angry think that somehow he has little leverage left.  I don’t think that that’s right.

Consider the defense sequester, which Very Serious People inside the Beltway believe to be some sort of problem.  I see no basis for this belief.

If the defense sequester is implemented, then defense budget will be — what it was in FY 2007, when we still had hundreds of thousands of troops in Iraq.  Keep that in mind the next time you read about how the sequester will give us a “hollow force.”  Did we have a hollow force during the Dubya Regency?

Micah Zenko of the Council on Foreign Relations has made the point succinctly:

The Bipartisan Policy Center projected that defense sequestration, if triggered, would lower the Pentagon’s budget (excluding war costs) for fiscal year 2013 to $498 billion. As then-Secretary of Defense Robert Gates quipped in July 2009: “If the Department of Defense can’t figure out a way to defend the United States on half a trillion dollars a year, then our problems are much bigger than anything that can be cured by buying a few more ships and planes.”

Conservatives often make similar arguments about domestic spending: “we are just going back to what we were spending five years ago!”  Progressives reject this, and I think rightfully, because our population is greater, and economic conditions are different (e.g. spending the same on Food Stamps during a recession and during an expansion makes no sense under Economics 101).  Would the same principle apply to defense spending?  Hardly.  There is noting about cyclical conditions that makes spending money on a bloated military establishment equivalent to spending on counter-cyclical policies such as Food Stamps and unemployment benefits.  Just as importantly, the terms of the defense sequester specifically allow the President to exempt salaries and benefits for military personnel, and President Obama has already ordered this exemption.  If advocates of ending the sequester believe that it is the best way to maintain counter-cyclical policies, then they must do things that thus far they have refused to do: 1) show why defense spending represent good counter-cyclical policy; and 2) give up the right-wing Republican nonsense that we should reduce spending in the first place.

Many of the most detailed arguments in favor of the defense sequester come from the Center for Strategic and Budgetary Assessments, a think tank that I admit I had not heard of before: its crucial backgrounder on the defense sequester can be found here.  Is it a real operation, or a fake think tank like the Tennessee Center for Policy Research, a Koch-funded libertarian whack job outfit that became briefly famous for “finding” that Al Gore’s home in Tennessee was an energy guzzler (a claim that has yet to be confirmed)?  CSBA looks to be the real deal, or at least hardly a left-wing front: it’s board members include David McCurdy, Pete Dupont, and James Woolsey.  Whatever else one might say about it, its people aren’t hanging out with Wavy Gravy.

The sequester method is hardly the best one to effect long-term, measured reductions in the defense establishment.  But we should not make the perfect the enemy of the good. Defense Secretary Panetta has been egregiously irresponsible with his Chicken Little warnings about what will happen if the sequester is implemented.  A new Defense Secretary cannot come too quickly.

President Obama needs to use the leverage that the defense sequester gives him.  The Republicans want to get rid of the defense sequester — badly.  By now, we should all be past the silly notion that the GOP wants to reduce spending: it only wants to reduce spending that could possibly assist low-income and working Americans.  Very well, the President has to say: I will veto any bill that gets rid of the defense sequester unless I get my own priorities in spending and revenue.  End of story. 

And conversely, if the President does not use this leverage, and instead agrees to benefit cuts in Medicare, Medicaid, Social Security, and crucial domestic priorities, he will have no one to blame but himself.

Put Obamacare On The Table!

Kevin Drum notes that Republicans insist on something called “entitlement reform,” but have no actual ideas about what this reform might mean  (aside from getting rid of Medicare).  So now they are insisting that President Obama make the first offer, which is a laughable position.  The also insist on “putting Obamacare on the table”, which the White House immediately rejected.

But maybe it shouldn’t.  If we’re talking about reducing entitlement payments, wouldn’t it be great if we could find something that could save, say, $500 billion over ten years, but not reduce access to coverage and actually make the health care system more efficient?

Oh wait: we do!  Remember the public option?  That’s what it would do, according to the Lewin Group and the Urban Institute.   Both studies estimated a public option at saving the federal budget $50 billion a year.  And if anything, those estimates are conservative, because they do not assume that Medicare providers would be mandated to accept public option patients (as they should be), and they also assume large “cost shifts,” i.e. increases in private insurance costs, which have no empirical basis.  So I say put Obamacare on the table and put in a strong public option.

What’s that you say? That such an action would reform entitlements and save money, but that the Republicans would never go for it?  Gosh, it’s almost as if the GOP doesn’t really care about saving money and really only wants to cut people off of health insurance.  I can’t imagine why anyone would think that.

If you’re looking for action …

Let’s keep the campaign going! Sign up at

I was planning a long post on the need to keep the Obama electoral organization in being to pressure Congress, continue voter registration, try to make the 2014 electorate look like 2012 rather than 2010, and punish the lawmakers and officials (e.g., the Ohio Secretary of State) who engaged in vote suppression this year.

Apparently it’s going to happen. In the wrap-up mass conference call with Obama volunteers, the campaign urged them to sign up at Not sure how much of the above agenda it’s going to pursue, but the first focus will be the fiscal-cliff negotiations. I urge you to give of your time and your money to help make this happen. The capacity to mobilize masses of voters outside the election cycle would mark an epoch in American history, and might help repair the damage done by the growing power of dark money.

The Last Refuge of Scoundrels

Filegate.  Travelgate. Whitewater.  Birtherism. Solyndra. Fast and Furious.  Notice a pattern?

When there is a Democratic President, Republicans are quick are quick to make wild accusations of wrongdoing that turn out to be a huge nothingburger.  (Oh yes, they did impeach a President for having sex with an intern.  Saving the Republic, that.).

Now we are hearing about Benghazi.  There might be things to be investigated there, but it is painfully obvious that Republicans have no interest in actually finding them out about it.  If they did, then they would attempt to actually investigate.  Instead, we have hissy fit threats of filibusters from has-beens like John McCain and pompous lectures from never-weres like Lindsey Graham.  By the way, you know during the seven times that embassies and consulates were hit during the Bush Administration?  Still waiting for outraged threats from McCain and Graham.  You know that small event that occurred on September 11, 2001?  If Democrats had responded with half the vitriol of Republicans after Benghazi, Fox News would have accused them of treason.

It’s been obvious for a while that the essential Republican ideology, at least after plutocracy, has been to put party over country.  After January 1st, when the Republicans don’t budge on raising taxes on the $370,000+ a year crowd, Obama might try to remind the American people of this.

Instead of shutting down Organizing For America, the President needs to make it a permanent feature of the political landscape, holding as many rallies as he can in as many states as he can.

And if the Villagers start reaching for their scented handkerchiefs over the President not being “presidential,” all he needs to do is respond that he will spend more time in Washington once the GOP grows up.

UPDATE:  John McCain cares so deeply about protecting national security in light of Benghazi that he skipped a classified CIA briefing on it in order to give a press conference attacking the President.  What a pathetic, bitter, cranky old man….

The Democrats’ House Majority

No, not really.  But sort of.  Ian Millhiser explains that Democratic House candidates actually got more votes nationwide than Republicans, by around 500,000.  So how could the Republicans maintain their majority?  Simple.  It was gerrymandering.  Nick Baumann at Mother Jones has the goods (h/t Dayen):

  • North Carolina, which Obama lost by around 2 percentage points: 9-4 GOP
  • Florida, which Obama won by around half a percentage point: 17-10 GOP
  • Ohio, which Obama won by nearly 2 percentage points: 12-4 GOP
  • Virginia, which Obama won by around 3 percentage points: 8-3 GOP
  • Pennsylvania, which Obama won by more than 5 percentage points: 13-5 GOP
  • Wisconsin, which Obama won by 6 percentage points: 5-3 GOP
  • Michigan, which Obama won by 8 percentage points: 9-5 GOP

Now, in fairness, it is not all about partisan gerrymandering.  Some of this is also because of the creation of majority-minority districts, particularly in the south.  But that is decidedly a secondary impact.

Last week, I argued that if Obama were to win the electoral college but lose the popular vote, that should not affect his legitimacy as President: that’s the way that the system was set up.  So does that apply here?  Not so much: the Electoral College is created by the Constitution.  Partisan gerrymanders are created by — Republican state legislatures.  They created this distorted system; they can’t argue then that they were simply playing by the rules.

I’m not precisely sure what it means to question the “legitimacy” of some governing institution.  But to the extent that any duly and legally elected House majority is illegitimate, it is this one.  Let’s have none of the idea that the voters wanted to support conservative ideology by returning John Boehner to the Speaker’s chair.  They didn’t.  They wanted change.  And the GOP figured out how to prevent them from exercising their will.