Attention Women: These 5 Men Know What's Best

The GOP Panel on birth control: (yes, they're debating BIRTH CONTROL!)

Shocking Revelations From Within The White House (With Cats and animated gifs!)

The debate over the size of the stimulus has always been one that captivated progressives, and this will probably not end any time soon. People like myself have looked at all kinds of reporting on the subject for clues as to who chose the size, why it was chosen, and why there was such an emphasis on tax cuts.

Apparently a new book will be giving us a more complete picture of that process, and a whole lot more:

There has been no shortage of literature to dissect how President Obama handled the stimulus debate. But a new book by Noam Scheiber of The New Republic, "The Escape Artists," sheds new light on the matter.
As Scheiber writes, members of the president's economic team felt that if they were to properly fill the hole caused by the recession, they would need a bill that priced at $1.8 trillion -- $600 billion more than was previously believed to be the high-water mark for the White House.

The $1.8 trillion figure was included in a December 2008 memo authored by Christina Romer (the incoming head of the Council of Economic Advisers) and obtained by Scheiber in the course of researching his book.
"When Romer showed [Larry] Summers her $1.8 trillion figure late in the week before the memo was due, he dismissed it as impractical. So Romer spent the next few days coming up with a reasonable compromise: roughly $1.2 trillion," Scheiber writes. 

As has now become the stuff of Obama administration lore, when the final document was ultimately laid out for the president, even the $1.2 trillion figure wasn't included. Summers thought it was still politically impractical. Moreover, if Obama had proposed $1.2 trillion but only obtained $800 billion, it would have been categorized as a failure. 

"He had a view that you don't ever want to be seen as losing," a Summers colleague told Scheiber. 

So that's news. Before now, no one had previously mentioned a 1.8 trillion dollar stimulus under any context. But wait there's more:

When Summers made the final presentation to the president's then-chief of staff Rahm Emanuel, Scheiber writes, "It reflected what he deemed the best course that was politically feasible ... Yet because Emanuel and the president assumed Summers was largely giving them [economic advice], they believed they were closer to the ideal than they actually were." 

Well that's not good. Summers thought his job was to give the president a proposal that he thought was politically feasible, while Obama and Emanuel believed they were getting a strictly economic overview of what needed to be done. That may salvage some of Summers' rep as an economist (He still thought the stimulus only needed to be a "insurance plan", so not really), but it is fairly damning on the whole administration that this fuck up occurred on the most important decision of Obama's presidency.

But at least no one in the room was peddling completely discredited arguments against a larger stimulus, right?

The split was noticeable as early as the crafting of the Recovery Act, often with Office of Management and Budget Director Peter Orszag playing the role of Keynsian antagonist. Orszag, writes Scheiber, "worried that the sheer size of the stimulus could undermine the confidence of businessmen and money managers." In the subsequent year, when other advisers argued that an additional dose of stimulus would prop up a staggering economy, he downplayed the potential impact. 

Sweet Jesus. Having someone making such a bullshit argument against stimulus is the equivalent to having to having a climate denier in the room when talking about global warming. It's not true and stupid, and why the fuck was someone who believes crazy things like that advising the president. Moving on:

At various intervals, Orszag clashed with different members of the president's economic and political team. David Axelrod, the president's chief communications hand, became convinced that Orszag was leaking material to The New York Times. Orszag, in turn, refused to incorporate any of Axelrod's talking points that he didn't personally find credible. Summers fought Orszag's pursuit of a deficit reduction commission, arguing that it would lock the president into uncomfortable reforms. He also pushed back on Orszag's idea of a domestic spending freeze, insisting the cuts would be too close to the bone.

"We're Democrats," Summers harrumphed. "We believe in these things." Besides, both ideas struck him as gimmicks unworthy of a president. To colleagues he complained that "what's really important in life is not to believe your own bullshit."

Orszag, in turn, so distrusted Summers' influence that, as Scheiber writes, he "enacted a special rule for Summers's deputy, Jason Furman: anyone receiving an unsolicited inquiry from Furman was to alert Orszag's chief of staff, Jill Blickstein."

In the end, however, only one economic adviser truly argued that deficit reduction should be put off for another day. And by the time the 2010 elections were over, even Obama's top political advisers were arguing that Christina Romer's position was utterly untenable.

It's nice to have Larry Summers being a dick for our cause every now and then! The "believing your own bullshit" line is key. I remember after Obama gave his main 'Austerity Now' speech, my first thought was, holy crap, I think they might actually believe this stuff. Not everyone believes it, but it's scary to know that some of them do.

Even with all the stuff listed above, we haven't gotten to the most stunning revelation in this article:

[Top Adviser David] Plouffe urged the president to give [entitlement reform] a shot. "I said he [Obama] should be big on entitlements," Plouffe told one former administration official, by which he meant reining in these budgetary elephants. Sure, this would enrage the party's base. But the political upside with the rest of the country would more than make up for it ... "Plouffe is pretty big on accomplishments trump normal politics," said one White House colleague. "Plouffe's view is that big trumps the little."

This is quite possibly the dumbest thing I have ever fucking heard. Putting aside the merits of cutting social security and medicare (none)... HE THINKS THAT CUTTING THE TWO MOST POPULAR GOVERNMENT PROGRAMS WOULD BE A POLITICAL WINNER. The guru brought back into the administration to put his reelection back on track THINKS CUTTING SOCIAL SECURITY AND MEDICARE IS A POLITICAL WINNER.

There are seriously no words for that level of stupidity. With advisers like that, what could possibly go wrong?

News You Can't Use!

ABC News seems fine with making people stupid: (Dean Baker)

ABC News took budget reporting to new levels of irresponsibility last night telling its viewers to think of the federal budget like the family budget by knocking off 8 zeros to make spending $38,000, instead of $3.8 trillion. While this approach could be useful to put some items in context (spending on TANF, the main welfare program, would be around $190; the $1 million Woodstock museum that served as a main prop for John McCain's presidential campaign would cost 1 cent), it is fundamentally misleading in explaining the significance of the deficit and debt.

Unlike ABC's family, the government is expecting to be around in perpetuity. This means that it never has to pay off its debt. At the least, it would be more appropriate to make a comparison to a corporation, which may forever add to its debt as it grows. No shareholder would complain if General Electric borrowed a huge amount of money to expand a profitable division. Government spending fosters growth by financing education, infrastructure and other public investments which will make the country richer in the future.

However, there are even more fundamental differences between the government and a family. The U.S. government's debt is in notes printed by the government. If ABC wants to make the family analogy, its family has an obligation to pay off the $9,000 it has borrowed in 9000 sheets of paper that say "I owe you $1, payable in notes that say 'I owe you a note saying that I owe you a note'."

Most families can't borrow on such terms, but the government can and does. If ABC can't explain this distinction in its 2 minute and 30 second news segment, then it should look for a different analogy.

You would think a news organization would be slightly ashamed that anyone who watched that "family budget" segment is now grossly misinformed about how our economy works. Guess not.

Happy Valentine's Day Washington

One more sane state...

Gov. Christine Gregoire signed legislation on Monday to make Washington the seventh state to legalize same-sex marriage, but opponents said they would try to seek its repeal through a ballot measure. Ms. Gregoire, a Democrat and a Roman Catholic, said, “I’m proud of who and what we are as a state.” Connecticut, Iowa, Massachusetts, New Hampshire, New York and Vermont recognize same-sex marriage, as does Washington, D.C. The measure will take effect 90 days after the legislative session ends.

Also, here is a really cool Valentine's day mix from Bird Peterson:

Bird Peterson - Dearest Lover (A Mix For Heavy Petting) by Bird Peterson

People Won't Always Agree!

Atrios really nails this:

Everybody in DC needs to stop this fantasy that if only we find all the magic compromises then people will stop caring about this stuff. I'm not religious, but if I genuinely had beliefs that those in the Church profess to have, I wouldn't be happy with some sort of compromise. Why the hell would I? I'd be fighting to outlaw contraception completely if I thought it was strategically reasonable to do so within a broader agenda.

There is a sense that if each side moves a little close to the other person's position, then all differences can be worked out. This may be true when your friends are debating where to go for dinner, but in politics any decision you make is going to piss some people off, no matter what. People who oppose contraception aren't going to like this agreement or you! It's ok, they represent an extreme viewpoint held by 2% of the population! Tell them to suck it and move on!

Lies and the Lying Liars Who Tell Them

Jonathan Chait touches on a pet peeve of mine:

And this is why I am forced to be so mean. There are just a lot of people out there exerting significant influence over the political debate who are totally unqualified. The dilemma is especially acute in the political economic field, where wealthy right-wingers have pumped so much money to subsidize the field of pro-rich people polemics that the demand for competent defenders of letting rich people keep as much of their money as possible vastly outstrips the supply. Hence the intellectual marketplace for arguments that we should tax rich people less is glutted with hackery. The very simple fallacy I pointed out by de Rugy has been knocking around for years, without end. (Here it is in a piece by Stephen Moore in yesterday’s Wall Street Journal op-ed page. Here is Senator Jim DeMint making it today in an interview with the approving editors of Reason.) A similar problem exists, perhaps to an even worse extent, with climate change denial.

Most people don’t follow these issues for a living and have a hard time distinguishing legitimate arguments from garbage. I don’t mean this patronizingly: I certainly would have trouble distinguishing valid arguments from nonsense in a technical field I didn’t study professionally. But that's why there’s a value in signaling that some arguments aren’t merely expressing a difference in values or interpretation, but are made by an unqualified hack peddling demonstrable nonsense. Being so mean is a labor of love, I confess, but also one with a purpose.

The only issue I take with his post is that I'm not even sure qualified/unqualified is the distinction we want to be making. I'm sure plenty of these hacks have all the right credentials! The difference is that one side of the policy debate is lying almost all the fucking time. It's important to understand the difference between genuine disagreements on policy, and lying. Mainstream media outlets rarely point out the difference, and this unsurprisingly leads to people thinking most policy debates are genuine disagreements or he said/she said bickering. There is always some of that too, but the right has figured out that there is absolutely no political cost to lying constantly, so they're using it to great effect. Watch an interview with any Republican politician/think tank hack and I guarantee you over half the stuff they say are either highly misleading or outright bullshit. That's not to say that Democrats don't lie (All politicians do), but conservatives have turned it into a science.

I'm genuinely not sure how you counter this when most media outlets don't seem to give the slightest shit about educating their readers/viewers. However, since this is one of the defining dynamics of this era, it's at least worth pointing out from time to time.

Foreclosure Settlement In

I need to read more about this, but my initial verdict is: Not good:

Forty-nine states, every one but Oklahoma, as well as federal regulators will participate in a foreclosure fraud settlement that will release the five biggest banks (Wells Fargo, Citi, Ally/GMAC, JPMorgan Chase and Bank of America) and their mortgage servicing units from liability for robo-signing and other forms of servicer abuse, in exchange for $25 billion in funding for legal aid, refinancing, short sales, restitution for wrongful foreclosures and principal reduction for underwater borrowers. The announcement will be made on Thursday.

This settlement arises from multiple abuses found in the servicing of loans and the foreclosure process over the past several years. At the height of the housing bubble, banks sliced and diced mortgages and traded them with little regard for the rules following land recording or securitization to such a sloppy extent that they lost track of the true owner on potentially millions of homes. To cover up for this massive failure, banks and their servicing units have been found to have routinely forged, back-dated and fabricated documents at county recorder offices and state courts across the country. Furthermore, they employed “robo-signers,” who signed hundreds of thousands (if not millions) of documents and affidavits without any knowledge of the underlying mortgages. In addition, investigations uncovered massive servicing abuses, including illegal fees charged to borrowers, putting borrowers into foreclosure at the same time as they were working out loan modifications, failing to honor previous settlements where promises were made on modifications, and countless other errors that maximized servicer profits and gouged homeowners. There are also cases of wrongful foreclosures where homeowners have been turned out of their homes without just cause, and servicer-driven foreclosures, where servicers illegally added late fees and applied payments inaccurately, pushing the homeowner into foreclosure. This is but a smattering of the examples of foreclosure fraud and servicer abuse found in a series of interlocking investigations, court depositions, reviews of documents in registers of deeds offices, and homeowner testimonials.

The deal caps a 16-month process that had several fits and starts, and closed with the final holdouts, New York and California, coming to terms. The deal will release claims from state Attorneys General, but individual homeowners retain private rights of action to sue over foreclosure fraud and other abuses. As part of the settlement, states will get a fixed amount in hard dollars that would go to fund legal aid services. “This will get a lawyer for everyone facing foreclosure in the state,” said one source in an Attorney General’s office. “This will stop every wrongful foreclosure.”

Oklahoma stayed out of the deal because the state’s Attorney General, Scott Pruitt, did not believe that the banks should face any penalty.

As far as the release goes, AG offices that signed onto the lawsuit claimed it was narrowly crafted to only affected foreclosure fraud, robo-signing and servicing (which I don’t feel is all that narrow, but I’m trying to just-the-facts this -ed). The lawsuit that New York AG Eric Schneiderman filed last Friday, suing MERS and three banks for their use of MERS, was preserved fully. There was a last-minute request by the banks to dissolve that lawsuit, but it was not successful. In addition, Schneiderman reserves the right to sue other servicers for their use of MERS along the same lines as the current lawsuit.

In addition, all securitization claims, tax fraud claims, insurance fraud claims, and more will be able to be investigated and prosecuted by individual AGs and the RMBS working group, set up at the Financial Fraud Task Force, with Schneiderman as one of five co-chairs. They will be able to use all findings gathered in multiple investigations into servicing and foreclosures in their investigation. At least one of those investigations, the HUD Inspector General report, will be made public as part of the settlement. That report, according to a senior Administration official, will show a wide variety of errors among the major servicers, but the worst will show up to a 60% error rate. In one incident described in the report, an employee of one of the servicers spent two weeks experimenting with her staff to see how long it would take to process foreclosure documents correctly. They determined it would have taken at least 1-2 weeks. This employee went to their manager and reported the information. The following week, the manager told the employee they were reducing the time spent on each file from 48 to 24 hours.

Read the entire article, because Dayen has been one of the best people covering this topic.

This seems to be a key point:

And then there’s the settlement price: $25 billion, divided up several ways. $3 billion will go toward refinancing for current borrowers who are underwater on their loans, as well as short sales. $5 billion will go as a hard cash penalty to the states, which can use them for legal aid services, foreclosure mitigation programs, and ongoing fraud investigations in other areas (one official close to the talks feared that much of that hard cash payout will go in some Republican states toward filling their budget holes). The federal government will get a cash penalty as well. Out of that $5 billion, up to 750,000 borrowers wrongfully foreclosed upon will get a $1,800-$2,000 check if they sign up for it, the equivalent of saying to them “sorry we stole your home, here’s two months rent.”

The bulk of the money, around $17 billion, will go to principal reduction credits for troubled borrowers. The banks will not get dollar-for-dollar credit for every write-down; reductions on loans bundled in private-label mortgage-backed securities, for example, will be under 50 cents on the dollar, and write-downs for second liens (mostly home equity lines of credit) will be more like 10 cents. Housing and Urban Development Secretary Shaun Donovan believes that they will be able to get between $35-$40 billion in principal reduction in real dollars out of the settlement. Donovan became the point person on the federal level, along with DoJ, as the Administration pretty much took over the investigation and settlement process from the states, who were led by Iowa AG Tom Miller.

But even this $35-$40 billion number, which is at best a guess since the direction of the principal reduction is mostly at the discretion of the banks, pales in comparison to the negative equity in the country, which sits at $700 billion. And the banks have three years to implement the principal reductions, drawing out the loss on their books. As the New York Times reports, banks have covered reserves for all of this, and should see major boosts to their stock price as a result of the settlement.

35-40 Billion out of 700 Billion = Not good. More to come once the full details of the settlement are released.