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Empirical Test of Piketty’s r > g Theory Coming

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Bernie Sanders forced the issue of wealth inequality into the presidential campaign, which presented a real problem for neoliberals of the Democratic persuasion. They want us to believe that the market rewards people in accordance with their merit and hard work. It doesn’t. They want us to believe everyone can get ahead if they get a good education and work hard. Not so. So the neoliberal dems fall back on their version of trickle-down: economic growth is the cure. So what is the future of economic growth?

Earlier this year Gerald Friedman did a study of the potential impact of Bernie Sanders’ economic ideas, saying they would create enormous economic growth. That drew fire from many liberal economists, including Paul Krugman who wrote several blog posts saying Friedman’s numbers were ridiculous, and using that as a opportunity to bash Sanders supporters for naiveté and for encouraging impossible expectation. On February 23, he put up a post with his own predictions of growth: a fraction over 2%. And that, he says, is good enough.

And let me say that the great thing about a progressive agenda is that it doesn’t require big growth promises to make it work, because the elements of that agenda are good things in their own right. Conservatives need to promise miracles to justify policies whose direct effect is to comfort the comfortable (cutting taxes on the rich) and afflict the afflicted (slashing social insurance); progressives only need to defend themselves against the charge that doing good will somehow kill economic growth. It won’t, and that should be enough.

But what about inequality in this scenario? Thanks to Thomas Piketty and his book Capital in The Twenty-First Century, we can say with some certainty that it isn’t going to get better with this kind of thinking. Remember Piketty’s basic finding: if r > g, wealth inequality will increase to a very high level. In this formulation, r is the rate of return to capital, and g is the growth rate of the economy. Here’s a chart from the St. Louis Fed showing the rate of return to capital in the US:
real returns on capital
With the exception of the immediate post-Great Crash years, the All capital after tax line doesn’t sink below 5%, and the most recent figures show it near 7%. Here’s the definition, found in Note 5:

“Business” capital includes nonresidential fixed capital (structures, equipment, and intellectual property) and inventories. “All” capital includes business capital and residential capital.”

Piketty’s definition of capital is broader than this definition of “all”, but there isn’t any reason to think that will have a material effect on the overall number. In other words, r is about 5% higher than g, so we can expect a steady increase in wealth inequality.

The Republicans couldn’t care less: they nominated a billionaire. What’s on offer from the Democratic Party? Here’s Hillary Clinton’s webpage on economic issues. It’s mostly neoliberal ideas, from cutting taxes to deregulation to trade (see the part on small businesses), and some liberal ideas: investment in infrastructure and research, equal pay, paid leave and affordable child care. Her new idea? Let’s give tax breaks to companies that share profits with workers. Also, raise the minimum wage to $12 some day, and some tiny steps to increasing taxes on the rich by closing loopholes and making sure rich people pay more taxes than Warren Buffett’s secretary.

We are going to get an empirical test of Piketty’s idea, but we already know how it will turn out. The rich have nothing to fear.

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Hillary’s Bold Plan to Financially Penalize Recidivist Super-Predators

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The other day Hillary promised she would appoint Attorneys General like Eric Holder and Loretta Lynch. “I will appoint an Attorney General who will continue the courageous work of Eric Holder and Loretta Lynch.” Given that the comments came at an Al Sharpton event, I assumed the comment meant to invoke Holder and Lynch’s efforts to reform criminal justice and, presumably, their even more laudable support for civil rights.

Nevertheless, it was a disturbing comment, given that Holder and Lynch have also both coddled the bankers who crashed our economy. Indeed, when Hillary tries to defend her huge donations from bankers, she always points to Obama’s even huger ones, and insists that there’s no evidence he was influenced by them. But the Obama DOJ record on bank crime is itself the counter to Hillary’s claim those donations didn’t influence the President.

But then, last night, Hillary said something even more outrageous, which I take to be a solid promise to her funders they’ll continue to get special treatment before the law. Amid a comment shifting from Too Big to Fail into the serial settlements the banks have signed for their crimes, Hillary took the bold step of calling for financial penalties for the people directing that crime.

CLINTON: Dana, let me add here that there are two ways to at this under Dodd-Frank, which is after all the law we passed under President Obama, and I’m proud that Barney Frank, one of the authors, has endorsed me because what I have said continuously is, yes, sometimes the government may have to order certain actions. Sometime the government can permit the institution themselves to take those actions. That has to be the judgement of the regulators.

But, there’s another element to this. I believe strongly that executives of any of these organizations should be financially penalized if there is a settlement.

(APPLAUSE)

CLINTON: They should have to pay up through compensation or bonuses because we have to go after not just the big giant institution, we have got to go after the people who are making the decisions in the institutions.

Granted, under Holder and Lynch, those courageous Attorneys General Hillary would model her own pick on, the banksters haven’t even been asked to do this much.

But the fact that Hillary thought a great punishment for those harming the country with their serial crime wave is to fine them is a testament that she doesn’t even see the underlying crimes.

This is behavior that has continued over years, often after previous settlements. If anyone can be called a super-predator, it’s the bankers who toy with millions of people’s livelihoods and savings to make a buck. If there were a Three Strikes law for bankers most of these guys would be looking at life imprisonment.

And yet Hillary’s bold plan is not to incarcerate them, but instead to take a little bit of their money.

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Connecting the Dots on the Hillary Emails

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I maintain my belief that it is unlikely Hillary will be implicated in the investigation into her email practices, though it is quite possible that top aides like Jake Sullivan or Huma Abedin would be.

That said, I want to put three pieces of data together that have made me less sure of that — or the potential scope of this investigation.

The first is this AP story showing that top Clinton aides sought, but did not obtain, a blackberry like device that Hillary would have been able to use in a SCIF. [See update]

Clinton’s desire for a secure “BlackBerry-like” device, like that provided to President Barack Obama, is recounted in a series of February 2009 exchanges between high-level officials at the State Department and NSA. Clinton was sworn in as secretary the prior month, and had become “hooked” on reading and answering emails on a BlackBerry she used during the 2008 presidential race.

“We began examining options for (Secretary Clinton) with respect to secure ‘BlackBerry-like’ communications,” wrote Donald R. Reid, the department’s assistant director for security infrastructure. “The current state of the art is not too user friendly, has no infrastructure at State, and is very expensive.”

Reid wrote that each time they asked the NSA what solution they had worked up to provide a mobile device to Obama, “we were politely told to shut up and color.”

Resolving the issue was given such priority as to result in a face-to-face meeting between Clinton chief of staff Cheryl Mills, seven senior State Department staffers with five NSA security experts. According to a summary of the meeting, the request was driven by Clinton’s reliance on her BlackBerry for email and keeping track of her calendar. Clinton chose not to use a laptop or desktop computer that could have provided her access to email in her office, according to the summary.

Standard smartphones are not allowed into areas designated as approved for the handling of classified information, such as the block of offices used by senior State Department officials, known by the nickname “Mahogany Row” for the quality of their paneling. Mills said that was inconvenient, because they had to leave their offices and retrieve their phones to check messages.

The story shows that some top aides (and presumably Hillary herself) were aware of the security concerns tied to using a blackberry in a SCIF (though Judicial Watch president Tom Fitton’s statement that this shows an awareness of security concerns with the blackberry may overstate things).

Perhaps the most telling detail comes from this no-comment from former Department of Justice Director of Public Affairs, Brian Fallon:

Clinton campaign spokesman Brian Fallon declined to comment Wednesday.

Fallon has generally been much chattier about the drip drip drip tied to this story.

In any case, this story puts revelations in a Fox story from last week, describing Clinton sysadmin Bryan Pagliano’s testimony as “devastating” because he helped tie the use of particular devices to particular times.

The source said Pagliano told the FBI who had access to the former secretary of state’s system – as well as when – and what devices were used, amounting to a roadmap for investigators.

“Bryan Pagliano is a devastating witness and, as the webmaster, knows exactly who had access to [Clinton’s] computer and devices at specific times. His importance to this case cannot be over-emphasized,” the intelligence source said.

The source, who is not authorized to speak on the record due to the sensitivity of the ongoing investigation, said Pagliano has provided information allowing investigators to knit together the emails with other evidence, including images of Clinton on the road as secretary of state.

The cross-referencing of evidence could help investigators pinpoint potential gaps in the email record. “Don’t forget all those photos with her using various devices and it is easy to track the whereabouts of her phone,” the source said. “It is still boils down to a paper case. Did you email at this time from your home or elsewhere using this device? And here is a picture of you and your aides holding the devices.”

Knowing that the FBI has evidence that Clinton’s aides sought a way to obtain a secure blackberry, the detail that they’re tying emails sent to what device they were sent from, suggests they may be trying to tie individual emails, and their content, to the device they were sent from. And remember, there’s an entire Tumblr of pictures of Hillary using her (non-secure) blackberry.

Now consider what I laid out in this post, when John Cornyn made it clear Attorney General Loretta Lynch is the final decision maker on whether to act on an FBI recommendation to convene a grand jury and move toward an indictment.

Cornyn: If the FBI were to make a referral to the Department of Justice to pursue criminal charges against Mr. Pagliano or anyone else who may have been involved in this affair, does the ultimate decision whether to proceed to court, to ask for the convening of a grand jury, and to seek an indictment, does that rest with you, or someone who works for you at the Department of Justice?

Lynch: So Senator with respect to Mr. Pagliani [sic] or anyone who has been identified as a potential witness in any case, I’m not able to comment on the specifics of that matter and so I’m not able to provide you–

Cornyn: I’m not asking you to comment on the specifics of the matter, I’m asking about what the standard operating procedure is, and it seems pretty straightforward. The FBI does a criminal investigation, but then refers the charges to the Department of Justice, including US Attorneys, perhaps in more celebrated cases goes higher up the food chain. But my simple question is doesn’t the buck stop with you, in terms of whether to proceed, to seek an indictment, to convene a grand jury, and to prosecute a case referred to you by the FBI?

This felt like Cornyn had been sent by someone very high up in FBI (which is probably why Lynch responded so forcefully to make clear she’s the boss of everyone at the Bureau) to pressure the Attorney General to let them convene a grand jury. Now, it appears the basis for any grand jury is not just sending classified emails, but where and on what device those emails got sent.

Again, I still think Hillary is most likely safe. But I’m beginning to see how FBI might want to make a criminal case of sending classified information using insecure blackberries knowing they were insecure.

Update: Here are the emails. Note this seems to target Cheryl Mills more than Sullivan or Abedin (note her departure briefing is in there). It shows Mills directly receiving a bunch of briefing from NSA about the insecurities of BBs.

Also note: contrary to the emphasis of the AP piece, the issue appears not to be that NSA wasn’t doing what they could do, but instead that Hillary’s key staffers can be shown to have gotten technical briefing on the problems with BBs.

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How Hillary Helped Banks Foreclose on 5 Million Families

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Let me be clear at the outset: I think what follows is a bullshit argument. But I think it is less unfair of an argument than Hillary’s claim that, by voting to withhold the second tranche of TARP funding on January 15, 2009, Bernie Sanders voted against the auto bailout.

As you’ll recall, in October 2008, the Bush Administration threw some vaguely laid out plans on some cocktail napkins over the wall to Congress and got it to release $700 billion dollars to bail out the banks. Between the time the new Congress got sworn in but before Obama became President, Republicans in the Senate wrote a bill to withhold the second tranche, or $350 billion, of those funds. In the days before the vote, Larry Summers threw two more cocktail napkins of promises to Congress. Bernie was one of seven Democrats who voted not to release the funds based on a series of what were effectively ideas on cocktail napkins.

One of the things on those cocktail napkins, though, was a promise from the Obama Administration that actual human persons facing a crisis, rather than just banks, would get some of the second tranche of money.

The Obama Administration will commit substantial resources of $50-100B to a sweeping effort to address the foreclosure crisis.  We will implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners, while also reforming our bankruptcy laws and strengthening existing housing initiatives like Hope for Homeowners. Banks receiving support under the Emergency Economic Stabilization Act will be required to implement mortgage foreclosure mitigation programs.

Of course, it was just a cocktail napkin, and by voting to release the funds without tying them to actual legislation requiring the Administration actually use the funds in a such a way as to help homeowners, Hillary — and all the other Democrats who voted to give their new President funds without real limits on how they could spend it — gave away any leverage they had to actually force the Administration to implement such a plan.

Last year David Dayen described how the Administration not only never spent $50 billion — they only ever spent $12.8 billion — but the number of people helped was far lower than promised, and most people “helped” actually weren’t helped at all.

On January 15, 2009, Obama’s chief economic policy adviser, Larry Summers, wrote to convince Congress to release the second tranche of TARP funds, promising that the incoming administration would “commit $50-$100 billion to a sweeping effort to address the foreclosure crisis … while also reforming our bankruptcy laws.” But the February 2009 stimulus package, another opportunity to legislate mortgage relief, did not include the bankruptcy remedy either; at the time, the new administration wanted a strong bipartisan vote for a fiscal rescue, and decided to neglect potentially divisive issues. Having squandered the must-pass bills to which it could have been attached, a cramdown amendment to a housing bill failed in April 2009, receiving only 45 Senate votes.

Senate Majority Whip Dick Durbin, who had offered the amendment, condemned Congress, declaring that the banks “frankly own the place.” In fact, the administration had actively lobbied Congress against the best chances for cramdown’s passage, and was not particularly supportive when it came up for a vote, worrying about the impacts on bank balance sheets. Former Treasury Secretary Timothy Geithner admitted in his recent book, “I didn’t think cramdown was a particularly wise or effective strategy.” In other words, to get the bailout money, the economic team effectively lied to Congress when it promised to support cramdown.

[snip]

According to a recent Government Accountability Office report, 64 percent of all applications for loan modifications were denied. Employees at Bank of America’s mortgage servicing unit offered perhaps the most damning revelations into servicer conduct. In a class-action lawsuit, these employees testified that they were told to lie to homeowners, deliberately misplace their documents, and deny loan modifications without explaining why. For their efforts, managers rewarded them with bonuses—in the form of Target gift cards—for pushing borrowers into foreclosure.

Because of all this, HAMP never came close to the 3–4 million modifications President Obama promised at its inception. As of August 2014, 1.4 million borrowers have obtained permanent loan modifications, but about 400,000 of them have already re-defaulted, a rate of about 30 percent. The oldest HAMP modifications have re-default rates as high as 46 percent.

Effectively, because Congress didn’t force the Administration to adopt cramdown (which would have resulted in real modifications which would have mean more people kept their homes and didn’t lose their wealth), Treasury could instead use the promise to “foam the runways” to help the banks string out losses and therefore avoid accountability for their recklessness.

This was a direct result of voting to give the Executive continued free rein on what to do with massive amounts of bailout money. So was bailing out the car industry, but the vote in January was primarily about whether to continue letting the Executive spend billions without clear guidelines.

So Hillary, according to her own logic, voted to help banks foreclose on 5 million people, which resulted in a tragic loss of wealth for American families.

Again, I think this is a bullshit argument. I assume Hillary intended to get real foreclosure relief (indeed, one domestic policy on which she was better than Obama in 2008 did just that). Though for someone who claims to know how to “get things done,” she showed no awareness of how to do that here. Nevertheless, it is the kind of bullshit argument she is making.

And having gone there — having permitted herself to engage in this kind of bullshit argument — she makes such arguments fair game for Donald Trump to make about her in June.

Ultimately, I think this vote was about whether the Executive should be able to operate without real limits. Bernie voted against that, Hillary voted for it (which makes it similar, in many ways, to the Iraq War vote in 2003, and had equally foreseeably bad results). Hillary will never make such votes for freeing the Executive of meaningful restraints again. But it’s pretty clear she’s a fan of letting the Executive operate without them.

That, to me, is the meaningful, non-bullshit, takeaway from that vote.

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Bernie Wins MI — Wait Whut?

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Apparently my state gave Bernie Sanders the most unexpected of wins last night, winning a close race that only one poll even got close (but still predicted a narrow Hillary win). Most polls predicted she’d win it by 20%.

I’m going to spend the day looking at the results. But here’s what I understand to have happened:

  • Hillary won African-Americans, but not by as much as she had in the south. That’s probably consistent with MA’s results, the exit poll for which didn’t break down people of color, but as far as I know no one did the granular analysis of the MA results to figure that out.
  • MI’s Muslims voted for the elderly Polish Jew, by wide margins. That’s not a huge population, but it is big enough to have accounted for much of the differential between Hillary and Bernie. Keith Ellison, one of Sanders’ few Congressional backers, has close ties to the Muslim community here in MI and did some events for him in the last week.
  • Independents turned out in big numbers, and they voted for Sanders by big margins. MI has a completely open voting process, which means independents — who might normally be considered less likely primary voters — can (and apparently did) turn out in big numbers. I suspect, though haven’t yet confirmed it, that support for Bernie outside of SE MI was much higher in terms of numbers; usually when people analyze Democratic contests in this state they just blow off the areas outside of SE MI, because the latter is such a population center of Democratic voters. That may be what pollsters missed. Update: Adding, the Democratic party in my part of the state is pretty dysfunctional, even though there’s a population that should be turning increasingly Democratic. This is where Bernie picked up the numbers to offset Hillary’s SE MI numbers. That suggests he basically created a Democratic infrastructure that doesn’t exist (as Chris Savage pointed out, Bernie set up offices here and in other cities so had more field organizers throughout the state, save Detroit, than Hillary).
  • Students voted, and not just in Ann Arbor. Because of the way they suppress student turnout, University of Michigan is the school at which it is hardest for college students to vote (because they’re more likely to be out of state and/or from all over the state, which means if there’s a registration problem they’ll have harder time going “home” to vote). Bernie did events at EMU, MSU, GVSU, and only then U of M, and while those students are more likely to be dispersed than UM students, they appear to have turned out. Bernie continued to win young people by enormous margins.
  • Hillary underperformed in the rich suburbs. Hillary only won Oakland County, which is the second largest county and is the kind of affluent county Hillary has done really well in this year, by about 4.6%. I thought she’d win by 5 to 7%. I’m not sure why that is — again, it’s always possible cross-over voting is affecting the Democratic side. But had she gotten the numbers in Oakland I would have expected she likely would have won the state. The same is true of Detroit, but turnout in Detroit is less reliable than in Oakland.

There was a lot of talk last night about Hillary’s cynical auto bailout attack misfiring. Apparently, some top UAW people got quite pissed about it and were communicating about it among themselves.

It may be that Michiganders realized that was a dishonest attack, but I think it just as likely they responded to Sanders’ comments about Hillary’s trade record (curiously, he never even hammered on KORUS, where her involvement is much more direct than some of the other trade agreements she has supported, and which has had a clear impact on MI jobs). I’ve been predicting for some time that Hillary’s record on trade would hurt her in the state. Exit polls showed that those who think trade agreements have cost MI jobs voted in fairly big numbers for Bernie.

Update: One more point. I’m hearing a lot of talk about Hillary voters crossing over to vote for Kasich or Rubio to slow Trump’s momentum. I doubt that explains Hillary’s loss. First, any talk of that is anecdotal: there was no big discussion about how to strategize a cross-over vote. Second, the Kasich and Rubio numbers just don’t show any big swing, except perhaps in Washtenaw (Ann Arbor), but the Democratic results are about what we’d expect there. Third, the only people I heard talk about this were Sanders voters, so to the extent it did happen, it likely happened, in small numbers, among both Bernie and Hillary voters. Finally, while crossover voting is quite common here, it’s less common among party insiders than more independent voters (in part, because what ballot you pull does get recorded, so it shows in the voting rolls), so you’d think fewer of Hillary’s supporters would even consider it.

Update 2: I know that exit polls showed 7% of Dems crossed over compared to 3% of Republicans. I actually suspect those numbers are lower than what happened in other states and mostly stems from Democrats voting for Trump. Indeed, it’s possible that those who wanted to vote for a populist in MI felt like Bernie was a viable choice here (which would be consistent with where he got his biggest margins) as compared to places in the south where Trump was a more attractive populist to vote for.

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Amid an Inconclusive Answer on Encryption, Hillary Reveals She Doesn’t Understand How Metadata Works

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Less than a mile from my house (at a small local tech firm called Atomic Object), Hillary Clinton got asked a question about encryption. After talking about the role of encryption in Atomic Object’s own work, one of the women asked (after 14:00; recording cuts out during her question),

What steps do you think government needs to take to make sure that the companies who build these,  create these products, keep our data secure. And also looking at the controversy between Apple and the FBI about encr–

After describing Healthcare.gov as the biggest tech failure in government because “it just didn’t really gel and there wasn’t enough testing,” Hillary admitted (in an apparent non sequitur) the government doesn’t do a good enough job protecting its own data.

We are woefully behind in the government in even protecting our own stuff. And so we’ve got to do a better job if we’re going to be a good partner with businesses to try to maintain privacy of data, whether it’s just customer data or whether it has real public consequences.

She then pivoted from what (I thought) was a project management issue, not a security one, to a long answer on the Apple v FBI that basically admitting not knowing (or being willing to say) what the right answer was.

With respect to the current legal controversy, between Apple and the FBI, I am someone who is just feeling like I am in the middle of the worst dilemma ever. I mean, think about it. Because there’s got to be some way to protect the privacy of data information. There’s got to be some way to avoid breaking encryption, however you describe it, and opening the door to a lot of bad actors. But there also has to be some way to follow up on criminal activity and prevent both crimes and terrorism. You guys are the experts on this. I don’t know enough about it to tell you how to do it. But I think that the real mistrust between the tech companies and the government right now is a serious problem that has to be, somehow, worked through.

I keep saying, you know, we have a lot of smart people in this country. You know, we invented the Internet, we invented, you know, the Internet of Things, we’ve invented all of this. Isn’t there some way without opening the door and causing even, you know, more and worse consequences to figure out how you get information?

Because I’m also very understanding of the position that law enforcement finds itself and and if any one of you were working at Quantico in the FBI lab, and you know, you had this phone that one of the terrorists in San Bernardino did and you wanted to find out who they communicated with and you know that could trace us back to somebody in this country, it could trace us back more clearly to somebody directing it overseas. You’d want to know that too.

So that’s what we need help on, so that we don’t make a grave error that affects our ability to maintain privacy and to protect encryption, but we also don’t open the door — because we know what happens, is these guys that are on the other side of us now, with ISIS and the like, they are really smart. A lot of them are well-educated. They’re not the image of just some poor guy coming to be a Jihadist. They are educated, they are increasingly computer literate, they are wanting to wage as much war and violence on Europe, the United States, as they can. They have learned, so they’re now using encrypted devices, why wouldn’t they? You know why would they be so stupid to continue to allow us to monitor where they are and what they’re doing? This is a problem. And it’s a problem we’ve got to come up with some way to solve. But I certainly am not expert in any way to tell you how to do it.

Right in the middle, however, Hillary reveals not understanding a key part of this controversy. To the extent Syed Rizwan Farook used the Apple software on his work phone to communicate with accomplices, we know who he communicated with, because we have that metadata (as Admiral Mike Rogers recently confirmed). We just don’t know what he said.

We wouldn’t necessarily know who he talked to if he used an App for which metadata was more transient, like Signal. But if so, that’s not an Apple problem.

Moreover, if ISIS recruits are — as Hillary said — smart, then they definitely wouldn’t (and in fact generally don’t) use Apple products, because they’d know that would make their communications easily accessible under the PRISM or USA Freedom programs.

This response is not really any different from what we’re getting from other to Obama officials. But it does come with some indication of the misunderstandings about the problem before us.

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How Hillary Turned Her Support for Welfare for Banks into an Auto Bailout Attack

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For a campaign that has spent days insisting Bernie Sanders should not launch attacks against her, the Hillary Clinton campaign sure engaged in some dishonest hackery last night.

During the debate in Flint, Hillary attacked Bernie for “vot[ing] against the money that ended up saving the auto industry.” She was talking about a January 15, 2009 attempt to withhold the second $350 billion of TARP funding that failed (here’s the resolution); Bernie voted not to release those funds. But the vote was not directly about auto bailout funding. It was about bailing out the banks and funding what turned out to be completely ineffective efforts to forestall foreclosures.

It is true that Bush’s failure to fund an auto-specific bailout meant that TARP funds got used to fund the $85 billion auto rescue (Bush had already spent some money on the auto companies — basically just enough to ensure they’d go under on Obama’s watch, but not enough to do anything to save them). But that’s not what the vote was (and there might have been enough money for the auto bailout in any case).

Larry Summers’ two letters in support of the additional funding (January 12, Janaury 15) in support of the additional funding certainly didn’t describe it as an auto bailout bill. He mentioned “auto” just three times between the two of them. In the January 12 letter, in support of auto loans to consumers, and in the January 15 letter, limits on what I believe is a reference to GM Finance (now Ally)’s Christmas holiday move to turn into a bank so it could access funding. Contemporary reporting on the vote also did not mention the auto bailout (though there had been discussion that it might be used the previous month).

Moreover, there had been an auto bailout vote in the Senate (on a bill already passed by the House) on December 11, which failed. Both Bernie and Hillary voted in support.

So while Hillary’s attack was technically correct — Bernie did vote against giving Jamie Dimon more free money, which had the side effect of voting against the second installment on the fund that would eventually become the auto bailout — he did not vote against the auto bailout.

But Hillary’s attack did its work, largely because national reporters appeared completely unaware that they were fighting about TARP much less aware that there had been votes in December that directly pertained to the auto bailout. Even some local reporters now appear unaware of what went down in 2008-9. John Podesta helped matters along by sowing confusion in post-debate speeches.

Here’s one of what will end up being several exceptions to the shitty reporting on this that will come too late for people to figure out what actually happened.

During the testy exchange over the auto bailout, Clinton called Sanders a “one-issue candidate” for voting against the release of $350 billion in Jan. 15, 2009, to continue funding the bailout of the nation’s banks and mortgage lenders.

Sanders joined seven Democratic senators in voting against the second wave of TARP funds. President Barack Obama ended up using some of TARP to fund the $85 billion rescue of GM, Chrysler and their auto lending arms.

“If everybody had voted the way he did, I believe the auto industry would have collapsed, taking 4 million jobs with it,” Clinton said.

[snip]

David Axelrod, a former top adviser to President Barack Obama, questioned Clinton’s attack on Sanders’ voting record in the middle of the debate.

“It wasn’t explicitly a vote about saving auto industry,” Axelrod wrote on Twitter.

U.S. Sen. Debbie Stabenow, a Clinton supporter, said after the debate that senators, including Sanders, were aware the TARP money would be used to aid the domestic auto industry.

“A lot of folks said we shouldn’t do it because somehow it was helping the banks,” said Stabenow, D-Lansing. “It was the auto bailout we were talking about. I was very clear with colleagues that we had to do this.”

Stabenow’s comment, incidentally, is proof that the money shouldn’t have been granted as it was (it wasn’t spent on auto companies until much later). While she’s right that there had been public discussion of spending some money on the auto bailout, there obviously was still so little limiting what the Executive could do with the money that there needed to be nothing explicit supporting the auto bailout to make it happen. The flimsiness of the guidelines is one of the things that enabled the Obama Administration to avoid providing real foreclosure relief, choosing instead to “foam the runway” for banks.

Don’t get me wrong. Bernie did a number of other things at the debate that hurt him last night, such as his comment about ghettos that suggested all African Americans are poor and no whites are. I think, too, the optics of his efforts to stop Hillary from interrupting him as well as his own gesticulating while she was making responses will go over poorly.

But the auto bailout attack was a pretty shameful ploy, one that otherwise would make it fair game to really hit on Hillary’s own actions in a way Bernie has not yet done. That said, it was also a probably perfectly timed attack, because it will ensure victory for Hillary on Tuesday, eliminating one of the last possibilities that Bernie might really challenge Hillary.

Update: As it turns out, Hillary should be attacking Stabenow according to her own standards, because Stabenow voted no on the first TARP vote that actually paid for the first tranche of funding to the auto companies. (Here’s the second, January 2009 one.)

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Hillary Is Now Picking and Choosing Which Obama Accomplishments to Take Credit For

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According to Hillary Clinton’s latest campaign ploy, she deserves credit for domestic policies passed under Obama — notably, ObamaCare — but not issues — in this case, trade deals — she negotiated as Secretary of State.

She rolled out former Governor and erstwhile Michigan resident Jennifer Granholm (when this story hit, some local folks were talking about how Granholm hasn’t been seen in these parts of late) to claim that Hillary can’t be held responsible for NAFTA — which she supported when it got passed by her spouse (who is, of course, a key campaign surrogate) — or for the Trans-Pacific Partnership — which she helped negotiate as Secretary of State. It’s the latter I find particularly remarkable.

“It’s not really fair to ascribe NAFTA to her when it was her husband’s administration,” Granholm said in an interview with The Detroit News. “And, of course, it’s not really fair to ascribe TPP to her when it was her boss’s administration. She can’t go against somebody who she worked for.”

As a U.S. senator from New York, Clinton voted against the Central American Free Trade Agreement (CAFTA) forged by Republican President George W. Bush’s administration.

“I think people have to be fair about looking at how she acted when she was on her own,” said Granholm, who is supporting Clinton’s candidacy.

Sanders has been talking about trade policy in speeches in Michigan this week. His campaign is planning a large rally a 7:30 p.m. Saturday night at Macomb Community College’s southern campus in Warren. Clinton and her husband were stumping for votes Saturday in Detroit.

On Thursday, Sanders highlighted trade policy at a press confernece in Lansing, previewing a potential topic of disagreement in Sunday night’s debate with Clinton at the University of Michigan-Flint.

“On the issue of trade, Secretary Clinton’s views and mine are very different,” Sanders said. “She has supported NAFTA, I opposed it. She supported permanent normal trade relations with China, I vigorously opposed the (permanent trade) with China. She supported permanent normal trade relations with Vietnam, I opposed that.”

“She supported the Colombia Free Trade Agreement. I opposed that. And she supported the Korean Free Trade Agreement. I opposed that.”

It’s unclear from Detroit News’ reporting whether Granholm includes the Colombian and Korean free trade deals in her absolution of Hillary’s responsibility or not. But as David Sirota has shown, Hillary’s own emails show some really damning details about her claims and enthusiasm for the former (which makes sense, because she is also an enthusiastic booster of Plan Colombia).

During her 2008 presidential run, Clinton said she opposed the deal because “I am very concerned about the history of violence against trade unionists in Colombia.” She later declared, “I oppose the deal. I have spoken out against the deal, I will vote against the deal, and I will do everything I can to urge the Congress to reject the Colombia Free Trade Agreement.”

But newly released emails show that as secretary of state, Clinton was personally lobbying Democratic members of Congress to support the deal, even promising one senior lawmaker that the deal would extend labor protections to Colombian workers that would be as good or better than those enjoyed by many workers in the United States.

One of the 2011 emails from Clinton to U.S. Trade Representative Michael Froman and Clinton aide Robert Hormats has a subject line “Sandy Levin” — a reference to the Democratic congressman who serves on the House Ways and Means Committee, which oversees U.S. trade policy. In the email detailing her call with Levin, she said the Michigan lawmaker “appreciates the changes that have been made, the national security arguments and Santos’s reforms” — the latter presumably a reference to Colombian President Juan Manuel Santos. She concludes the message about the call with Levin by saying, “I told him that at the rate we were going, Columbian [sic] workers were going to end up w the same or better rights than workers in Wisconsin and Indiana and, maybe even, Michigan.”

Note, too, in that email that there is no exemption claimed for the paragraph that follows on the discussion of KORUS, which has been particularly damaging to Michigan’s economy.

Look, last I checked, Hillary cleaned up on Super Tuesday claiming she is running on a continuation of Obama’s policies. While I recognize she mostly means the domestic policies she had a less direct role in, at some point we get to hold her accountable for the things she did in her actual job, which included negotiating trade deals that hurt American workers, especially while she’s claiming she’ll be Obama’s third term. Her role in trade deals — and her likely dishonesty about TPP (see this Larry Summers piece that assumes if Trump wins, TPP will be dismantled, which suggests he expects it to be fully implemented if Hillary wins) is part of who she is. Yes, she voted against a trade deal once. Yes, she also had an affirmative role in a lot more trade deals. That’s a shitty record to run on in MI (and it will be a shitty record that Trump will hammer her on mercilessly if they end up being the nominees), but it is her record, part of the extensive experience that she points to as making her best qualified to be President.

 

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The Return of the Reagan Democrats

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Donald Trump held a rally in Warren, MI today, a blue-collar, largely white suburb of Detroit in Macomb County. The county, as a whole, is famous for what Democratic pollster Stan Greenberg dubbed the “Reagan Democrats” after lifelong white working class Democrats started flipping to the GOP in 1980, as he described in this study done on polling about Obama in 2008.

In 1960, Macomb was the most Democratic suburban county in the country as John F. Kennedy won handily there, garnering 63 percent of the vote. Four years later, Lyndon Johnson increased the Democratic vote share even further, winning 75 percent of Macomb voters. But over the next 20 years, these voters turned on the Democrats, culminating with Ronald Reagan taking 66 percent of the vote in 1984.

Even before the election, Greenberg found Obama did worse with Macomb’s voters than he did elsewhere. Greenberg even found some racial basis for that, though not as much as he had earlier. But Greenberg judged early on that Obama did so much better elsewhere in the state — primarily, with the young, but also by generating enthusiasm among African American voters — that it wouldn’t matter.

Obama is running 7 points ahead in our statewide poll conducted at the same time. Obama obviously will be able to count on immense enthusiasm and turnout among African Americans, but there is more going on than that – including Obama’s over-performance in the growing suburban parts of the state, including Oakland County, where he is running a net 5 points above party identification and 9 points ahead of John McCain. Among young voters under 30 years, Obama defeats McCain 58 to 36 percent but Obama’s success with younger voters is even broader.

He leads McCain among all voters under 40 years by 48 to 41 percent across Michigan and matches that margin in Macomb. Clearly, the rules of the game are a little different this year.

Sure enough, Obama did over-perform in the suburbs. So much so that after the election, Greenberg said so long to his Macomb Reagan Democrats, embracing, instead, the racially diverse (or at least tolerant) suburbanites who could replace them in the Democratic coalition.

Oakland County has formed part of the Republican heartland in Michigan and the country. From 1972 to 1988, Democratic presidential candidates in their best years lost the county by 20 points. From Bill Clinton to John Kerry, however, Democrats began to settle for a draw. Over the past two decades, Oakland County began to change, as an influx of teachers, lawyers and high-tech professionals began to outnumber the county’s business owners and managers. Macomb has been slow to welcome racial diversity, but almost a quarter of Oakland’s residents are members of various racial minorities.

These changes have produced a more tolerant and culturally liberal population, uncomfortable with today’s Republican Party. When we conducted our poll of 600 voters in Oakland County on election night, they were a lot more open than voters in Macomb to gay marriage and affirmative action. We asked those who voted for Mr. Obama why they made that choice. At the top of the list was his promise to withdraw troops from Iraq, followed by his support for tax cuts for the middle class and affordable health care for all, and the idea that he will bring people together, end the old politics and get things done.

On Tuesday, Oakland County voters gave Mr. Obama a 57 percent to 42 percent victory over John McCain — those 15 points translated into an astonishing 96,000-vote margin. That helped form one of the most important new national changes in the electorate: Mr. Obama built up striking dominance in the country’s growing, more diverse and well-educated suburbs.

So, good riddance, my Macomb barometer.

But in elections since, Democrats have been doing worse and worse among whites and, in the interim years, losing elections as a result. By 2014, Greenberg was not so sanguine about Democrats’ losing those white voters anymore.

For example, a lot of blue-collar work today takes place in small groups rather than in factory settings, and most construction workers are self-employed contractors. Moreover, if by blue-collar jobs we mean jobs that involve routine and repetitive tasks, require limited skills, are closely supervised, and offer no autonomy during working hours, then it turns out that half of all white male workers and 40 percent of white working women are blue collar. Far from working on factory floors, more and more workers are employed in service-sector jobs like health care, leisure and hospitality, and, particularly, professional and business services.

If Democrats cannot figure out how to appeal to today’s working-class voters, then they don’t deserve to lead. Nearly all of the people in these jobs have not seen a raise in years. The majority of them, who now work in the service sector—maids and housekeepers, waitresses and hostesses, cooks and dishwashers, counter attendants and ticket takers, janitors and hairdressers and child care workers—earn, on average, about $400 a week.

At that point, the GOP wasn’t even doing all that well with these voters. But they are now, with Donald Trump, returning today to the site of Reagan’s victory with the support of a bunch of working people arguably voting against their economic interest. Trump is speaking the language — significantly, of building infrastructure, and not just his damned wall — that would appeal to this group in a way the GOP had foresworn. And in Macomb, as elsewhere, Trump’s voters are his voters, largely detached from either party and thus far unimpressed with the dirt the GOP threw last night and reportedly will start throwing in abundance in the near future. Trump seems to recognize he has a limited window of time to win out before the shit gets really deep, and he stands a very good chance of doing just that.

And there is a real reason to be concerned that it will lead to victory for the GOP in November.

Thus far, we’re seeing Democratic turnout down, significantly, and GOP turnout up even more. That comes, in large part, because white voters — thus far we’ve had voting in the South, so these consist of what this analysis calls old-style Dixiecrats as well as Trump cross-overs — are turning to Donald Trump. Worse, we’re not seeing the kind of turnout among people of color, not even African Americans, that Democrats have been presuming would build a permanent firewall against GOP victories.

So it’s absolutely imperative that we find some way to do three things:

  • Bring back some form of the Obama effect on African American turnout, so it does not fall (as it did in South Carolina).
  • Give younger voters the motivation to actually turn out and vote.
  • Effectively fight the Trump effect, and stem the anti-establishment exodus of working class whites to the GOP, and to Trump.

If we can’t find a way to do that, then in the outer South:

  • North Carolina will not be remotely competitive.
  • Virginia won’t lean Dem, and could be a true tossup or even lean R.
  • Florida won’t really be a tossup, but will probably lean reasonably R as in 2004 (unless gains among Hispanics are fully strong enough to offset the Trump effect in North Florida and the drift of older retirees to the GOP).

That’s enough by itself to return the electoral college map to something more similar to what we had in 2000 and 2004. And if the Trump effect is strong in places like Ohio, Pennsylvania, and Michigan, then we could have a real fight on our hands, without any clear reason to think we have the upper hand.

In other words, with Trump on the GOP ballot and Obama off the Dem ballot, the Obama coalition could come tumbling down and crash into pieces. That “blue wall” we liked to think made America safe from another George W. Bush? Gone. History.

But even in MA, Trump drew those working class whites in YUGE numbers.

Bernie probably had a shot at winning among white and black and brown working people. Partly because the Democrats launched Republican attacks on sound policy, partly because Bernie didn’t listen to people of color enough, and partly because Trump had an easier sell to the white working class, he won’t pull it off.

Which will leave Hillary and Oakland’s voters (or, in parallel fashion, huge wins in the most affluent Military Industrial Complex suburbs of VA).

Democrats risk losing this election, once again to Reagan’s Democrats. If Trump wins, it may also be a realignment election, where Democrats become the party of those suburbs while Trump feeds the fears of those working towns. As Greenberg said, Democrats don’t deserve to win if they’re not offering solutions for those working class service workers, of all classes.

And thus far, Democrats haven’t convinced sufficient numbers they do.

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Hillary’s Admission Diplomacy Couldn’t Get Pakistan To Hand Over Bin Laden

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There was a really weird moment during the foreign policy section of last night’s debate.

Bernie, to respond to Hillary’s explanation of what we need to do to win wars against terrorism, said he doesn’t support regime change. To counter him, Hillary said, in part, that he had voted in favor of regime change in Libya.

Which led to this exchange:

SANDERS: Judy, if I can, there is no question, Secretary Clinton and I are friends, and I have a lot of respect for her, that she has enormous experience in foreign affairs. Secretary of state for four years. You’ve got a bit of experience, I would imagine.

But judgment matters as well. Judgment matters as well. And she and I looked at the same evidence coming from the Bush administration regarding Iraq. I lead the opposition against it. She voted for it.

But more importantly, in terms of this Libya resolution that you have noted before, this was a virtually unanimous consent. Everybody voted for it wanting to see Libya move toward democracy, of course we all wanted to do that.

SANDERS: That is very different than talking about specific action for regime change, which I did not support.

CLINTON: You did support a U.N. Security Council approach, which we did follow up on. And, look, I think it’s important to look at what the most important counterterrorism judgment of the first four years of the Obama administration was, and that was the very difficult decision as to whether or not to advise the president to go after bin Laden.

I looked at the evidence. I looked at the intelligence. I got the briefings. I recommended that the president go forward. It was a hard choice. Not all of his top national security advisors agreed with that. And at the end of the day, it was the president’s decision. So he had to leave the Situation Room after hearing from the small group advising him and he had to make that decision. I’m proud that I gave him that advice. And I’m very grateful to the brave Navy SEALs who carried out that mission.

This is not the first time Hillary has changed the subject by bringing up the Osama bin Laden killing — a far more awkward example came when she did so to respond to Chuck Todd’s question whether she would release her Goldman Sachs speech transcripts.

TODD: Are you willing to release the transcripts of all your paid speeches? We do know through reporting that there were transcription services for all of those paid speeches. In full disclosure, would you release all of them?

CLINTON: I will look into it. I don’t know the status, but I will certainly look into it. But, I can only repeat what is the fact that I spoke to a lot of different groups with a lot of different constituents, a lot of different kinds of members about issues that had to do with world affairs. I probably described more times than I can remember how stressful it was advising the President about going after Bin Laden.

But this example is more telling in a number of respects.

First, consider why she had to change the subject, aside from the fact that Libya has turned out to be such a colossal mistake. Hillary claimed Bernie voted in favor of regime change and then, without a break, described the vote as favoring Security Council involvement.

He voted in favor of regime change with Libya, voted in favor of the Security Council being an active participate in setting the parameters for what we would do, which of course we followed through on.

The resolution included, among other things, these three parts:

(3) calls on Muammar Qadhafi to desist from further violence, recognize the Libyan people’s demand for democratic change, resign his position and permit a peaceful transition to democracy governed by respect for human and civil rights and the right of the people to choose their government in free and fair elections;

(7) urges the United Nations Security Council to take such further action as may be necessary to protect civilians in Libya from attack, including the possible imposition of a no-fly zone over Libyan territory;

(11) Welcomes the outreach that has begun by the United States government to Libyan opposition figures and supports an orderly, irreversible and transition to a legitimate democratic government in Libya.

It certainly called for Qaddafi to resign and transfer power to a democratic government. It even endorsed the “outreach” — which ultimately involved barely covert support for rebels — as a means to “transition to a legitimate democratic government.” And it called for the UNSC to take further action, which it did weeks later in calling for a no-fly zone. Famously, Russia and China only permitted that resolution to pass because Susan Rice had led them to believe it did not entail regime change (which is why Russia refused to play along with multilateral efforts to do something about Bashar Assad’s massacres).

VITALY CHURKIN (Russian Federation) said he had abstained, although his country’s position opposing violence against civilians in Libya was clear.  Work on the resolution was not in keeping with Security Council practice, with many questions having remained unanswered, including how it would be enforced and by whom, and what the limits of engagement would be.  His country had not prevented the adoption of the resolution, but he was convinced that an immediate ceasefire was the best way to stop the loss of life.  His country, in fact, had pressed earlier for a resolution calling for such a ceasefire, which could have saved many additional lives.  Cautioning against unpredicted consequences, he stressed that there was a need to avoid further destabilization in the region.

In last night’s debate, Sanders responded — after talking about what good friends he is with the woman who just claimed he had supported regime change — that he had supported more democracy in Libya, not regime change.

Everybody voted for it wanting to see Libya move toward democracy, of course we all wanted to do that. That is very different than talking about specific action for regime change, which I did not support.

Which led Hillary to suggest, in response, that “we follow[ed] up on,” which led directly to Qaddafi taking a bayonet up his rectum.

You did support a U.N. Security Council approach, which we did follow up on.

Hillary is suggesting (whether solely for political gain or also for legal cover, it’s not entirely clear) that that Senate call for democracy entailed permission to execute regime change. That is, she seems to be claiming that the intent all along was regime change and Sanders should have known that when he did not object to a voice vote in favor of the Libya resolution.

Then, BOOM, dead Osama bin Laden…

… Just in case you start thinking too much about what it means that Hillary suggested that Senate resolution amounted to support for regime change which therefore amounted to an authorization to use military force.

Now, thus far, the exchange is troubling, but not surprising. Hillary’s hawkishness and fondness for fairly broad exercises of executive authority are known qualities.

But the juxtaposition of the disastrous regime change effort in Libya with Obama’s decision to secretly send Navy SEALs into Pakistan to execute Osama bin Laden got me thinking about how different that OBL decision looks when the former Secretary of State is boasting about it, rather than the President.

Once you decide that the way to respond to locating OBL is to sneak into a sovereign country and execute someone, you clearly have to consult with the Secretary of State, as she’s going to have to deal with the diplomatic fallout. That was all the more true as things rolled out, given that we were already conducting delicate negotiations to get Raymond Davis out. Not to mention the way that Davis fiasco soured relations between CIA and State.

Left unsaid, though, is the other option: developing good enough relations with Pakistan — or, more likely, being able to wield enough leverage against Pakistan — such that they would turn him over without the sovereignty violation.

Maybe — likely — that was never going to happen. Maybe — likely — within the bowels of CIA and State and the White House we had good reason to know that Pakistan would not turn over OBL, no matter how much leverage we used. Maybe — likely — it’s also true that the Obama Administration thinks special forces have a better success rate than diplomacy — or thought that, in his first term; his second term, post-Clinton, has had a series of impressive diplomatic successes.

I’m not suggesting I think we could have just asked nicely. But I find it notable that the Secretary of State describes her role as advising the President on whether or not to violate another country’s sovereignty to execute someone, not as considering whether there are other ways to achieve the same objective. I find it remarkable that a Secretary of State boasts about this decision, which ultimately is about the limits of diplomacy even with our so-called allies.

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