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Whatever the merits of the claims made about Fox News by Obama’s communications team, it can be good strategy to pick a fight with your critics. To the very long list of reasons, add this one. If you can make them so angry that they lose the will to say anything at all nice about you, then you have won a major victory. For then they will have lost all (remaining) credibility.
But I am somebody who is very anxious to have the Afghan government and the Pakistani government have the capacity to ensure that those safe havens don’t exist. And so it, I think, will be an important reminder that we have no territorial ambitions in Afghanistan; we don’t have an interest in exploiting the resources of Afghanistan. What we want is simply that people aren’t hanging out in Afghanistan who are plotting to bomb the United States.
Obama said this in an interview with NPR (transcript.) He actually says “hangin’ out” but the transcriber apparently wanted to maintain an air of formality and wrote “hanging.” You can hear it here, around the 12:30 mark. He chuckles a bit when he says it.
These are conspicuoulsy different ways for a President to talk, especially about something as serious as terrorism. It says something about the man himself and it also draws a sharp contrast with Bush, whose standard catch phrase at these moments would be “rout out the terrorists.”
Previous installment in the series.
Jeff already wrote an interesting blog about Specter switching parties. Specter seems to have switched because he stands a better chance winning in re-election as a Democrat than a Republican, Jeff’s point 4. The Democrats seem ecstatic and I’m trying to deduce why this is the case.
If Specter had not been accepted into the Democratic fold, he would have lost in the Republican primary. The Republican candidate, presumably someone very right wing, would then face a Democratic challenger. This Democrat would be someone other than Specter as Specter would have tried to run as a Republican. Maybe Specter would run as an Independent in this scenario – though I’m not sure if Pennsylvania allows this. If the Democrats think that having Specter run as a Democrat means a higher probability of a Democratic win than this messy scenario, I can see some rationale for their happiness.
Their payoff is affected by the quality of Specter as a Democrat as well as his probability of winning. Specter was pretty independent as a Republican and, for example, voted for the stimulus bill. So, he is a net gain to the Democrats if he is more likely to vote Democrat than Republican with a “D” label attached to him rather than a “R”. But he has just shown his lack of loyalty to party by switching sides and was always independent anyway. His move is very much a rational move made by a calculating politician. Hence, I believe he is only of use till he is re-elected (or not) in 2010. Obama has promised to campaign with him and help him raise money. This is useful till 2010. After that, Specter will go his own way. Obama has to get as much Specter-friendly legislation as possible passed in the next two years. I’m not sure where Specter stands on healthcare reform. He had cancer and is emotional about health issues. Maybe this is a point of common value.
Continuing to make bold moves in the first 100 days of his administration, Obama will announce this week two blockbuster appointments to senior positions at the Department of Treasury.
Freakonomist
Sure to raise eyebrows will be the appointment of University of Chicago economist Steve Levitt to Tim Geithner’s team. Rarely venturing into the realm of policy, the author of Freakonomics is better known –and often derided– for research focusing more on cute trivialities like cheating by Sumo wrestlers.
Ironically, his foray into Sumo-economics appears to be exactly why he is getting the call. As readers of Freakonomics know, Levitt made headlines when he used the same statistical analysis to expose widespread cheating by teachers in the Chicago Public Schools. How does this help the Department of Treasury you ask? Stress Tests. The big headline of Geithner’s first announcement as Treasury Secretary was the promise to screen out banks doomed to fail. Strangely, Treasury has since been mum on the results from the stress tests. Now we know the reason: it turns out all the banks are getting passing marks and the suspicious Treasury Secretary is calling on Levitt to bring his Sumo-scrutiny to bear on the banks.
Colleagues at the University of Chicago economics department are cheering the move. “I could not think of a better choice than Steve Levitt to move to Washington and help the Obama team” says Nobel Laureate James Heckman, adding that he expects the job to occupy Levitt for two full Obama administration terms. “We will miss him, but he has an important job to do.”
When we finally reached Levitt, he was at McDonalds headquarters at Oak Brook, IL. Some of their franchises have been cheating by hiding Big Mac revenues that they have to share with McDonalds. Levitt has found a way to benchmark performance that can reveal suspiciously underperforming locations. “This is what economists call ‘moral hazard,’ ” Levitt said over a carton of Chicken McNuggets. “Look, economics is not rocket science. Think of the US Government as like McDonalds, a bank and a toxic asset are just like a franchisee and a Big Mac. Once you see it that way, its simple.”
Former Bushie
Joe Lieberman supported John McCain during the election, made a speech at the Republican Convention and said Obama was not ready for the Presidency. And yet Obama later forgave him because he knew Lieberman’s vote was going to be crucial in the Senate.
Now, Obama has shown the same pragmatic streak in inviting Greg Mankiw to join his administration. Mankiw was the head of Bush II’s Council of Economic Advisors. He has so far played a role on the sidelines, an informal referee of the contest between Obama and his right-wing critics. Mankiw is often skeptical of Obama’s plans but at the same time he does not fully endorse their antithesis. This ambiguity has suited Mankiw well, as he has been courted by both sides of the political spectrum. Finally, he has chosen his prom date and decided to join the Obama administration. He will serve alongside his old Harvard colleague Larry Summers as Co-Director of the National Economic Council.
Why did Obama choose Mankiw for this post?
Mankiw said, “Well, in all modesty, I must point out that I proposed something like the Geithner plan – of course, I call it the Mankiw plan (!) – last October. There are some differences in the details but the principles are the same. I’m looking forward to improving the plan and being involved in its implementation. Whenever you are asked to serve your country, I think you should do it, even if there are ideological differences with some of the people involved.”
The additional intellectual heft of having Mankiw on board will certainly help in the coming months. Mankiw is also quite familiar with the rump of the Republican party that is still left standing in Congress. He is one of the rare individuals who has a good relationship with both John Boehner and Mitch McConnell. McConnell and Mankiw were bridge partners and they have the camaraderie and preternatural ability to wordlessly communicate that comes from expertize at that genteel but vicious game. But Mankiw can also be a populist and is a great expositor of complex ideas, a fact that Obama hopes will help in persuading at least some House Republicans to occasionally vote for some of his economic plans.
There is another factor at play. True to predictions, Larry Summers has proved hard to control within the West Wing. Orzag and Geithner have not been able to do it. In any case, they are fantastically busy trying to implement Obama’s healthcare policies and manage the financial crisis. Furman and Goolsbee , who were both students in Cambridge, are in awe of their former teacher and find it hard to contradict him. Summers and Mankiw respect each other, or at least Mankiw respects Summers! Obama has watched Biden and Clinton argue over Afghanistan policy. As a lawyer, Obama has always favored the “team of rivals” approach and wants to replicate it in economic policy.
Only one thing stands in the way. Mankiw has amassed a huge fortune by selling economics textbooks all over the world. He is incorporated in Switzerland as a Verein for tax purposes. A verein is an association of independent businesses and each international textook is an independent “firm” within the Mankiw Verein. This has several tax advantages and seems to be all quite legal. But with the current furor over AIG bonuses the administration wants to tread carefully.
Jeff and Sandeep
(I have taken to titling my posts in the style of an Alinea dish.)
I was reading one recent morning to my 2 year old boy a story from Frog and Toad. In this story, Toad is grumpy about Winter but Frog talks him into coming for a sleigh ride. Once the sleigh gets going really fast, Toad begins to forget all of his complaints and enjoy the ride. Unbeknownst to Toad, Frog is knocked off the back of the sleigh as the sleigh starts to hurtle faster and faster down the hill. Despite the sleigh being without a driver and completely out of control, Toad begins to feel more and more secure and at peace with the Winter.
Of course, something is going to happen to bring it all crashing down on Toad. In fact, what happens is not that the sled crashes into a tree, at least not yet. What happens is a crow flies by and upon hearing Toad describe what a wonderful ride he and Frog are having, points out to Toad that Frog is not behind him anymore. Its only after learning that there is nobody at the wheel does Toad panic and cause the sleigh to crash.
This is a recurrent theme in children’s literature. I think the quintessential expression of it is from the cartoons, especially the roadrunner/coyote cartoons. Here is the image. Coyote is chasing roadrunner through some rugged canyonland along a steep ridge and the chase brings Coyote to a cliff. He is so focussed on finally nabbing the roadrunner that he does not notice that he has run off the cliff. He keeps running. In mid-air. But then at some point he looks down and notices that there is no ground beneath his feet and at that moment that he falls to back to Earth. (At which point he turns to the next page in his ACME catalog and the chase is on again…)
If you run off a cliff you should make sure you are running fast and that the opposing cliff is not too far. It also helps to be like the roadunner: looking down is not in his nature and he always makes it to the other side.
I think of Obama’s first 100 days as running off a cliff. We have a pretty good running start. So far we are not looking down. I hope we get to the other side before somebody does. And please, pay no attention to the crows.
I admit defeat.
St. Patrick’s Day is approaching and I claim credit for the first to make this lame pun. I won’t be the last.
Obama gave an interview yesterday on TV where he was asked about nationalizing banks. His response is an interesting look into the way the administration thinks about things, comparing the US to Japan and Sweden. You can read a transcript here.
What caught my eye was his use of the word “like” in the following excerpt (second sentence.)
So you’d think looking at it, Sweden looks like a good model. Here’s the problem; Sweden had like five banks.
This is the so-cal “like.” It stands for “about” or in this case “not many more than.” It lends an informality to the sentence which adds to its comical and therefore rhetorical punch. On top of that it brings the President further down to Earth even when talking about something esoteric like bank nationalization.
I like it. Is this the first occurence of the so-cal “like” in Presidential prose?
Be wary though, this mild version is the gateway “like” to more serious transgressions such as “We were discussing TARP and Geithner is like, ‘No way Larry, I am the Treasury Secretary and I say no caps on executive pay’ and then, like, Summers is all ‘Whatever.’ “
here are my two simple ways of thinking about fiscal stimulus.
from the perspective of the stimulee: the federal government is right now the cheapest source of capital. in fact capital has never been cheaper. the treasury can borrow at record low interest rates. unfortunately the banking system is not doing its job as an intermediary channeling this credit to the bridge-builders. so the bridge-builders effectively borrow directly from the source by accepting stimulus dollars and promising to pay them back in the future with taxes.
(of course there is a wedge between the amount i receive in stimulus ($X) and the amount I pay in taxes ($X/N) and this makes me inefficiently eager to accept it. this is why stimulus should focus on public projects where the benefits are dispersed equally.)
from the perspective of government. we accept that there are things government should be producing, in particular public projects where the benefits are dispersed equally. the government has flexibility in the timing of these investments. since the investment requires coupling labor with the government’s capital, the optimal timing is during times of (otherwise) unemployment when labor is relatively cheap.
so we don’t have to think about multipliers and we don’t have to think about Keynesian effective demand. The government acting optimally to smooth expenditures should spend a lot now. Yes, it means spending must be correspondingly reduced in the future and critics would worry that this won’t happen. But there will come a time when interest rates are higher and it is more costly for the government to borrow and under pretty much any theory you have of how spending is determined, at the margin at least, that will have the effect of reducing spending.
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