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Anonymous Donors Against Hegel

January 27, 2013 at 8:39 am

The front page of today's Times features a ridiculous article under the headline "Secret Donors Finance Fight Against Hagel."

It's ridiculous in part because it's hypocritical. The Times publishes non-bylined editorials, often grants anonymity to sources, and accepts anonymous contributions to the Times Neediest Cases Fund, so clearly the newspaper has no blanket objection to anonymous political speech or anonymous charitable contributions. What the paper objects to, rather, is when Republicans engage in anonymous political speech.

This becomes clear when one realizes that the article omits any mention of People for the American Way or the People for the American Way Foundation. They helped to block President Reagan's nomination of Robert Bork to the Supreme Court. They are organized under the same sections of the tax code as the conservative groups that are trying to block President Obama's nomination of Chuck Hagel to the Pentagon. Their donors are anonymous. But somehow the Times manages to leave them out of the story.

That may be because including them would undermine the hype in the article, which is the claim that "The media campaign to scuttle Mr. Hagel's appointment, unmatched in the annals of modern presidential cabinet appointments, reflects the continuing effects of the Supreme Court's 2010 Citizens United decision, which loosened campaign finance restrictions and was a major reason for the record spending by outside groups in the 2012 election."

But the Times article itself concedes lower down that the outside groups "would have been able to operate freely against Mr. Hagel even before Citizens United."

So what's the new news here? Not much, despite the front-page placement and breathless tone — "unmatched in the annals..."

 

Krugman on the Deficit and British Austerity

January 25, 2013 at 6:11 am

Paul Krugman's column begins:

President Obama's second Inaugural Address offered a lot for progressives to like. There was the spirited defense of gay rights; there was the equally spirited defense of the role of government, and, in particular, of the safety net provided by Medicare, Medicaid and Social Security. But arguably the most encouraging thing of all was what he didn't say: He barely mentioned the budget deficit.

Mr. Obama's clearly deliberate neglect of Washington's favorite obsession was just the latest sign that the self-styled deficit hawks — better described as deficit scolds — are losing their hold over political discourse. And that's a very good thing.

From the White House transcript of President Obama's Inaugural Address:

We must make the hard choices to reduce the cost of health care and the size of our deficit.

Maybe Professor Krugman nodded off for that line in President Obama's speech, the same way that his Times editorial page colleague Charles Blow missed the reference to economic ups and downs and international conflicts, and Andrew Rosenthal apparently missed the gun control reference.

Elsewhere in the same column, Professor Krugman discusses Britain:

Consider, in particular, the case of Britain. In 2010, when the new government of Prime Minister David Cameron turned to austerity policies, it received fulsome praise from many people on this side of the Atlantic. For example, the late David Broder urged President Obama to "do a Cameron"; he particularly commended Mr. Cameron for "brushing aside the warnings of economists that the sudden, severe medicine could cut short Britain's economic recovery and throw the nation back into recession."

Sure enough, the sudden, severe medicine cut short Britain's economic recovery, and threw the nation back into recession.

Professor Krugman blames "austerity," but one can just as easily blame Prime Minister Cameron's decision to follow through on his Labour Party predecessor Gordon Brown's decision to raise the income tax rate for the highest earners to 50%, a level Mr. Krugman has supported for America as a way to counter income inequality. Said Mr. Cameron at the time, "The rich will pay their share." How does Professor Krugman know for sure it was deficit reduction of the sort that he opposes that caused Britain's recession rather than tax increases on the rich of the sort that he supports? He doesn't say.

 

Declining Education Spending

January 24, 2013 at 8:33 am

From a Times review of Al Gore's new book, The Future: Six Drivers of Global Change:

The results, Mr. Gore goes on, can be seen in "the ever increasing inequalities of income and growing concentrations of wealth, and the paralysis of any efforts at reform." Such paralysis is particularly dangerous, he says, given the challenges facing America today, like declining public education financing (at a time when schools need to adapt "to the tectonic shift in our relationship to the world of knowledge") and continuing high unemployment (a by-product not only of the 2008 crash, but also of globalization, outsourcing and automation).

"Declining public education financing"? What could Mr. Gore, or the Times reviewer (who elsewhere in the review is deft in pointing out the hypocrisy of Mr. Gore's criticism of television and fossil fuels while selling his Current TV to the oil potentates who own Al Jazeera), possibly be talking about?

Here are the amounts the federal government spent via the Department of Education, according to Table 4.1 of the White House Office of Management and Budget, accessed this morning:

2000: $33.476 billion

2012 estimate: $98.467 billion

Here are the amounts New York City, the nation's largest public school system, spends on its public schools (not including colleges and universities):

1998-1999: $9.79 billion, according to a report by a Democratic member of the New York State Assembly from New York City)

2012-2013: $24.4 billion, according to the Web site of the city department of education.

Now, one can argue about inflation adjustments using the price of gold or the consumer price index. There may be some places, perhaps California, where the rate of growth in state funding for education has slowed (though the population growth has slowed, too). But taking even a mildly long view of it, "public education financing" hasn't been "declining," it's been doubling or tripling, as shown in the federal and New York City statistics above. It would have been nice had the Times review pointed this out rather than just passing along the decline claim as if it were accurate.

 

Eschew On This

January 24, 2013 at 8:20 am

From Charles Blow's column on President Obama's inaugural: "This speech eschewed seasonal issues — economic ups and downs, international conflicts — for the everlasting concepts."

From the White House transcript of the speech: "A decade of war is now ending. (Applause.) An economic recovery has begun. (Applause.)"

Maybe Mr. Blow had nodded off by that point in the speech, just as his Times editorial page colleague Andrew Rosenthal apparently missed the gun control reference.

 

Israeli Election Coverage

January 23, 2013 at 7:07 am

At least two points seemed worth mentioning in the Times's coverage of the Israeli election.

First, the front-page news article reports, "The results were a blow to the prime minister, whose aggressive push to expand Jewish settlements in East Jerusalem and the West Bank has led to international condemnation and strained relations with Washington." This is an odd formulation on several fronts. Jerusalem is Israel's capital, and it's not entirely clear that building homes in a national capital city should count as "settlements." The description of the settlement push as "aggressive" is an opinion. It's just as plausible to characterize the building not as "aggressive" but as "defensive." Also, for ten months of Netanyahu's administration a settlement "freeze" was in place. That was a freeze, not an aggressive expansion. Finally, even by the count of the left-wing Israeli group Peace Now, Mr. Netanyahu's government approved 6,676 settler housing units in 2012. That wasn't construction, just approval. And for a country of 6 million Jews, many with rapidly expanding large families, it can seem like a small number, not a large one.

Second, the front-page news article and Thomas Friedman's op-ed page column offer opposing interpretations of the election results. The Friedman column says, "Israel's election on Tuesday showed that the peace camp in Israel is still alive and significant." The news article, on the other hand, says "it was the center, led by the political novice Yair Lapid, 49, that emerged newly invigorated...Mr. Lapid...avoided antagonizing the right, having not emphasized traditional issues of the left, like the peace process. Like a large majority of the Israeli public, he supports a two-state solution to the Israeli-Palestinian conflict, but is skeptical of the Palestinian leadership's willingness to negotiate seriously; he has called for a return to peace talks but has not made it a priority."

 

Porter's VAT

January 23, 2013 at 6:49 am

A friend recently suggested that the Times could increase its revenues by offering readers an option: "you can pay more not to get articles by certain writers."

Under that plan, Eduardo Porter might be a real money maker for the Times. Today his column begins:

What would happen if the government raised everybody's taxes? The fiscal deal struck in the wee hours of 2013 will raise at best $700 billion from higher taxes on wealthy Americans in the coming decade. This is hardly enough to stabilize the nation's debt in the next 10 years, let alone deal with a long-term budget deficit that is expected to mushroom as the population ages and spending on entitlements rises. To make ends meet, both parties agree, spending must be drastically cut…This is not, however, the only option we have. There is an alternative: raising more money from all taxpayers, including the middle class.

This mischaracterizes the fiscal deal. Because the deal included the expiration of the payroll tax cut, the tax increase fell not only on the wealthy but included many middle class and even working poor taxpayers. The column does not acknowledge that point.

The column goes on to call for the imposition of a federal value-added tax, a sales tax on goods and services, at a rate of 16.7%. It's not clear from the column whether this would be instead of or in addition to the existing payroll, income, and state and local taxes, which is another flaw in the crafting of this flawed column.

 

A Times Prediction

January 22, 2013 at 9:23 am

An article by Jane Sasseen begins, "As Washington grapples with the country's fiscal woes, the private equity industry is grudgingly facing a new reality: its long-held tax advantages are likely to disappear."

This is a misconception. There is no "tax advantage" for private equity carried interest. It's subject to the same capital gains treatment that other long-term capital gains, including founder's stock, are subject to. And the same rules apply to private equity as to real estate partnerships, oil and gas partnerships, hedge funds in cases where the funds have long-term gains, and venture capital.

As for the prediction at the top of the article, we shall see. I doubt it. A recent Bloomberg article pointed out, "If carried interest were taxed as ordinary income, the top rate on such profits would increase to 39.6 percent. High earners also face a 0.9 percent added tax on wages starting this year as a result of the health-care law. That means the top rate would be 40.5 percent compared to 23.8 for capital gains, or a 70 percent rise." If anyone thinks that either House Republicans or the Senate Democrats representing these partnerships are going to back that kind of tax increase on venture capital, real estate, or oil and gas, they may be surprised. And Senator Schumer has been pretty firm in opposing holding hedge funds or private equity funds to different standards than other investment partnerships.

Finally, there's a contradiction in the logic of the article. On one hand, it argues that the tax increase is inevitable because the revenue from the increase is needed by the federal government. On the other hand, much of the article is about how the managers may restructure their affairs so as to avoid the tax increase. If the tax increase is so easily avoided, it is unlikely to raise the amount of revenue that is predicted.

 

Gun Control in the Inaugural

January 22, 2013 at 7:01 am

Times editorial page editor Andrew Rosenthal writes of President Obama's inaugural address: "I was, personally, upset that Mr. Obama did not discuss gun control. I hope that was not a sign of a lack of commitment on his part to the ambitious proposals he put forth last week."

From Mr. Obama's speech, as provided by the White House: "Our journey is not complete until all our children, from the streets of Detroit to the hills of Appalachia, to the quiet lanes of Newtown, know that they are cared for and cherished and always safe from harm."

It seemed to me that the reference to keeping the children of Newtown "always safe from harm" meant gun control. What does Mr. Rosenthal think President Obama was discussing there? Making sure they were properly vaccinated? Arming their teachers? Maybe Mr. Rosenthal had dozed off by the point in the speech at which the president mentioned the children of Newtown.

 

Always the Inequality

January 21, 2013 at 8:25 am

The latest example of habit of the New York Times and the left of making just about every issue into a tale of income inequality is this, from an article headlined "Iran Resorts to Hangings in Public to Cut Crime": "Police commanders and other officials blame government mismanagement of the economy — which they say has caused a rise in unemployment and inflation — for the increase in crime. International economic sanctions have aggravated problems, many here say, leading to a record gap between rich and poor in Iran."

The Times doesn't explore why rising income inequality and unemployment causes crime in Iran but not, say, in other countries where the Times claims income inequality has been increasing, such as, say, America.

Nor does it consider the possibility that the public hangings are not a crime control measure but rather an attempt by the deeply unpopular ruling authorities to terrorize the population into compliance.

The idea that Iranians have to resort to crime to counteract income inequality is almost humorous, when you get right down to it. The Times's imaginary Iranian criminal trying to strike a blow against income inequality by stealing from someone richer bears an uncomfortable resemblance to a Times editorial writer or columnist urging President Obama to counter income inequality by passing new tax laws that take more money from the rich and redistribute the money to the poor and middle class.

Anyway, the entire analytical framework undergirding this dispatch is high New York Times leftism unmarred by skepticism or self-doubt.

 

Amgen's Settlement

January 20, 2013 at 8:30 am

A front-page article highlights a provision in the fiscal cliff bill that gives the drug company Amgen two additional years to sell the medicine Sensipar under less restrictive Medicare reimbursement rules. It's a useful article in that it shines a light on this obscure provision and how it became law. But it has a few flaws.

"The bill gives Amgen an additional two years to sell Sensipar without government controls," the article says. That inaccurately suggests that no government controls at all apply. There are still plenty of government controls — the sales are subject to all the usual anti-fraud provisions, the FDA's rules, and Medicare's rules. They just aren't subject to inclusion in the new bundled payment system for kidney dialysis.

Second, the article includes as context: "On Dec. 19, as Congressional negotiations over the fiscal bill reached a frenzy, Amgen pleaded guilty to marketing one of its anti-anemia drugs, Aranesp, illegally. It agreed to pay criminal and civil penalties totaling $762 million, a record settlement for a biotechnology company, according to the Justice Department."

The text of the article does not specify how this marketing was done "illegally." Readers might imagine bribes or kickbacks, or selling the drug in a way that intentionally harmed patients. In fact the issue was not any of those things, but rather off-label use, where Richard Epstein and Andrew Grove, among others, make a reasonable case that the laws are silly and should be reformed. Sure, companies are obliged to follow laws even if the laws are counterproductive and due for reform, but the Times throws these lines in in a way that looks simply designed to bolster the depiction of Amgen as some greedy villainous pharmaceutical company, without raising the issue of whether these off-label use restrictions make any sense.

Finally, the article fails to make the next logical leap, which is that a system that sets up the government as a big payer and authorizer of medical care almost inevitably breeds the sort of influence-peddling and backroom dealing described by the article. If the prices for drugs were set by competing retailers without a lot of government intervention, you'd wind up with something more like the $4 generic drugs available at Walmart and Target, and individuals, in consultation with their doctors, can decide whether to purchase and consume the drugs. But when it's Medicare or the FDA deciding whether to pay and how much for the whole country, the stakes are so high that it becomes a rational economic decision for the drug company to start making political contributions and hiring congressional aides-turned lobbyists.

One can argue that an article highlighting a particular legislative provision isn't the place for the Times to digress into FDA reform or explanations (rather than examples) of how big government breeds corruption. Maybe so, but what explanatory context there is in the article tends to promote one story line — drug companies are law-breakers — rather that the alternative story line, which is that silly laws and centralized government decision making breed corruption.

 

IndyMac's Collapse

January 18, 2013 at 7:54 am

An article on Michael Dell's business empire outside his computer company includes this:

Perhaps MSD's most prominent deal came in 2008, in the middle of the financial crisis, when it joined a consortium that acquired the assets of the collapsed mortgage lender IndyMac Bank from the federal government for about $13.9 billion and renamed it OneWest Bank.

The OneWest purchase has been wildly successful. Steven Mnuchin, a former Goldman executive who led the OneWest deal, has said that the bank is expected to consider an initial public offering this year. An I.P.O. would generate big profits for Mr. Dell and his co-investors, according to people briefed on the deal.

"Collapsed" is arguably a misleading term for what in fact happened to IndyMac. Maybe this article on Michael Dell isn't the right place for a fuller explanation, but on the other hand, the term "collapsed" doesn't fully capture it. A CNN article reports what did happen. Senator Schumer wrote and released a June 26, 2008 letter to regulators warning that he was "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers." In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts, and the federal Office of Thrift Supervision proceeded to seize it and to turn it over to the Federal Deposit Insurance Corporation.

Mr. Schumer argues that the bank was in trouble before his letter became public. And it's certainly possible that Mr. Mnuchin and the management team he brought in added value by managing the bank better and restoring confidence in it. I'm not faulting him for seeing value where others did not. But one can also argue that the remarkable recovery of IndyMac under the OneWest name demonstrates that — like the once "toxic," now golden mortgage-backed securities — there was more value in these assets than either regulators or the press recognized at the time.

All of this is a long way of saying that "collapsed" is a shorthand for a story about this financial institution that makes it seem like it fell down on its own. In fact regulators and politicians made a decision not to prop up the owners, and instead decided to take it over. If they had left it alone, maybe it would have recovered on its own. Maybe it wouldn't have. Maybe it would have failed on its own, or the owners, under distress, would have decided to sell it at a bargain price without the intervention of a senator or the Office of Thrift Supervision.

The article would have been better if some editor had just deleted the word "collapsed."

 

NYC School Bus Driver Pay

January 17, 2013 at 7:28 am

Today's Times carries a front-page article on the New York City school bus drivers strike. Like the coverage leading up to the strike, it doesn't include any information about how much the bus drivers are paid. That information is usually, and justifiably, considered relevant by readers trying to make judgments about whether to side with the striking bus drivers or with the mayor.

For some hours yesterday the Times home page carried an article by Marc Santora that quoted a union leader saying that the bus drivers' wages start at $14 an hour and the wages of "matrons" – the archaic term that the paper has been using for bus monitors — start at $11 an hour. The Times's longtime labor reporter, Steven Greenhouse, tweeted that information. But that information has been omitted from the article linked in Mr. Greenhouse's tweet, which is no longer easily found on the Times web site.

If an editor took the information out until more information could be gathered on bus driver wages, the editor probably made a smart move. The starting salary, after all, is just one piece of the puzzle, and a potentially misleading piece at that. To get a full picture, one would need to know not just the starting salary, but the top salary for bus drivers and monitors with years of seniority, as well as perhaps the average salary. What about overtime? Is the pay hourly, or annual, and, if annual, do the drivers get paid during summers and school vacations if they aren't working? If the driver is actually driving a bus full of children only for two hours a day, how many hours does the driver get paid for? Is there health insurance?

I tried to get some of this information for a column I wrote about the strike earlier this week. A city department of education spokesman referred me to the private bus companies, and the bus companies I called were not forthcoming. But I'd hope that the Times — whose front-page article carries the name of five reporters — could do better.

 

The Immersion Blender Menace

January 16, 2013 at 8:32 am

The Times food section has a front-page article and a sidebar on the threat of injuries from the kitchen appliance known as an immersion blender.

The main article is by a woman who was herself injured by such an appliance — not exactly the most objective source.

The Times article claims "the immersion blender sells for about $50 to $200." That's an overstatement of what they cost; Amazon has an assortment of them, with at least eight priced below $50.

The sidebar says "Cuts from slicers and choppers accounted for 21,699 estimated visits to emergency rooms nationwide in 2011, up from 12,001 in 2001, according to the United States Consumer Product Safety Commission. Blenders sent an estimated 7,261 people to emergency rooms in 2011, up from 2,424 visits a decade earlier."

Put that way, the statistics sound alarming. But the article has no information on how many more blenders are in homes now than there were a decade ago. The number of injuries per blender may have gone down over the past decade. There's also no information on how many blenders are in homes overall. If there are, say, 70 million blenders in American homes — my own household has three, one old-fashioned blender for milkshakes and smoothies, and two immersion blenders, one for milk and one for meat, which I use mainly for soups — then about 7,000 emergency room visits a year means that a household with one blender has a roughly one in ten thousand chance in a year of suffering a blender-related emergency-room visit. If one frames it that way — and the Times does not — the chances of a blender-related injury seem more remote.

My immersion blender says right on the handle "sharp blades, handle carefully," and if you read the instructions, they reiterate, "Blades are sharp, handle carefully," "The blade is very sharp," "Always unplug the appliance before assembling, disassembling and cleaning." This, too, goes unmentioned in the Times article.

The commenters on the Times site tend to blame the user, not the blender:

This isn't an article about dangerous blenders. This is an article about inexperienced, uneducated cooks. Immersion blenders are great kitchen tools that, like any other kitchen tool, need to be used with respect. Creaming butter, making cookies are improper uses of an immersion blender, which is meant for pureeing and making soups or smoothies. Would these same people stick their hands into a regular blender or grab a knife by the blade? There is nothing wrong with immersion blenders or their design; there is something wrong with the lack of basic cooking and kitchen education in this country.

And:

Some dangers are so obvious that the only reason they come with instructions is because of liability issues caused by people who think they deserve money for their carelessness and embarrassment. Maybe the injured people were too distracted or had one too many glasses of wine; it's not exactly an accident, like being hit by a random rock falling off a cliff, they were active participants in the problem. Some things can be assumed to be dangerous just by looking at them--there is no subtle or hidden danger here. Sharp badges attached to a motor. Sharp blades without a motor. Gee, who'd a thunk? And don't put your baby in the fireplace either.

I'm going to resist drawing a parallel to the debate over gun control. But just the immersion blender discussion raises some interesting questions about blaming the product or the manufacturer versus placing the responsibility on the individual user. The Times article leans more in the direction of blaming the product or the manufacturer.

 

Private Sector Oil Spills

January 16, 2013 at 6:50 am

A column by Eduardo Porter in the Business section of the New York Times blames capitalism for the BP oil spill: "While in government hands, British Petroleum paid too little attention to profitability, constrained by its need to please elected officials who often cared more about keeping energy cheap and employment high. But in private hands, it may have cared about profits far too much, at the expense of other objectives."

The logic here struck me as suspicious, because there are plenty of other privately owned oil companies that don't have big spills, and there are plenty of government-owned oil companies that do have big spills.

The Daily Telegraph has a list of the top 10 oil spills in history. The largest came when the Iraqi government opened the valves of Kuwaiti oil as Saddam Husseins' forces retreated in the first Persian Gulf War. That was a government-caused spill, not one caused by private enterprise.

The third-largest was the Ixtoc I oil spill, at a well operated by Pemex, the state-owned Mexican oil company.

The sixth-largest was at the Norwuz oil field in the Persian Gulf, operated by the Iranian Offshore Oil Company, a subsidiary of the National Iranian Oil Company, which is owned by Iran's ministry of petroleum.

In other words, the Times columnist's notion that governments or government-owned oil companies just care about safety, while privately owned oil companies just care about profits and don't care about safety, is silly, or, at the very least, is unsupported by evidence. The Times column doesn't mention a single one of these spills caused by governments, though it dwells on BP's post-privatization errors.

The Times column concludes by suggesting a rule on what should be done by governments and what should be done privately: "a good rule of thumb to determine when a private company will outperform the public sector: if the task is clear-cut and it's possible to define concrete goals and reward those who meet them, the private sector will probably do better....But if the objectives are complex and diffuse — making it difficult to align profit with goals without undermining some other desirable outcome — the profit motive could well make conflicts more difficult to manage. In these cases, privatization is probably not the best solution."

By this "rule of thumb," the government should nationalize the news business.

 

Decline of Catholic Schools

January 15, 2013 at 9:41 am

The New York section has a big article on the decline of Catholic schools:

In the New York Archdiocese, which extends from Staten Island north almost to Albany, fewer than 75,000 students now attend 245 Catholic elementary and high schools, down from 212,000 students in 414 schools in the early 1960s.

The article displays a remarkable lack of curiosity about the reasons for this decline in enrollment. Are there fewer Catholic children in the area now than there were in the early 1960s? Or are there similar numbers of Catholic children, but fewer of them choosing to attend Catholic schools? Or are fewer non-Catholic children choosing Catholic schools? What's responsible for these trends? The rise of charter schools? The increase in spending on public schools that has driven up teacher salaries and made it harder for the Catholic schools to compete in the market for professional educators? Fewer people becoming priests or nuns or members of religious orders that used to staff the schools? The sex-abuse scandals? It would be nice to have some answers to these questions from the Times, but the article is no help at all.

 

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