More hostages in the future

Hard to argue with Chait’s (depressing) conclusion to expect more debt ceiling hostage taking because it worked so well for Republicans.  We already knew that from a policy perspective, but the public opinion angle makes this all the more so:

So first the House Republicans held the debt ceiling hostage. It’s utterly clear that this which caused S&P to downgrade U.S. debt…

The reasons for the downgrade may be shaky, but that’s neither here nor there. S&P got freaked out by the hostage drama and decided to downgrade the debt.

But, of course, Republicans aren’t going to say that they caused the downgrade. They’re going to blame the Democrats, as parties do. And the news media isn’t going to take sides in this. We’re going to get a shouting match. Indeed, even the liberal Daily Show presented it as a childish shouting match in which neither side was right: [emphasis mine]

End result: Republicans get concessions, and when the consequences for their decision hurt everyone, the blame is spread equally. If you can use hostage tactics and walk away with both a ransom and everybody blaming you and the ransom-payer equally, why not do it again?

Damn you Jon Stewart– you should know better.  And, of course, it seems that Republicans are much more of this dynamic of how modern political media work and consistently use it to their advantage.

S&P vs. Moody’s

At first, I was going to post on Nate Silver’s nice analysis of how lame S&P’s country analyses are, but I actually find the Felix Salmon critique even more on point.  (Shorter Silver: S&P’s ratings are based on weak research, and even more damning, they’re not at all predictive).  Anyway, onto Salmon.  Turns out the S&P rating is really not all that useful a tool as compared to what Moody does.  And this makes it quite clear why Moody’s will not be downgrading us.  Salmon:

An S&P ratings seeks to measure only the probability of default. Nothing else matters — not the time that the issuer is likely to remain in default, not the expected way in which the default will be resolved. Most importantly, S&P simply doesn’t care what the recovery value is — the amount of money that investors end up with after the issuer has defaulted.

Moody’s, by contrast, is interested not in default probability per se, but rather expected losses. Default probability is part of the total expected loss — but then you have to also take into account what’s likely to happen if and when a default occurs.

The difference, as it applies to the US sovereign credit rating, is enormous. No one doubts America’s ability to pay its debts, and if the US should ever find itself in a position where it’s forced by law to default on a bond payment, that default is certain to be only temporary. Bondholders would get all of their money, in full, within a couple of weeks, and probably within a few days.

Short version: Moody’s version actually looks to provide useful information to investors.  S&P is simply predicting default or not entirely outside any other context– and that other context matters a lot.

Bachmann cover

This Newsweek cover of Michelle Bachmann has sure been getting lots of coverage.  Personally, I do think it is if not, unfair, at least somehow wrong to feature such an unflattering picture of a politician on the cover.  I’m also intrigued by trying to figure out what exactly, makes it such an unflattering photo, as there’s nothing totally obvious out of place, yet it is undoubtedly very unflattering (does it look like her eyes are focusing in different places?).  Is it sexist?  Liberal bias?  Maybe the former.  Mostly, as Slate’s Jack Shafer argues, it’s just Newsweek trying to drum up attention and readers.  It worked.


Personal accountability, pre-school cuts, and special needs

So, I was reading this nice little rant about cuts to NC’s pre-K programs:

It happens every week, sometimes every couple of days.

A newspaper or television station reports that a popular, important and effective state program or service is ending because of budget cuts made this summer by the Republican-controlled General Assembly. The story explains the service in detail and often includes details about a child or family affected.

Sometimes there is philosophical justification for the cuts from one right-wing think or another. Then there is a reaction from a Republican legislative leader or maybe the local Republican member of the House or Senate who says that lawmakers wanted to support the program but had no choice but to make the cuts.

The legislators are simply not telling the truth. They had plenty of choices, the easiest one to accept Governor Perdue’s recommendation to reduce the state sales tax by ¼ of penny instead of the full cent the lawmakers insisted on cutting.

That would have cost the average North Carolinian 17 cents a day but raised $750 million for the state, enough to avoid most of the severe cuts to education, early childhood, human services, and environmental protections.

The latest example came this week in a News & Observer story that reported that in Wake County a literacy program for kids and help for parents with special needs were ending because of state budget cuts to Smart Start [emphasis mine], the state’s national recognized early childhood program.

Anyway, I got to thinking about how Republicans are always saying that we spend too much helping out people; we need more accountability; people need to take responsibility for the consequences of their choices.  Well, then, what does that mean here?  I guess all these damn people (like me) shouldn’t have been foolish enough to choose to have special needs children and they should just suffer the consequences without sucking up the tax dollars of those smart and responsible enough not to have special needs kids.  Sometimes, I think Democrats just get the simple point that life is not fair and it’s kind of nice to try and even things out a bit, whereas Republicans just pretend that life is fair.

In our case, we’re really fortunate that we can afford to get Alex what we needs and that there’s terrific special needs classes in our school system– paid for with NC resident tax dollars– where he’s thriving.  But if there’s any group that needs help and is not responsible for their condition, it’s certainly special needs kids and their families.

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