Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Saturday, February 04, 2006

Scooter Libby: What May Be Going on...

I will not say that this makes anything in the Scooter Libby case clearer. But it does increase the likelihood of one possible scenario:

Glaukon: Why did Pat Fitzgerald charge Scooter Libby with perjury and false statement charges, rather than more substantive violations concerning damage to national security?

Thrasymahkhos: If Libby were charged with substantive violations, then Libby's lawyers would demand to see classified documents as part of preparing his defense, the judge would have no choice but to agree, the White House would cite national security and refuse to turn the documents over, and the judge would dismiss the charges.

Glaukon: Ah.

Thrasymakhos: Charging Libby with substantive violations is--with a White House in cahoots with Libby's defense--a fast way to get the charges dropped.

Aristodemos: Ah. But what about Libby's actual trial? Isn't perjury about private talks between Libby and reporters a "he said, he said" kind of offense that it is impossible to prove beyond a reasonable doubt?

Thrasymakhos: Normally, yes. But look at Fitzgerald's list of people who say that Libby is lying:

  1. An Under Secretary of State
  2. A senior officer of the Central Intelligence Agency
  3. The Vice President of the United States
  4. Libby's own notes of his meeting with the Vice President.
  5. A briefer from the Central Intelligence Agency.
  6. Libby's then-principal deputy.
  7. Judith Miller.
  8. Tim Russert.
  9. The White House Press Secretary.
  10. The Counsel to the Vice President.
  11. The Assistant to the Vice President for Public Affairs.
  12. "White House Officlal A".
  13. Matthew Cooper.

Glaukon: Recollections differ. Memories are fallible. People forget. But I cannot see how any conceivable jury could fail to find Libby guilty on the perjury and false statement charges, if the witnesses testify as the indictment suggests they will.

Aristodemos: So what did Libby think he was doing?

Thrasymakhos: There are two possible answers. Answer 1: Libby is certifiable.

Glaukon: Probably true, but even so not sufficient reason for him to do something so stupid as to lie repeatedly to Fitzgerald.

Thrasymakhos: Well how about answer 2: Libby is erecting a perjury firebreak to keep Patrick Fitzgerald from knowing that he, Cheney, Rove, and possibly others knew very well that Valerie Plame Wilson was a covert operative and thought that blowing her cover would be a nice way to warn the CIA not to leak information that contradicted what Cheney and company had said?

Aristodemos: That certainly sounds more plausible.

Thrasymakhos: In a normal case, right now Fitzgerald would be offering Libby the choice between spending a long time in prison or giving up Rove or Cheney or somebody even more interesting.

Glaukon: But what if Libby can't give up anybody more interesting?

Thrasymakhos: That's his tough luck. If Libby cannot sing--if Libby is in fact the prime mover--than Libby has tough luck and spends a long time in prison.

Aristodemos: Is that fair? To be especially harshly punished just because the prosecutor wants to see if he can induce you to give up somebody more interesting?

Thrasymakhos: It's how our legal system works: we don't torture--well, we do torture now--instead of torture we threaten people we think have interesting things to say with long prison terms. It's more humane than crushing their hands.

Glaukon: Am I supposed to like this?

Thrasymakhos: It's running code.

Aristodemos: Oh.

Thrasymakhos: As I was saying, if this were a normal case, then if Libby can't or doesn't want to sing, he spends a long time in prison. If Libby tries to give up Rove or Cheney but just has one-on-one conversations to relate, than once again Libby has tough luck and spends a long time in prison: no prosecutor would think that he can convict on the word of a confessed perjurer without corroborating evidence. Only if Libby wants to sing and can point Fitzgerald to corroborating evidence that gives Fitzgerald a conviction of somebody more interesting would he be able to avoid spending a long time in prison. That's what would be happening now if this were a normal case.

Sokrates: But I expect to hear that this is not a normal case.

Thrasymakhos: Indeed, it is not. In the present circumstances, things are complicated by the existence of the presidential pardon power.

Glaukon: Pardon power?

Thrasymakhos: Fitzgerald can threaten to try to put Libby away for a long time. Cheney can promise Libby a presidential pardon on January 20, 2009. Libby's perjury firebreak protecting Cheney will hold.

Glaukon: But isn't that illegal? For a president to promise he will pardon somebody as long as he keeps his mouth shut?

Thrasymakhos: Article II, §2, clause 1: "Section. 2. Clause 1: The President shall... have Power to grant Reprieves and Pardons for Offences against the United States, except in Cases of Impeachment." The president's power to pardon is unreviewable and uncontrollable. But there is a question I want to ask a real lawyer: What kinds of discussions among whom about the exercise of the presidential pardon power rise to the level of conspiracy to obstruct justice?

Friday, February 03, 2006

Martin Wolf's Economists' Forum

The Financial Times is starting an online webloggy "Economists' Forum," with the excellent Martin Wolf as the ringmaster: / Martin Wolf's economists' forum : Forum: Introduction by Martin Wolf

What are the risks to the world economy? Is the European economy doomed to stagnation? Do the advanced countries face serious problems of fiscal sustainability? How should pensions be financed and organised? Is China's growth sustainable?

These are just a few of the big questions that policy-oriented economists address. Now they will have an opportunity to address them together in an informal way. Under the moderation of Martin Wolf, chief economics commentator of the FT, an invited group of influential, policy-oriented economists from around the globe will consider subjects of immediate interest and ones that are of more enduring significance.

Debates that have until now taken place in closed seminars or conferences will be openly conducted on for the education and stimulation of its readers. The discussion will, no doubt, be vigorous, but it should also be pointed, clear and logical. The FT is delighted to launch this initiative.

Issue #1: The quantity of analysis devoted to the so-called "global imbalances" is extraordinary. As is usual with economists, we have reached no conclusion. Yet what is happening is extraordinary enough to merit an attempt at least to clarify the basis of the disagreements.

I suggest the discussion needs to be focused around five questions: first, what is actually happening? Second, why has the US developed such large current account deficits? Third, in what sense, if any, are these' deficits a matter for concern? Fourth, what is likely to happen and over what time period? Finally, to the extent that they are a concern, what actions should be taken to deal with them and by whom?

Let me outline below what I see as the issues under each of the questions I have listed...

Contributing economists:

The list below includes those economists who have been invited to participate in the forum. Their comments on their subjects of special interest will be published over the months ahead, as Martin Wolf posts his view on the big issues.

Alberto Alesina, Harvard University
Olivier Blanchard, MIT
Willem Buiter, London School of Economics, Goldman Sachs
Ricardo Caballero, MIT
Stephen Cecchetti, Brandeis
Paul Collier, Oxford University
Richard Cooper, Harvard University
Guillermo de la Dehesa, Goldman Sachs
Brad De Long, Berkeley
Peter Diamond, MIT
Michael Dooley, University of California - Santa Cruz
Sebastian Edwards, UCLA
Martin Feldstein, NBER
Jeffrey Frankel, Kennedy School
Richard Freeman, Harvard University
Fan Gang, China Academy of Social Sciences
Wynne Godley, Cambridge University
Robert Gordon, Northwestern University
Ricardo Hausmann, Kennedy School
Glenn Hubbard, Columbia University
Taketoshi Ito, Tokyo Univeristy
Robert Laurence, Kennedy School
Richard Layard, London School of Economics
Robert Lucas, Chicago University
Gregory Mankiw, Harvard University
Alan Meltzer, Carnegie-Mellon
Ronald McKinnon, Stanford University
Edmund (Ned) Phelps, Columbia University
Jean Pisani-Ferry, Brueghel
Richard Portes, London Business School
Adam Posen , Institute for International Economics
Helmut Reisen, OECD
Danny Rodrik, Kennedy School
Andrew Rose, University of California - Berkeley
Nouriel Roubini, New York University
Jeffrey Sachs, Columbia University
Andrei Sapir, European Centre for Advanced Research in Economics
Paul Seabright, Toulouse
Hans-Werner Sinn, University of Munich
Laurence Summers, Harvard University
Tony Venables, London School of Economics
Juergen von Hagen, University of Bonn
Robert Wade, London School of Economics
Adrian Wood, Oxford University
Luigi Zingales, Chicago University

And It's Today's Human-Animal Hybrid Report...

From Opinions You Should Have:

White House Staff Hit Hard By Human-Animal Hybrid Ban : A ban on human-animal hybrids announced by President Bush in his State of the Union address has many senior White House staffers panicked, and the NIH, which has been tasked with enforcing the ban, has already prepared subpoenas for DNA samples for most of the White House staff.

Dick Cheney, who is thought to be a chickenhawk/man, told reporters today that the State of the Union was not intended to be taken literally by anyone. "It's really a rhetorical flourish," he said. Karl Rove, who many people freely attest is "not entirely human," backed up Cheney, saying that almost everything the President said was "unenforceable." Cheney and Rove then retired to the White House dining room where they gnawed on hanging seed sticks and sharpened their beaks.

A White House official, who preferred to remain anonymous because commenting on the genetic makeup of co-workers is frowned upon, said that Donald Rumsfeld, while not necessarily a chickenhawk, was certainly half-man, half-beast.

In this morning's press gaggle, White House Press Secretary Scott McClellan found himself denying rumors today that the President himself is "half-man, half-chimp," saying only, "There's just a resemblance." After becoming increasingly defensive, McClellan finally compared the press corps to "a bunch of geese" and left the room.

A poll this morning found that Americans, by and large, are completely unconcerned by events in the White House or on Capitol Hill. According to pollster Melonie Fisk, "On the whole, Americans are more concerned with keeping up with the herd and the coming spring shearing."

The Housing Economy...

Kash Mansouri writes:

Angry Bear: Taking a look at the industry shares of employment gains over the past year illustrates that construction has regularly accounted for nearly one out of five new jobs in the US economy. In percentage terms the growth rate of jobs in the construction sector was higher than for [almost] any other industry in 2005.... Unsurprisingly, all of this confirms what we already knew: the US economy is steadily shifting away from producing tradeable goods, toward producing non-tradeable goods. And that underlies most of the concern many people have about how painful an adjustment in the US's current account deficit might someday be.Kash

Social Origins of Dictatorship and Democracy and

My father writes:

[W]hat is a Chinese leader dedicated to the welfare of the people to do, given this incredible uncertainty, and the lack of convincing models? The wisest course seems to be: Focus on perestroika above glasnost. Move cautiously. Avoid any threat of losing control to demagoguery and mob rule, which inevitably ends in re-authoritarianism. Develop the rule of law before an extended franchise. And keep maneuvering in the fantastically complicated situation involving the modernists, the PLA, the old Mao-ists, the modern equivalent of regional warlords, the rising demands of the new economic classes, and the restlessness of the people who see that a better life is possible.

And given this Chinese view, what should Google do? Google should do what Google does, which is search engines... search engines, even truncated [i.e., censored] ones, will contribute to the economic and political development of China.... The working out of this story will be one of the great tales of human history, for tragedy or triumph, depending on how it goes."

And gets flamed by Jacob Sullum and many others for making an argument about that is, I think, fundamentally derived from Barrington Moore's old Social Origins of Dictatorship and Democracy.

One of Moore's major points was that mass politics--ideology-based political parties, popular mobilization via media, universal suffrage, et cetera--appeared, in the history of nineteenth and twentieth century Europe at least, to be a poisonous recipe for fascism or worse unless a strong, confident, independent, articulate, powerful middle class had already established itself.

Life and Fate...

In this morning's mail: Vasily Grossman (2005), A Writer at War: Vasily Grossman with the Red Army, 1941-1945 (New York: Pantheon: 0375424075).

Grossman's Life and Fate is certainly one of the best Russian novels of the twentieth century. These wartime notebooks were raw material for the novel, but are, I think, more important as witness to what went on between 1941 and 1945.

We in the west have still done far too little to repay our debt to the soldiers of the Red Army and to the workers of Magnitogorsk for what they did and suffered in those years.

January Employment Release

From Reuters:

News One Article | : WASHINGTON (Reuters) - U.S. employers added a smaller-than-forecast 193,000 new jobs in January but job growth in each of the five prior months was pushed up as part of a broader annual revision of the Labor Department's statistics collection, a government report on Friday showed.The monthly report showed the January unemployment rate dropped to a 4-1/2-year low 4.7 percent from 4.9 percent in December. The last time the rate was lower was in July 2001 when it was at 4.6 percent.

Economists had forecast that 240,000 new jobs would be created in January and that the unemployment rate would be unchanged at 4.9 percent.

Average hourly earnings rose to $16.41 in January from $16.34 in December. In the 12 months through January, earnings have risen by 3.3 percent, the largest for any 12-month period in nearly three years, since February 2003. The wage data is likely to fan concerns that steady job growth is pushing up demands for wage rises and that could help foster broader inflation.Previously, the department said 108,000 jobs were created in December but it pushed that up to 140,000 and it said that, in November, 354,000 jobs were created rather than the 305,000 it reported a month ago.

Thursday, February 02, 2006

Why Oh Why Can't We Have a Better Press Corps? (Yet Another Washington Post Edition)

David Broder is a sad, strange little man, and he has our pity:

Michael Crowley makes the catch:

The Plank : DAVID BRODER SELF-PARODY WATCH, PART XII: Gotta love David Broder! What, in his view, was a key highlight of Bush's generally drab State of the Union address? The bipartisan entitlements commission, of course! Washington sure is overdue for one of those, isn't it? You have to hand it to the man, he stays true to himself....

It would be really funny if it weren't so sad. It would be really sad if it weren't so funny.

Why Oh Why Can't We Have a Better Press Corps? (New York Times Edition)

UPDATE: Eric Umansky weighs in:

Deficit Distraction By Eric Umansky : The New York Times and Washington Post all lead with the House barely passing $40 billion in cuts, mostly to student loans, crop subsidies, and Medicaid. The Senate passed the bill in December, so now it goes to the White House for the president's signature. The Los Angeles Times also leads with the cuts but focuses on the roughly $2 billion in aid California is expected to lose. USA Today leads with the U.S. plan to rehab Iraq's health-care system running into serious snafus. One-hundred-eighty clinics were supposed to have been built by December 2005. Number actually finished so far: four. Number that have opened: zero....

The budget bill, which passed by only two votes and got no Democratic support, was pitched by Republican leaders as a key part of a big push to rein in the deficit. It wasn't. As the Post [Jonathan Weisman] notes, "The impact of the bill on the deficit is likely to be negligible, slicing less than one-half of 1 percent from the estimated $14.3 trillion in federal spending over the next five years." That bit of reality comes well-past-the-fold. Instead, higher up we're treated to that ever-informative practice of dueling quotes, including this fine bit of flab from a Republican rep., "American taxpayers, and anyone concerned with the nation's long-term fiscal stability, have won a great victory today."

The NYT [Sheryl Gay Stolberg] plays up the politics of the close vote, then plays dumb: "The vote helped President Bush deliver on his promise to rein in federal spending."

The LAT [Richard Simon and Joel Havema] isn't so slow. It notes that not only were the cuts themselves "mild," Congress is about to pump up the deficit a bit. As the House was voting on the budget tweaking, "the Senate was debating a $56-billion tax cut that the House had already passed." The net result of the two measures would "add $16 billion to federal deficits."

Sheryl Gay Stolberg needs to take Susan Rasky's and my course--badly:

Congress Narrowly Approves $39 Billion in Budget Cuts - New York Times : House Republicans, handing a close-fought victory to President Bush on the heels of his State of the Union address, pushed through a measure today to rein in spending by nearly $40 billion over the next five years, with cuts in student loans, crop subsidies and Medicaid, the government's health insurance program for the poor. The bill, approved 216 to 214, largely along party lines, is the first major attempt in eight years to curb what is known as entitlement spending.... President Bush, who has made controlling the growth of government spending one of his signature domestic issues, has promised to sign it.... The bill would cut the growth of education spending by more than $16 billion between 2006 and 2010, and make reductions in the spending on Medicaid and Medicare, the health insurance program for the elderly, as well. Republicans cast it as an important step toward restraining programs that, they said, would gobble up the entire federal budget if left unchecked.

But with the Senate taking up a tax-cutting measure at the same time, Democrats sounded what will be a prominent election year theme: that Republicans were cutting taxes for the rich at the expense of services for the poor. And at a time when Congress is consumed by a lobbying scandal, Democrats also complained bitterly that the measure was written without them, behind closed doors with the help of paid representatives from the drug and insurance industries.... The budget-cutting bill is actually a holdover from last year; it first passed the House in late December in an all-night marathon session...

In our syllabus, we wrote apropos last November's New York Times story on this bill: [The story totally lacks any placing of the bill's size in context.] The Federal government currently spends money at the rate of $2.6 trillion a year. Total incomes in the entire American economy are about $12 trillion a year. Saving $35 billion over five years means that you are saving $7 billion a year--0.3% of federal spending; 0.06% of GDP. Out of a federal budget that spends $9,000 per person per year, Judd Gregg is saving $27 a year. Thus reading a lead like [Robert Pear's] makes Brad DeLong... foam at the mouth: phrases like "sweeping," "ambitious," "commitment," and "fiscal responsibility" simply have no place here--especially since Pear and Hulse do not give their readers any of the numbers needed as reference points to assess the magnitude of the Senate's action...

Yet here we have Sheryl Gay Stolberg say that this is a "major attempt... to curb entitlement spending." There's nothing "major" about it.

Wednesday, February 01, 2006

Why Oh Why Are We Ruled by These Incompetents?

NEC Director Allan Hubbard and Energy Secretary Samuel Bodman play cleanup after George W. Bush:

KR Washington Bureau | 02/01/2006 | Administration backs off Bush's vow to reduce Mideast oil imports : By Kevin G. Hall: WASHINGTON - One day after President Bush vowed to reduce America's dependence on Middle East oil by cutting imports from there 75 percent by 2025, his energy secretary and national economic adviser said Wednesday that the president didn't mean it literally.... America still would import oil from the Middle East.... The president's State of the Union reference to Mideast oil made headlines nationwide Wednesday because of his assertion that "America is addicted to oil" and his call to "break this addiction."

Bush vowed to fund research into better batteries for hybrid vehicles and more production of the alternative fuel ethanol, setting a lofty goal of replacing "more than 75 percent of our oil imports from the Middle East by 2025." He pledged to "move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past."

Not exactly, though, it turns out.

"This was purely an example," Energy Secretary Samuel Bodman said....

Asked why the president used the words "the Middle East" when he didn't really mean them, one administration official said Bush wanted to dramatize the issue in a way that "every American sitting out there listening to the speech understands." The official spoke only on condition of anonymity because he feared that his remarks might get him in trouble. Presidential adviser Dan Bartlett [had] made a similar point... "I think one of the biggest concerns the American people have is oil coming from the Middle East. It is a very volatile region," he said....

Alan Hubbard, the director of the president's National Economic Council, projects that America will import 6 million barrels of oil per day from the Middle East in 2025 without major technological changes in energy consumption. The Bush administration believes that new technologies could reduce the total daily U.S. oil demand by about 5.26 million barrels.... But we'll still be importing plenty of oil, according to the Energy Department's latest projection. "In 2025, net petroleum imports, including both crude oil and refined products, are expected to account for 60 percent of demand ... up from 58 percent in 2004," according to the Energy Information Administration's 2006 Annual Energy Outlook.

Some experts think Bush needs to do more to achieve his stated goal.

"We can achieve energy independence from the Middle East, but not with what the president is proposing," said Craig Wolfe, the president of Americans for Energy Independence in Studio City, Calif. "We need to slow the growth in consumption. Our organization believes we need to do something about conservation" and higher auto fuel-efficiency standards.

Why Oh Why Can't We Have a Better Press Corps? (New York Times Edition)

Sheryl Gay Stolberg needs to take Susan Rasky's and my course--badly:

Congress Narrowly Approves $39 Billion in Budget Cuts - New York Times : House Republicans, handing a close-fought victory to President Bush on the heels of his State of the Union address, pushed through a measure today to rein in spending by nearly $40 billion over the next five years, with cuts in student loans, crop subsidies and Medicaid, the government's health insurance program for the poor. The bill, approved 216 to 214, largely along party lines, is the first major attempt in eight years to curb what is known as entitlement spending.... President Bush, who has made controlling the growth of government spending one of his signature domestic issues, has promised to sign it.... The bill would cut the growth of education spending by more than $16 billion between 2006 and 2010, and make reductions in the spending on Medicaid and Medicare, the health insurance program for the elderly, as well. Republicans cast it as an important step toward restraining programs that, they said, would gobble up the entire federal budget if left unchecked.

But with the Senate taking up a tax-cutting measure at the same time, Democrats sounded what will be a prominent election year theme: that Republicans were cutting taxes for the rich at the expense of services for the poor. And at a time when Congress is consumed by a lobbying scandal, Democrats also complained bitterly that the measure was written without them, behind closed doors with the help of paid representatives from the drug and insurance industries.... The budget-cutting bill is actually a holdover from last year; it first passed the House in late December in an all-night marathon session...

In our syllabus, we wrote apropos last November's New York Times story on this bill: [The story totally lacks any placing of the bill's size in context.] The Federal government currently spends money at the rate of $2.6 trillion a year. Total incomes in the entire American economy are about $12 trillion a year. Saving $35 billion over five years means that you are saving $7 billion a year--0.3% of federal spending; 0.06% of GDP. Out of a federal budget that spends $9,000 per person per year, Judd Gregg is saving $27 a year. Thus reading a lead like [Robert Pear's] makes Brad DeLong... foam at the mouth: phrases like "sweeping," "ambitious," "commitment," and "fiscal responsibility" simply have no place here--especially since Pear and Hulse do not give their readers any of the numbers needed as reference points to assess the magnitude of the Senate's action...

Yet here we have Sheryl Gay Stolberg say that this is a "major attempt... to curb entitlement spending." There's nothing "major" about it.

In Favor of Man-Animal Hybrids (Why Oh Why Are We Ruled by These Evildoers?)

George W. Bush is evil.

Kevin Drum writes:

The Washington Monthly: MAD SCIENTISTS AND PIG MEN....I know that I wasn't the only one mumbling "WTF?" when George Bush talked about banning "human-animal hybrids" last night, but apparently it was just a garden variety shout out to the religious right. PZ Myers provides an example of what's really going on in our nation's labs:

Down syndrome is a very common genetic disorder caused by the presence of an extra chromosome 21.... We would love to have an animal model of Down syndrome...So what scientists have been doing is inserting human genes into mice, to produce similar genetic overdoses in their development. Sheesh.

....These mice are a tool to help us understand a debilitating human problem.

George W. Bush would like to make them illegal.

He's trusting that everyone will think he is banning monstrous crimes against nature, but what he's really doing is targeting the weak and the ill, blocking useful avenues of research that are specifically designed to help us understand human afflictions. His message isn't "We aren't going to let the mad scientists make monsters!", it's "We aren't going to let the doctors help those 'retards.'"Actually, that's kind of disappointing. I was hoping that scientists were working on outfitting me with the eyes of an eagle and the reflexes of a cat. But instead they're just working on curing disease and making the world a better place. Sheesh.

Calling Bush's Lies Lies (Why Oh Why Can't We Have a Better Press Corps?)

Michael Kinsley once said:

CJR Daily: Michael Kinsley on Slate vs. the L.A. Times, Calling a Lie a Lie, and Opinion Journalism as Indulgence : The biggest problem [with American journalism] is -- and I don't know what the solution is, so it's not a criticism, as much as it is a puzzle -- is that the conventions of objectivity make it very difficult to say that something is a lie. And they require balance, which is often just not justified by reality

Example from this morning: Glenn Kessler of the Washington Post unable to quite say that Bush's lies are lies--and still have national political editor John Harris think that he is "objective":

Glenn Kessler : "Assertions on Spying, Jobs And Spending Invite Debate": Bush waded right in the middle of the debate over his warrantless domestic eavesdropping program, making a number of assertions that have been subject to intense debate.... Bush strongly suggested that the Sept. 11, 2001, attacks could have been prevented if the phone calls of two hijackers had been monitored.... But the Sept. 11 commission and congressional investigators said... bureaucratic problems -- not a lack of information -- were the main reasons for the security breakdown.... Bush also asserted that "previous presidents have used the same constitutional authority I have." But the most recent example cited... is hotly disputed by Democrats who say the current and past situations are not comparable. The Foreign Intelligence Surveillance Act (FISA), which required the executive branch to get approval from a secret court before conducting wiretaps within the United States, was silent on warrantless physical searches of suspected spies or terrorists. So the Clinton administration asserted that it had the authority to conduct such "black bag" jobs.... Clinton later sought amendments to FISA that brought physical searches, as well as wiretaps, under the FISA framework. Bush has never sought such amendments, and he did not publicly acknowledge the program until it was revealed in news reports.

In other sections of his speech, Bush omitted context or made rhetorical claims that are open to question. Referring to Iraq, he said the United States is "continuing reconstruction efforts." He did not use the word "spending" because... the administration does not intend to seek any new funds for Iraq reconstruction.... Bush said the number of jobs went up by 4.6 million in the past two and half years. There was a reason he chose not to start from the beginning of his presidency -- that would have brought the net number of added jobs down to 2 million....

Bush also made a pair of contradictory pledges on the budget. He said the budget deficit -- which has soared during his presidency -- is on track to decline by half by 2009. But he also urged a permanent extension of his tax cuts... this would send the budget deficit soaring after 2011.

The president said he has reduced "the growth" of non-security discretionary spending. This only means it did not increase as much from year to year. Moreover, overall discretionary spending has exploded during his tenure, especially when military spending is included.... [D]iscretionary spending as a share of the overall economy is at its highest level in 13 years, according to the CBO....

Bush ended his address with a stirring image that "every great movement of history comes to a point of choosing." But then he said, "The United States could have accepted the permanent division of Europe, and been complicit in the oppression of others." This is historically misleading. At the end of World War II, the United States allowed the division of Europe between Soviet and Western spheres, though it drew the line at giving up West Berlin. And the United States permitted the Soviet Union's grabbing of large parts of other countries -- or even whole countries, such as the Baltic states. Bush should know this. In May, he flew to Latvia and declared that the United States bore some blame for "the division of Europe into armed camps" -- what he called "one of the greatest wrongs of history."

Note what Glenn Kessler tries to do: He tries to signal--in as many ways as he can--that Bush is telling lies "Historically misleading", "contradictory pledges", "omitted context", "rhetorical claims that are open to question", "did not use the word 'spending'", "subject to intense debate", and so forth. This is Mike Allen's dictum that you write so that a sophisticated, careful reader understands who is lying--in this case, Bush. The White House, however, is not to unhappy to Glenn Kessler's story. It thinks that the overwhelming bulk of readers will think: "The President made his case, and partisan Democrats are sniping at him. Who knows who is right?"

Winged Pigs: Max Sawicky Praises the Corner

National Review pleasantly surprises Max Sawicky:

Something strange happened at The Corner. They let someone who is not a clown say something about economics. Turns out it's my buddy Kevin Hassett at the American Enterprise Institute. I reproduce it in full since it's my favorite comment on the SOTU, besides my own:

The economic portion of the speech could have been better. Bush dodged his biggest problem — his profligate spending — and offered nothing substantive to reverse the striking recent growth of government. The savings he mentioned were laughably small.

The idea factory is almost running on empty. He called for another commission, this time to study the long run entitlement problem. The experience of the most recent tax-reform commission was so terrible that the next commission members will have to be drawn from individuals who have been lost at sea for at least two years. (Emphasis added. -- mbs) What we really need is a commission to study commissions, or at least an advisory panel to study whether we need a commission to study commissions. That panel would, of course, be bipartisan, and I am disappointed he did not mention it tonight.

The American Competitiveness Initiative includes a recommendation to make the R&D tax credit permanent, something that has been advocated by every politician (except for those who understand how the abomination works) for a zillion years. It is not going to happen. Lawmakers enjoy squeezing lobbyists every other year or so when it is up for renewal. The tax panel savaged the R&D credit. They must be very happy tonight. The headline tax proposal is to make permanent something the tax panel tried to repeal. (Please reread the last paragraph now, but do be careful not to be caught in an infinite loop.)

He also wants to increase funding for hard sciences, a solid idea. We are running out of physicists, and we need more of them.

Kevin underscores a point I neglected -- the unmentionableness of Bush's Advisory Panel on Tax Reform. A member of this panel, Professor Edward Lazear of Stanford, just took the lead position at the Council of Economic Advisers. Now there's a good soldier.

I seem to be... much less... enthusiastic... about Kevin Hassett than Max is. Hassett has carried a lot of water for bad Bushie policies over the past six years--and knows better. And there is the egregious Dow 36000--where Kevin also knew better. But given that the bar at National Review's The Corner is at absolute zero, Hassett's contribution is a vast improvement.

Bush: "If We Reverse the Polarity on the Flux Capacitor!"

Chad Orzel has the best sum up of Bush's State of the Union address I have seen: he explains something the national press corps has failed to learn--that listening to George W. Bush is invariably a waste of time:

Uncertain Principles : The main reason why I didn't watch the speech to hear what Bush would say... is that it doesn't matter what he says. This administration doesn't do policy, they do politics. If Bush says something in a speech, it's because they think it will sound good in a speech, period. That doesn't mean there's a concrete proposal in the works-- if the line in he speech is poorly received, odds are it will disappear without a trace. And even if the line sounds good, that doesn't mean there will be any follow-through-- ask the people of New York, Afghanistan, Iraq, and New Orleans about that.

So, yeah, "double the federal commitment to the most critical basic research programs in the physical sciences over the next 10 years" sounds great. So does "If we reverse the polarity on the flux capacitor, we can generate an infinite amount of free energy, and a pony."

Tuesday, January 31, 2006

Perplex City

Adrian Hon's Perplex City makes Boing-Boing:

Boing Boing: Perplex city : Guy says: "Perplex City is a cross between collectible-card game and Alternate Reality Game. It's centered around a stolen artefact, and there's a $200,000 reward for whoever can find it. The cards themselves are rather beautiful and feature a diverse range of mind-bending puzzles, while Anton Bogaty (who you just featured) does much of the artwork for the game. I think it's primarily worth mentioning because it's the first self-supporting ARG, as opposed to marketing something else (or being made on a lo-to-no budget basis.) Also, Boing Boing itself is on one of the cards!"

Brendan Nyhan on George Allen

The Republican bench looks--if possible--worse than the Republican lineup. Brendan Nyhan writes:

Brendan Nyhan: George Allen is well-informed about the Fed : Ladies and gentlemen, I give you the man many GOP insiders think will be their next presidential nominee, inspiring confidence with his grasp of current events:

Wall Street may be intensely interested in just about every word ever uttered by Mr. Bernanke, the former Princeton economist and chairman of the White House Council of Economic Advisers who is President Bush's choice to succeed Alan Greenspan.

But in Washington, he is barely on some people's radar screens. Indeed, here is what Senator George Allen of Virginia, who is considering a bid for the Republican presidential nomination in 2008, said when asked his opinion of the Bernanke nomination.

"For what?"

Told that Mr. Bernanke was up for the Fed chairman's job, Mr. Allen hedged a little, said he had not been focused on it, and wondered aloud when the hearings would be. Told that the Senate Banking Committee hearings had concluded in November, the senator responded: "You mean I missed them all? I paid no attention to them."

Wealth Inequality in 2003

From David Cay Johnston:

Corporate Wealth Share Rises for Top-Income Americans: [T]he concentration of corporate wealth among the highest-income Americans grew significantly in 2003, as a trend that began in 1991 accelerated.... In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth, up from 53.4 percent the year before, according to a Congressional Budget Office analysis of the latest income tax data. The top group's share of corporate wealth has grown by half since 1991, when it was 38.7 percent.

In 2003, incomes in the top 1 percent of households ranged from $237,000 to several billion dollars. For every group below the top 1 percent, shares of corporate wealth have declined since 1991. These declines ranged from 12.7 percent for those on the 96th to 99th rungs on the income ladder to 57 percent for the poorest fifth of Americans, who made less than $16,300 and together owned 0.6 percent of corporate wealth in 2003, down from 1.4 percent in 1991....

The White House said... that since wealth is transitory for many people, a more important issue is how incomes and wealth are influenced by the quality of education. "We want to lift all incomes and wealth," said Trent Duffy, a White House spokesman. "We are starting to see that the income gap is largely an education gap." "The president thinks we need to close the income gap, and he has talked about ways in which we can do that," especially through education, Mr. Duffy said.

The data showing increased concentration of corporate wealth were posted last month on the Congressional Budget Office Web site. Isaac Shapiro, associate director of the Center on Budget and Policy Priorities in Washington, spotted the information last week and wrote a report analyzing it. Mr. Shapiro said the figures added to the center's "concerns over the increasingly regressive effects" of the reduced tax rates on capital. Continuing those rates will "exacerbate the long-term trend toward growing income inequality," he wrote.

The center, which studies how government affects the poor and supports policies that it believes help alleviate poverty, opposes Mr. Bush's tax policies. The center plans to release its own report on Monday that questions the wisdom of continuing the reduced tax rates on dividends and capital gains, saying the Congressional Budget Office analysis indicates that the benefits flow directly to a relatively few Americans.

An interesting thing is how low down in the story Johnston places his immediate source--Isaac Shapiro.

Good Tax Policy

Gene Sperling writes about progressive taxation as an important form of social insurance and risk-sharing: / Comment & analysis / Comment - How to reform a winner-takes-all economy : Progressive taxation is critical to marshall the resources to ensure that those who end up at [failing companies like] Lucent or Delphi have the support and education to get second and third chances in the global economy. Without a greater cushion against falls in the global economy, workers may opt to take less risk on their future, just as entrepreneurs would risk less if they thought a single bankruptcy would land them in debtors’ prison.

Furthermore, a tax system that eases the [luckiest one's] tax-free wealth accumulation but forces his brother to pay higher taxes on income earned through labour betrays American values that honour the hard work of the middle class over policies that perpetuate an economic elite. A better tax reform plan would prevent the most privileged Americans from paying lower taxes on their investment than typical families pay on their wages, while encouraging savings and wealth creation for struggling workers. We could start by ending our current system of giving those in the highest tax brackets more than twice the tax deduction of typical workers and creating a flat tax incentive for savings – a 30 per cent credit for everyone. More important, we should provide automatic matching credits for moderate income workers to save – essentially creating a universal 401(k) plan for retirement savings accounts for all Americans.

So if the president really wants to build support for greater openness in the economy, he needs to focus on tax reform that expands the winners’ circle, not reform that expands the current winners’ fortunes.

Bad News About Polimetrics

Mike Kellerman has some bad news about the utiity of econometrics:

Social Science Statistics Blog: Another paradox of turnout? (Part I) : Those of you who have followed this blog know that making reasonable causal inferences from observational data usually presents a huge challenge.... [I]t is worth mentioning "Comparing experimental and matching methods using a large-scale voter mobilization experiment" by Kevin Arceneaux, Alan Gerber, and Donald Green, which appears in the new issue of Political Analysis.... [T]hey base their analysis on a voter turnout experiment in which households were randomly selected to receive non-partisan phone calls encouraging them to vote.... This type of mobilization experiment suffers from a classic compliance problem; some voters either don't have phones or refuse to take unsolicited calls. As a result, in order to determine the average causal effect of the treatment on those who would receive it, they need to find a method to compare the compliers who received treatment to compliers in the control group. Since assignment to treatment was randomly assigned, they use assignment as an instrument in the spirit of Angrist, Imbens, and Rubin (1996). Using a 2SLS regression with assignment in the first stage, their estimates of the ATT are close to zero and statistically insignificant.... [T]heir experimental estimate... we might call the "truth".

The authors then attempt to replicate their experimental results using both OLS and various matching techniques. In this context, the goal of the matching process is to pick out people who would have listened to the phone call had they been contacted. The authors have a set of covariates on which to match, including age, gender, household size, geographic location, whether the voter was newly registered, and whether the voter turned out in each of the two previous elections.... [T]hey don't have much difficulty in finding close matches for the treated group based on the covariates in their data. Unfortunately, the matching estimates don't turn out to be very close to the experimental baseline, and in fact are much closer to the plain-vanilla OLS estimates.

Their conclusion from this result is that the assumptions necessary for causal inferences under matching (namely, unconfoundedness conditional on the covariates) are not met in this situation, and (at least by my reading) they seem to suggest that it would be difficult to find a dataset that was rich enough in covariates that the assumption would be met.

As a political scientist, I have to say that I like this dataset, because (a) it is not the NSW dataset and (b) it is not derived from a labor market experiment. What do these results mean for matching methods in political science?...

Tyler Cowen Finds Don Bodreaux Shopping in 1975

Tyler writes:

Marginal Revolution: Don Boudreaux Goes Shopping in 1975 : "Sears’ lowest-priced 10-inch table saw: 52.35 hours of work required in 1975; 7.34 hours of work required in 2006. Sears’ lowest-priced gasoline-powered lawn mower: 13.14 hours of work required in 1975 (to buy a lawn-mower that cuts a 20-inch swathe); 8.56 hours of work required in 2006 (to buy a lawn-mower that cuts a 22-inch swathe.... Sears Best side-by-side fridge-freezer: 139.62 hours of work required in 1975 (to buy a fridge with 22.1 cubic feet of storage capacity); 79.56 hours of work required in 2006 (to buy a comparable fridge with 22.0 cubic feet of storage capacity.) Sears’ lowest-priced answering machine: 20.43 hours of work required in 1975; 1.1 hours of work required in 2006.... [T]he fact most noticeable from the contents of this catalog’s 1,491 pages is what the catalog doesn’t contain. The Sears customer in 1975 found no CD players for either home or car; no DVD or VHS players; no cell phones; no televisions with remote controls or flat-screens; no personal computers or video games; no food processors; no digital cameras or camcorders; no spandex clothing; no down comforters (only comforters filled with polyester)."

Tyler sez:

The past is another country. I once lived there but have no desire to return.

Monday, January 30, 2006


Paul Boutin writes:

Paul Boutin : Chinese Google filter only works if you can spell. image search for Tiananmen: Gate of Heavenly Peace. image search for Tianenmen, Tienanmen and Tiananman: Tanks, tanks, more tanks. Try it yourself: Compare the same image search on and Only the results for "tiananmen" are different.

Kudos to Ed Lazear for Being Willing to Sit in the CEA Hot Seat

Congratulations to Ed Lazear for taking on this burden of public service. It won't be easy. He should do a good job. We wish him well:

Bloomberg Printer-Friendly Page : Bush to Nominate Stanford's Lazear to Head CEA, Spokesman Says Jan. 30 (Bloomberg) -- U.S. President George W. Bush will nominate Stanford University economist Edward Lazear to be chairman of his Council of Economic Advisers, White House spokesman Scott McClellan said. Lazear, 57, a member of Bush's tax advisory panel last year, would succeed Ben Bernanke at the helm of the CEA. Bernanke was nominated to be Federal Reserve chairman, replacing Alan Greenspan. Unlike Bernanke, who is known as a macroeconomist and a monetary theorist, Lazear has specialized in microeconomic labor issues, worker compensation and productivity.

The CEA chairman will be one of the chief salesmen for Bush's economic agenda, which in 2006 will include an effort to urge Congress to make tax cuts permanent. Bush also is urging Congress to cut spending to reduce the budget deficit and seeking to allay concerns of U.S. workers as the nation competes in the global economy.

To contact the reporter on this story: Brendan Murray in Washington at

Rethinking Bank Regulation

James R. Barth, Gerard Caprio Jr., and Ross Levine (2006), Rethinking Bank Regulation; Till Angels Govern_ (Cambridge: Cambridge University Press: 0521855764).

Rick Mishkin says:

Rethinking Bank Regulation is an important book. It provides striking evidence (using a unique data set created at the World Bank) that strengthening the discretionary powers of prudential supervisors in countries with weak institutional environments leads to a lower level of bank development, greater corruption in lending, and banks that are less safe and sound. Following the Basel II recommendation of strengthening supervisory powers, therefore, may do more harm than good in developing countries, unless it is accompanied by substantial progress in institutional development. This book provides an important warning to policy makers that what works for advanced countries may not work for developing countries.

Francisco Franco Is Still Dead!

Truly the archives of National Review are a gift that keeps on giving! Here is just one of National Review's Francisco Franco obituaries, this one by James Burnham:

James Burnham (2005), "Spain Minus Franco," National Review November 21): Francisco Franco was our century's most successful ruler.... [H]e outstayed all his great contemporaries, friend and enemy: Hitler, Mussolini, Stalin, Churchill, Eisenhower, de Gaulle... "a patient stubbornness, a flawless prudence, and an unshakable faith in his mission.... Before coming to a decision he meditated before a portable Blessed Sacrament.... 'I Francisco Franco Bahamonde, Caudillo of Spain, conscious of my responsibility before God and before history...' And, besides all the rest, luck."

Franco commanded the winning side in a ferocious civil war... held Spain aloof from World War II.... Under his postwar rule Spain transformed itself... into a modern industrial state.... Illiteracy has been halved....

[W]ith the exit of Franco... the regime was going to confront a formidable array of basic political and social problems. This fact is sufficient proof of how fundamentally Spain's regime has differed from genuine totalitarian regimes like Hitler's Reich.... Under a consolidated totalitarian regime, succession... does not raise issues involving the essential nature of the regime....

The whole concept of "fascism" for that matter has been a fraud from the beginning. Like "peaceful coexistence" and "detente," it is a tactical invention of the Soviet Agitprop, and boils down in practice to the simple definition: fascism is any regime that outlaws Communism....

Of course this is nonsense. Franco was not the twentieth century's most successful ruler. Franco's Spain did not undergo an economic miracle--post-Franco Spain, however, did. We can agree with Burnham that Franco was not as bad as Hitler, and go on to say what Burnham doesn't dare say yet doesn't dare ignore: that Franco was Hitler's friend.

As to fascism: the German philospher Ernst Nolte's classic Fascism in Its Epoch set out six key characteristics of fascism:

  1. Strong belief that--through social darwinism--morality is ultimately tied to blood and race, understood as descent and genetic relationship.
  2. Strong rejection of the classical "liberal" belief that individuals have rights that any legitimate state is bound to respect
  3. In its place, an assertion that individuals have duties to the state, seen as the decision-making organ of the collectivity.
  4. A rejection of parliamentary democracy and other bottom-up institutions to assess the general will.
  5. The assertion that the general will is formed by the decrees of the leader.
  6. A strong fear of twentieth-century Communism, and an eagerness to adapt and use its weapons--suspension of parliaments, mass propaganda, rallies, street violence, and so forth--to fight it.

Franco misses only on the first of these.

Covering the BEA January 27 GDP Release

There's news--lots of news--lots of bad news--in the Commerce Department's Bureau of Economic Analysis's "advance" release on GDP and the state of the economy in the fourth quarter of 2005. So I'm going to want to spend class on Tuesday, January 31 looking at (a) what the Thursday morning economic news was, and (b) how it was reported:

Here's how it was being covered on the morning of the 27:

BEA January 27 GDP Report

Full report in pdf format at:

Economist (Kash Mansouri) Instant Reaction

Reuters Immediate Wire Story

WSJ Friday Morning Release Roundup

WSJ Economists React

WSJ Chartbook

Later on: Economists:

Menzie Chinn writes about the Trade Balance and the 2005:IV GDP Advance Release

Barry Ritholtz Reacts to the GDP Number

Tim Duy watches the Federal Reserve

Macroblog is disturbed And confused

Later on: Journalists:

The New York Times Saturday morning story: U.S. Economy Slowed Sharply at End of 2005 - New York Times: By EDUARDO PORTER and VIKAS BAJAJ .

LA Times Saturday morning story by Bill Sing

Greg Ip's Saturday morning WSJ story

Covering the Economy: January 27 GDP Release: Greg Ip Saturday Morning WSJ Story

Greg Ip's Saturday morning story for the Wall Street Journal: - Economic Growth Slowed to 1.1% In Fourth Quarter : GDP Is Likely to Rebound, But Many Say Expansion Will Moderate This Year By GREG IP Staff Reporter of THE WALL STREET JOURNAL January 28, 2006; Page A1: Economic growth slowed to its most sluggish pace in three years at the end of last year as consumers and businesses applied the brakes to spending. While a rebound is likely in the current quarter, the expansion after two brisk years appears to be moderating as higher energy prices and interest rates begin to bite.

The nation's gross domestic product, or total output of goods and services, grew at just a 1.1% annual rate in the fourth quarter, the Commerce Department said Friday. That's the slowest rate since the fourth quarter of 2002 and well below the average 4.1% growth of the prior 10 quarters. "There is a slight tone change in the economy, though nowhere nearly as dramatic as the headline suggests," said Nancy Lazar, economist at ISI Group, a New York research and brokerage firm. "Growth may be moving into a slower stage."

Covering the Economy: January 27 GDP Advance Release: LA Times Story

The LA Times Saturday morning story:

GDP Data Are Weak and, Many Say, Off Base - Los Angeles Times : By Bill Sing, Times Staff Writer: The U.S. economy grew at a surprisingly weak 1.1% annual rate in the last three months of 2005, the Commerce Department said Friday, but many analysts said the economy was more robust than reported and would rebound in the current quarter. The fourth-quarter growth swoon was blamed largely on sluggish auto sales, surprisingly slow growth in business spending, a surge in imports and a drop in spending by the federal government. Hurricane damage and high energy costs took their toll on consumers and businesses, analysts said.

Growth in the gross domestic product, the broadest measure of U.S. economic output, fell far below the 2.8% predicted by economists and the 4.1% pace of the third quarter. It was the slowest growth rate since the 0.2% posted in the fourth quarter of 2002, when the economy was struggling to recover from the 2001 recession. A closely watched measure of inflation also rose, nearing a level seen as worrisome to Federal Reserve policymakers. The report came at a time when polls show that many Americans are skeptical about the economy's strength. A nationwide Los Angeles Times/Bloomberg poll, released Thursday, said 59% of respondents disapproved of the way President Bush was handling the economy. The Bush administration and many experts, however, expressed doubt at the accuracy of the latest growth report, suggesting that it was at odds with other economic data. They predicted that the numbers would be revised upward.

Covering the Economy: January 27 GDP Advance Report: New York Times

The New York Times Saturday morning story:

U.S. Economy Slowed Sharply at End of 2005 - New York Times : By EDUARDO PORTER and VIKAS BAJAJ: Economic growth weakened unexpectedly in the fourth quarter of 2005, rising 1.1 percent, the slowest pace in three years, and clouding the immediate outlook for the economy, the government reported yesterday. Consumer spending slowed abruptly as purchases of motor vehicles collapsed after automakers phased out the generous incentive programs that had lifted sales through the summer. As consumers cut back on spending, business investment also slowed as companies curtailed spending on cars and trucks. Military spending also fell unexpectedly, while a surging import bill put a drag on overall growth.

The intensity of the economic slowdown, which reduced yearly growth to 3.5 percent from 4.2 percent in 2004, surprised many forecasters. They had expected a sharp pickup in business investment in the final months of the year to take up some of the slack in consumer spending and had predicted an overall growth rate of 2.5 percent to 3 percent in the fourth quarter. "It is not so much surprising as baffling," said Ian C. Shepherdson, chief United States economist at High Frequency Economics in Valhalla, N.Y.

The weak economic data pleased investors, who pushed up the price of stocks in the expectation that the Federal Reserve, whose policy-making committee meets on Tuesday, might end its 18-month campaign to raise its benchmark interest rate -- now at 4.25 percent-- after it reaches 4.5 percent or 4.75 percent. "The silver lining in this is that the Fed should look at this and realize that this economy is not overheating," said David Kelly, a senior economic adviser at Putnam Investments in Boston, the mutual fund manager.

Yet the abrupt slowdown fed into a bubbling debate over the nation's economic prospects as the housing market weakens and removes a core pillar supporting consumers' hearty spending. Many economic analysts have been warning for months that the housing bubble will burst and lead to retrenchment as rising interest rates and the stalling of home sales put a dent in consumer spending. "I believe it is a genuine slowdown," said Robert J. Barbera, chief economist at ITG, arguing that higher interest rates and expensive oil are taking the wind out of consumers' sails. Specifically, he argued, the auto sector will keep bogging the economy down because car companies have built up heavy inventories that they must unload.

After setting records last summer, sales of existing homes, which make up 85 percent of the housing market, fell in each of the last three months as mortgage interest rates rose modestly. New-home sales, a more volatile and less reliable indicator, increased 2.9 percent in December, to an annual pace of 1.27 million, after falling 9.2 percent in November, the Commerce Department said yesterday. Median prices, however, fell 3.4 percent, to $221,800 from a year ago. Yet even though the housing market has started to cool, most forecasters argued that the fourth quarter's slowdown is not the beginning of a deeper slide. As they took stock of the data, economists argued that the economic slump would prove fleeting, caused by factors that are unlikely to be repeated in the first quarter.

Some warned that the reading for growth in the fourth quarter was merely a preliminary estimate and could be revised upward -- especially business investment, which should be surging at this stage in the economic cycle, when profits are high and companies are hitting capacity constraints. Most expected consumer spending and business investment to rebound in the first half of the year as the downturn in auto sales ends. "The probability of a substantial upward revision is quite high," said Lincoln Anderson, chief investment officer at LPL Financial Services in Boston. "Then growth should rebound in the first quarter back into the region of 4 percent."

Much of the current slowdown could be attributed to Detroit. "It all boils down to the auto sector," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, a business research group. "Auto sales permeate everything in final demand." Deep discounts on cars and trucks pumped sales by the three domestic automakers during the summer and early fall. But as the incentives expired and gasoline prices surged above $3 a gallon in some places in the aftermath of Hurricane Katrina, sales dropped precipitously. In the fourth quarter of last year, final sales of motor vehicles fell 50.4 percent at an annual rate. Consumer spending on sport utility vehicles and other light trucks fell by 69 percent, at an annual rate, while business spending declined 19 percent. The effect on overall economic output was significant. Just the decline in consumer purchases of vehicles subtracted 2.06 percentage points from growth in the quarter. Other items also contributed to the decline, but analysts argued they would prove temporary. Military spending slumped, a surprising development during a war. "We are still trying to figure out where that came from," a Lehman Brothers economist, Joseph Abate, said.

Moreover, the surge in the price of oil led to a big jump in the nation's energy bill, contributing to a sharp rise in imports that put a drag on domestic output. A buildup in business inventories provided a significant lift, 1.45 percentage points, to the economy. But if consumption remains weak, that additional stock of goods could force manufacturers to cut back on production in coming months. "That's not sustainable growth," said Anthony Chan, chief economist at J. P. Morgan's private client services group.

Still, though economists believe that the economy will rebound in the immediate future, there remains a deep-rooted concern about a downturn further down the road. Mr. Shepherdson, for instance, forecast a 30 percent to 40 percent drop in the number of home sales by the end of the year, which would put a freeze on consumer spending. Mr. Barbera predicted economic growth this year would fall to about 2.4 percent. Charles Dumas, the chief international economist at forecasting firm Lombard Street Research in London, said in a note to investors: "It will take a miracle as fine as Mozart, 250 years old today and as fresh as new, to prevent a sharp U.S. slowdown in the second half of 2006, probably to nil growth" by the fourth quarter.

The Voice of the Internet-Enabled Public Sphere

In comments, Kate Gilbert is the voice of the new internet-enabled public sphere. Juergen Habermas, please pick up the white courtesy phone:

Brad DeLong's Semi-Daily Journal: Henry Farrell and His Commentors Say Smart Things : I've been thinking about this a lot but in a different vein. I think one of the "issues" for "real journalists" is that they think the world consists of professional writers and amateur readers. Our job when we read them is to accept what they say (pace minor corrections) in an utterly passive way. But blogs blur that distinction--not only for writers but for readers. Because every person who posts and comments on someone else's blog is also blogging/reporting/commenting. Shafer's main complaint, the main source of his indignation, is that "someone sent their readers over..." to criticize Howell. Its analogous to the second order Howell/Post untruth that Abramoff "directed" the indian tribes to donate money.

As a blog reader and occasional commenter I read and commented over on Howell's thread--but of course not because I was "sent" or because I was a wholly owned "reader" of Atrios or whoever. For one thing, I read a lot of blogs as I read a lot of newspapers, so the idea of being labled as one kind of person/owned by one kind of blog is absurd. For another thing, cyberspace means I was already "over there" through links. I wasn't "going somewhere" I was already there. And finally, of course--through comments on comments of comments, through links and links and links--I and all the other commenters were already in a dialogue with Howell and the WaPo even if they didn't recognize it or refused to participate in it. Just as it was legal for the Indian tribes to make donations to both democrats and republicans.

Shaefer thinks the reader's job is clearly separate from the writer/pundits job. But on blogs that simply isn't the case. Great blog posts often get elevated to the main page. Good comments spin off new threads. Links from commenters create new information for other readers. By contrast, the WAPO/Shafer model is that the reader simply reads and then either rejects or aborbs the information privately. We are to to read/buy/consume news from an authoritative source. When told about tissue paper I should buy tissue paper. When told about wealthy getaways to the islands I should long for one. When told about political "facts" I should nod my head. Anything *other* than that makes me some kind of raving lunatic who simply doesn't know my place.

The WaPo, the Times and other journalists who don't blog regularly, and who think of themselves as above the political fray, are actually frightened to discover that their formerly anonymous, passive audience contains large numbers of active, angry, politically informed people. That's not who they were writing for. Its not the job they signed up for.

Why Oh Why Can't We Have a Better Press Corps? (National Review Edition)

National Review tells us that sometimes supporting democracy requires canceling elections:

National Review Online : Some critics blame the president's blindness here on his evangelical Christianity.... In the actual Bible, we learn of Jacob, who fought for his birthright, and of his brother Esau, who sold his for a mess of pottage. Now as then, the world has many brothers willing to sell the human birthright of freedom for an equally human dream of unlimited dominance over others.... Now as then, the ratio of Jacobs to Esaus varies greatly from one place and time to another... it varies in America too.

To pretend, as the president and his fellow neocons sometimes do, that it is "racist" to recognize and act on the reality of these differences, is to display the kind of unconscious racism we saw in late-to-the-party liberals of the 1970s, who claimed to love all Black people, but couldn't see the difference between brave democrats like Martin Luther King Jr. and racist thugs like the the Black Panthers.

Bush and Rice are... wrong to insist that support for democracy... [is] support for elections. In reality, supporting democracy... means supporting democrats.... In countries where [democrats] speak for substantial numbers of their fellows as, Walesa and Havel did, it makes sense to press for elections. In countries where they are more akin to lone voices, crying in the wilderness, it does not.

Hitler, after all, was elected, and elections %u2014 especially free elections %u2014 in places like Egypt, Jordan, and the Palestinian territories are bound to produce similar monsters.

The level of Bible criticism is also lower than one would expect even from National Review--even after taking account of the fact that the intellectual level of National Review is lower than one expects. Esau's sin is not to "sell the human birthright of freedom for an equally human dream of unlimited dominance over others." Esau's "sins" are that he works hard as a hunter, plays along with his brother Jacob (who he thinks is making a stupid joke), and is trusting and so falls prey to the machinations of his mother, Rebekah.

Next week: John Podhoretz explains that war is peace, William F. Buckley explains that freedom is slavery, and Michael Novak explains that ignorance is strength.

Sunday, January 29, 2006

Henry Farrell and His Commentors Say Smart Things

I was going to point everybody to Henry Farrell saying smart things about the Washington NPC journalists-and-webloggers lunch:

Crooked Timber : I was at the bloggers-meet-journalists lunch a few days ago which Matt Stoller and others have been talking about, and even tried to say something, but was shut down by the moderator, who thought that I was going to say something else altogether. What struck me (and what I was going to say) was that the journalists there didn't seem to understand.... I can understand how the people at the Post would get upset at hundreds of commenters from Atrios's or Kos's comments sections showing up... while they're nothing on, say, the denizens of the slimepit at LGF, their manner of criticism can be... robust....

But even so, the incomprehension... seemed to me to point to something more fundamental. Journalism and blogging have different internal systems of authority. Newspaper articles aspire to presenting a comprehensive, neutral and authoritative judgement.... Blogposts are quite different -- they're arguments in an ongoing debate.... They comment on, and respond to, what others are saying. The point is that they have very different -- and clashing -- notions of where authority and responsibility come from. Each newspaper article has the form of a discrete statement, which is supposed to be as authoritative as possible on its own ground. Each blogpost has the form of an intervention in an ongoing conversation -- the blogger's authority rests in part on her willingness to respond to others and engage in argument with them.... These forms of authority are difficult to reconcile with each other, because the latter in large part undermines the former. If journalists start systematically responding to their critics, and getting drawn into conversations about whether or not they were right when they made a particular claim, then they're effectively admitting that the articles they have written aren't all that authoritative in the first place.... Thus... the tendency for journalists like Jack Shafer to dismiss criticism from bloggers and their commenters as "organized riots" and lynch mobs. It's a fundamental threat to their notions of where journalistic authority comes from....

But the gerbil that powers Crooked Timber appears to have worn himself out, so there's no point in going there now.

However, here are three comments I added to Henry's thread. Looking at it again, I am once again reminded of why people interested in learning about stuff should visit Crooked Timber at least once a week.

Why Are We Ruled by These Morons? (Under Secretary of State Bob Joseph Edition)

Steve Clemons is upset because Under Secretary of State Bob Joseph is unsuited to be a diplomat:

The Washington Note: Bob Joseph broadened the traditional French application of "surrender monkeys" and added another 82 million people to it by casting Germans in the same lot. While it might work for satire on a Simpsons episode, a diplomat like Bob Joseph shouldn't be caught dead making a statement along those lines, particularly not in public, not even in United Airlines first class. If he feels so relaxed sharing such undiplomatic chatter in public, one can only wonder what his criteria are when something truly sensitive, or classified, is running through his mind. Secretary Rice, respectfully, your Under Secretary needs some "sensitivity training."

Well, yes, that is alarming. I am more alarmed by the fact that Bob Joseph has a brain that compares unfavorably to the brains of snails. The Germans "surrender monkeys"? In World War II, governed by the logistically incompetent Nazi regime, the German armed forces took on powers that outnumbered them 7-1 in manpower and 9-1 in industrial capacity--and almost won. That's not what "surrender monkeys" do. Not at all.

Minimal acquaintance with military history should be a prerequisite for employment in the Department of State.

Impeach George W. Bush. Impeach Richard Cheney. Fire Condi Rice. Dismiss Bob Joseph. Do it now.

Some of the News That's Fit to Print (Why Oh Why Can't We Have a Better Press Corps?)

In Slate, Jack Shafer writes:

Not Just Another Column About Blogging - What newspaper history says about newspaper future. By Jack Shafer: John Q. Blogger can't fly to Baghdad or Bosnia and do the work of a John F. Burns. But what a lot of guild members miss is that not everybody wants to read John F. Burns, not everybody who wants to read about Baghdad is going to demand coverage of the quality he produces...

There's a question Shafer doesn't ask: what quality of coverage does John F. Burns, chief foreign correspondent of the New York Times produce?

It's an important question.

On July 24, 2005, for example, John F. Burns tells us this that in the early summer of 2004 his successors called Iraq Proconsul L. Paul Bremer III and his staff by "a withering term... 'the illusionists'":

THE WORLD; If It's Civil War, Do We Know It? - The Archive - The New York Times : By JOHN F. BURNS July 24, 2005 BAGHDAD, Iraq: [T]he new American team that arrived [in the early summer of 2004]... headed by Ambassador John D. Negroponte, had a withering term for the optimistic approach of their predecessors, led by L. Paul Bremer III. The new team called the departing Americans ''the illusionists,'' for their conviction that America could create a Jeffersonian democracy on the ruins of Saddam Hussein's medieval brutalism. One American military commander began his first encounter with American reporters by asking, ''Well, gentlemen, tell me: Do you think that events here afford us the luxury of hope?'' It seemed clear then that the administration, for all its public optimism, had begun substituting more modest goals for the idealists' conception of Iraq...

But that's not what John F. Burns, chief foreign correspondent of the New York Times, was writing in the summer of 2004:

TRANSITION IN IRAQ: THE DEPARTING ADMINISTRATOR; Looking Beyond His Critics, Bremer Sees Reason for Both Hope and Caution - The Archive - The New York Times: By JOHN F. BURNS June 29, 2004 BAGHDAD, Iraq - For the 414 days that he was America's proconsul in Iraq, L. Paul Bremer III was forever reacting to surprises... often deeply jarring or violent ones.... On Monday, there was a surprise of a different kind, and it allowed Mr. Bremer to end America's formal occupation of Iraq in a way that pre-empted the insurgents... the 48-hour advance of Iraq's return to formal sovereignty.... Mr. Allawi's aim of forestalling insurgent attacks to disrupt the transition -- which American military intelligence had warned of in recent days -- was successful....

On Monday, Mr. Bremer, Brooks Brothers smart as always... allowed himself a smile of satisfaction.... ''It's a great pleasure to be here this day to formally hand over sovereignty on behalf of the coalition,'' he said.... [H]e boarded a Black Hawk helicopter to begin his journey out of Iraq, and eventually to his house in Vermont, teaching the gourmet cooking classes that are his favorite pastime.... Mr. Bremer seemed intent on bolstering the flagging confidence of many here and in the United States that the American enterprise can recover from the blows of the insurgency and lead to the creation of a stable, democratically governed Iraq. That has been his mantra through the months that the war has worsened.... ''I think we'll win the war, and we'll win it as we get more and more Iraqis standing up and fighting, and as we proceed on the second pillar, which is getting an Iraqi government,'' Mr. Bremer said....

If the plan holds up, the new Iraq of which Mr. Bremer was a principal architect could go down in history as an extraordinary achievement.

But at worst, things could descend into one of the doomsday scenarios... a new dictatorship, the rise of a militantly Islamic Shiite government, or worse yet, a civil war.... [H]istorians will weigh in on Mr. Bremer's stewardship, and on that score, his record seems, on balance, unlikely to win the sort of endorsements that have enveloped General MacArthur's legacy in Japan. The general, of course, did not have an insurgency to contend with....

Notably, though, Mr. Bremer left Iraq with wide respect among ordinary Iraqis -- no small thing.... There has been admiration for his courage in venturing outside the occupation headquarters.... ''I'm really upset about this,'' said Anaam Abdul Wahed, 35, having lunch with her niece in a Baghdad restaurant, when she learned Mr. Bremer had gone, in hastened circumstances that denied him even a broadcast farewell. ''He has become our friend. He's really kind, and handsome. We didn't look at him as we look at Iraqi officials.''...

Before he left, an aide described him as feeling like ''a punching bag'' for the criticisms he has taken from some quarters in Washington.... At the White House... State Department... Pentagon... he became less favored as his time here wore on.

Mr. Bremer's frustration at those shadowy assaults showed only obliquely in the interview, when he alluded to his strong personal relationship with Mr. Bush, who appears to have remained his backer even as others in the White House began looking for a scapegoat. ''I've always been amazed -- it's an interesting phenomenon, and I've talked to the president about it -- how good the view is from the back of a car,'' Mr. Bremer said. Then he added, smiling, ''Particularly looking backwards.''...

In effect, America and its allies, along with a few hundred returned Iraqi exiles, found themselves largely alone in tackling the daunting task of rebuilding a country the size of France, with a population of 25 million people, that had been devastated by three wars under Mr. Hussein, 13 years of United Nations economic sanctions and 35 years of government neglect.

When Mr. Bremer was asked in the interview whether there was anything the United States might have done better, he skirted the issue.... ''People have said the prewar planning was no good,'' he said. ''I don't know. I was a businessman until 10 days before I pitched up here, so I don't know.'' Looking back, Mr. Bremer liked to remind his critics what he inherited when he arrived.... ''Baghdad was on fire, literally, as I drove in from the airport... no traffic... no electricity... no oil production; no economic activity; there wasn't a single policeman on duty anywhere.''...

Suppose we search the New York Times international section archives in 2004 for "Iraq" and--it's a striking word--"illusionists." We get nothing. Zip. Nada. Adding "the successors to Bremer and his team have a withering term for the optimistic approach of their predecessors: 'the illusionists,'" would certainly have made Burns's June 29, 2004 story a better and truer story, wouldn't it?

It would have been very nice if Mr. Burns had given us at the end of June 2004 the assessment of Proconsul L. Paul Bremer III that he was to give us in July 2005, wouldn't it?

Jack Shafer writes, "not everybody wants to read John F. Burns, not everybody who wants to read about Baghdad is going to demand coverage of the quality he produces..." Turn it around: is there a reason that anybody would want to read coverage when you know that some of the most interesting pieces of it are going to be suppressed for a year, in this case so as not to embarrass the favored sources of Mr. Burns?

Randy Kroszner

Larry White asks:

Division of Labour : Reuters had this to say about [Randy] Kroszner: 'While his monetary policy views are not well known, economists said he would likely be in the mainstream. One University of Chicago colleague has said Kroszner would be a "sound money guy."'

I'm starting to wonder whether anyone besides me has actually read Kroszner's monetary writings (as of today!). I've been the intellectual target of some of Kroszner's monetary writings ("Scottish Banking Before 1845: A Model for Laissez-Faire?" Journal of Money, Credit, and Banking, May 1989, 221-31, with Tyler Cowen (reprinted in Lawrence H. White, ed., Free Banking (Aldershot, UK: Elgar 1993)), and the reviewer of others (Journal of Institutional and Theoretical Economics 152, June 1996, 419-22). But really, just look at the title of his book with Tyler Cowen, Explorations in the New Monetary Economics (Cambridge: Basil Blackwell, 1994): does that sound "mainstream" to you?

I have! I have!

Randy Kroszner is, as I said, eminently well-qualified to be on the Board of Governors. But, as I have also said, only one of him! Most Federal Reserve Governors should be "mainstream" in monetary policy. All don't have to be.

Getting to Fat Tuesday a Century Ago

Craig Depken writes:

Division of Labour : Mardi Gras Travel c. 1906: From the Jan. 28, 1906 NYT is an advertisement for the Washington and Southern Railway:

MARDI GRAS - NEW YORK TO NEW ORLEANS AND RETURN - $37.75: Tickets on sale February 21 to 27, good returning until March 3, 1906. Extension of limit March 16th can be had by depositing ticket and paying 50 cents at New Orleans.

I don't know how long it would have taken to get from the Big Apple to the Big Easy on a train, but I would figure two days or so. The folks over at estimate the following 2004 values for the $37 round trip:

In 2004, $37.75 from 1906 is worth:

  • $789.69 using the Consumer Price Index
  • $628.95 using the GDP deflator
  • $3,459.73 using the unskilled wage
  • $4,577.43 using the GDP per capita...

Ouch.... Today's cost of flying from NYC Laguardia to New Orleans? Travelocity has reasonably timed flights for around $160. Travel time from NYC to NO is about 2.5 hours. Wow.

Think of it this way: if the price of travel to New Orleans and back had gone up as fast as average prices have gone up, it would be $700 or so. Relative to average prices, long-distance transportation has become cheaper by a factor of nearly five. Plus we have become richer by a factor of seven (or more, taking account of increases in the capabilities invention and innovation have granted us).

Ironies of History: Chinese Communist Party as Land Baron Edition

Brad Setser writes about the Chinese Communist Party as land baron... or maybe just baron... or maybe that the eternal law of Chinese history is that the bureaucratically well-connected elite controls the land and squeezes the peasants, for the mountains are high and the emperor is far away:

RGE - Another great irony of history: The Chinese Communist party is a very profitable real estate company : Max Sawicky noted that key source of recent job creation in the capitalist United States has been the US government, which itself is financed, in no small part by the People's Bank of China.... That prompted prominent press critic Brad DeLong to add:

One of the great ironies of economic policy is that the historical role of the Vietnamese Communist Party has turned out to be that of a union-busting gang labor boss for Nike and other first-world manufacturing corporations

Let me add another: the Chinese Communist party may have the most valuable real estate franchise in the capitalist world.

The revolution ended private land ownership in China. So if you want to develop a bit of real estate outside Shanghai, you negotiate with the party. Not with the peasants who work the land, often under a long-term lease. And in a country with lots of people, not so much land, rapidly expanding cities, and banks flush with deposits that they would love to lend out, the right to turn rice paddies into apartments and factories can be rather valuable.

Joseph Kahn of the New York Times:

Peasants are not allowed to own the land that they farm and have little say if the government decides to sell it for commercial development. Compensation is assessed according to complex formulas but rarely approaches the market value of the land, leaving many feeling disenfranchised by the development around them.

China hasn't gotten its version of the original homestead act, let alone a modern version.

Disputes over changes in land use certainly seem to be the common denominator behind most violent social unrest in China.

Chinese peasants do not have clear title to the land they work. Or perhaps that should be peasants clearly don't have title to the land they work. That is one of many ways China has followed policies that do not fit well with the Washington consensus. Dani Rodrik is right to note that if China were not growing as fast as it is, western economist would say that China's slow growth stems from the absence of sufficient reforms.

We often extol speaking truth to power, but sometimes it is nice to hear power speaking the truth.

Via ex-Treasury beat reporter Joseph Kahn, China's Prime Minister Wen Jiabao:

Land grabs by officials eager to cash in on China's booming economy are provoking mass unrest in the countryside and amount to a ''historic error'' that could threaten national stability.

''We absolutely cannot commit a historic error over land problems,'' Mr. Wen said in an address delivered to a party meeting in late December and released in Chinese newspapers on Friday. ''In some areas, illegal seizures of farmland without reasonable compensation have provoked uprisings. This is still a key source of instability in rural areas and even the whole society.''....

In the last two years China abolished taxes on peasants and staple farm crops, relieving one historic source of grievance in the countryside. But even that advance, Mr. Wen said, risks being undermined by local officials who impose ''arbitrary fees'' on farmers.

Beijing has backed its words with a series of policy measures designed to bridge the rural/ urban divide. Free schooling, steps to improve rural health care and the like.

But not title to the land peasants now work. That would be too big a redistribution from the Communist party to poor Chinese peasants.

At least for those peasants lucky enough not to get land in the Chinese equivalent of Western Kansas.

But even implementing these modest reforms will be challenge. Remember that the Chinese government also introduced policy steps designed to stop over-investment, which, judging from the recent monthly fixed investment numbers (up 30% y/y), seem to have had only a limited effect. There is a serious point here. The modern-day emperors in Beijing do not necessarily exercise perfect control over all parts of China. Particularly when one of their instrument of control - the party - isn't entirely committed to their agenda.

Edward Cody of the Post:

But the party's efforts to better manage tension between urban growth and squeezed farmlands repeatedly have faltered in the hybrid of socialism and capitalism that has developed here in 30 years of economic liberalization. In the new era, the Communist Party's main ideology has become growth, creating a natural and often corrupt alliance between officials and businessmen that leaves farmers with no advocate.

Joseph Kahn made a similar point:

Local officials operate with impunity in the one-party state and have little to fear from a legal system that answers to the party. Endless exhortations by central government leaders to pay more attention to inequality have done little to address the root causes of the wealth gap and surging social unrest, Chinese and Western political experts say.

Mr. Wen did not announce any fresh steps to curtail land seizures, which many experts say stem from deep-seated problems in the way China manages land.

After all, the close alliance between the party, local banks, local firms and local real estate developers has been rather lucrative for all involved. Rapid local credit growth tends to feed rapid local growth and drive up local real estate values. And if the loans go bad, the local government assumes - probably correctly - that Beijing will be forced to pick up the bill.

Seizing land upsets peasants. Seizing bank deposits (or freezing them) -- even if the deposits have been used to finance a bunch of dud loans -- upsets the urban middle class.

The Republican War on Science Continues

People are surprised that there are so few Republicans in universities? Why?

Impeach George W. Bush. Impeach Richard Cheney. Do it now:

Climate Expert Says NASA Tried to Silence Him - New York Times : By ANDREW C. REVKIN: The top climate scientist at NASA says the Bush administration has tried to stop him from speaking out since he gave a lecture last month calling for prompt reductions in emissions of greenhouse gases linked to global warming. The scientist, James E. Hansen, longtime director of the agency's Goddard Institute for Space Studies, said in an interview that officials at NASA headquarters had ordered the public affairs staff to review his coming lectures, papers, postings on the Goddard Web site and requests for interviews from journalists....

Dr. Hansen, 63, a physicist who joined the space agency in 1967, directs efforts to simulate the global climate on computers at the Goddard Institute in Morningside Heights in Manhattan. Since 1988, he has been issuing public warnings about the long-term threat from heat-trapping emissions, dominated by carbon dioxide, that are an unavoidable byproduct of burning coal, oil and other fossil fuels. He has had run-ins with politicians or their appointees in various administrations, including budget watchers in the first Bush administration and Vice President Al Gore.... Dr. Hansen said that nothing in 30 years equaled the push made since early December to keep him from publicly discussing what he says are clear-cut dangers from further delay in curbing carbon dioxide.

In several interviews with The New York Times in recent days, Dr. Hansen said it would be irresponsible not to speak out, particularly because NASA's mission statement includes the phrase "to understand and protect our home planet." He said he was particularly incensed that the directives had come through telephone conversations and not through formal channels, leaving no significant trails of documents. Dr. Hansen's supervisor, Franco Einaudi, said there had been no official "order or pressure to say shut Jim up." But Dr. Einaudi added, "That doesn't mean I like this kind of pressure being applied."... After that speech and the release of data by Dr. Hansen on Dec. 15 showing that 2005 was probably the warmest year in at least a century, officials at the headquarters of the space agency repeatedly phoned public affairs officers, who relayed the warning to Dr. Hansen that there would be "dire consequences" if such statements continued, those officers and Dr. Hansen said in interviews.... Dr. Hansen and some of his colleagues said interviews were canceled as a result. In one call, George Deutsch, a recently appointed public affairs officer at NASA headquarters, rejected a request from a producer at National Public Radio to interview Dr. Hansen, said Leslie McCarthy, a public affairs officer responsible for the Goddard Institute.

Citing handwritten notes taken during the conversation, Ms. McCarthy said Mr. Deutsch called N.P.R. "the most liberal" media outlet in the country. She said that in that call and others, Mr. Deutsch said his job was "to make the president look good".... Several colleagues of both Ms. McCarthy and Dr. Hansen said Ms. McCarthy's statements were consistent with what she told them when the conversations occurred. "He's not trying to create a war over this," said Larry D. Travis, an astronomer who is Dr. Hansen's deputy at Goddard, "but really feels very strongly that this is an obligation we have as federal scientists, to inform the public."

Dr. Travis said he walked into Ms. McCarthy's office in mid-December at the end of one of the calls from Mr. Deutsch demanding that Dr. Hansen be better controlled. In an interview on Friday, Ralph J. Cicerone, an atmospheric chemist and the president of the National Academy of Sciences, the nation's leading independent scientific body, praised Dr. Hansen's scientific contributions and said he had always seemed to describe his public statements clearly as his personal views.

"He really is one of the most productive and creative scientists in the world," Dr. Cicerone said. "I've heard Hansen speak many times and I've read many of his papers, starting in the late 70's. Every single time, in writing or when I've heard him speak, he's always clear that he's speaking for himself, not for NASA or the administration, whichever administration it's been."

The fight between Dr. Hansen and administration officials echoes other recent disputes. At climate laboratories of the National Oceanic and Atmospheric Administration, for example, many scientists who routinely took calls from reporters five years ago can now do so only if the interview is approved by administration officials in Washington, and then only if a public affairs officer is present or on the phone...