Deficit hawks down


Yet despite what should have been a major discrediting of the whole deficit-hawk establishment, the word is that Wall Street is pushing for Obama to appoint Erskine Bowles as Treasury Secretary.

Erskine Bowles? The man who, charged with producing a deficit-reduction plan, decided that a key feature of this plan should be … cuts in marginal tax rates on high incomes? The man who warned, in dire terms, of a looming fiscal crisis, with soaring US borrowing costs, within two years — almost two years ago?

My life and welcome to it

So I’m trying to figure out where the dead mouse smell is coming from in my kitchen. It’s so bad that it even makes me sick while I’m sitting in the living room. Between the mold in my bedroom and the smell of rot in the kitchen, the only place I’m not under aerosol attack is in the bathroom. Which is relative, of course.

My friend helped me move the refrigerator and the stove yesterday, and while there was plenty of mouse shit, I couldn’t find a dead body. (I did find that mice have made themselves a nest in the stove insulation, and it’s simply inundated with their urine and droppings. Yay, nature!) My landlord is going to take the lid off the stove tomorrow, and I’m hoping that’s where the smell emanates, because it’ll be easier to clean up.

I am not looking forward to cooking a Thanksgiving meal in this stench.


So the drilling industry insisted there was no link at all between fracking and earthquakes, but finally had to admit that injecting fracking wastewater can trigger earthquakes. Now it looks like the actual fracking can trigger earthquakes, after all. Maybe we should put the onus on businesses to prove the safety of what they’re doing first? Nah, that would be un-American!

Drawing on scientific research and reports by government agencies, Smart News and Smithsonian‘sSurprising Science blog have written that, as the National Research Council puts it, “there is no evidence to suggest that hydraulic fracturing itself is the cause of the increased rate of earthquake.” The known link between fracking and earthquakes has been to do with the waste disposal process, not the fracking itself: Inappropriate disposal of waste water used during the fracking process has triggered induced earthquakes.

A recent report by the British Columbia Oil & Gas Commission, however, finds that fracking actually can cause earthquakes.

Earthquake monitoring equipment in northern British Columbia, Canada, says the report, recorded 216 small earthquakes clustered in a small area around an ongoing fracking project in the northern end of the province. Of those earthquakes, 19 of them were rated between 2 and 3 on the Richter magnitude scale. Only one of them was strong enough to be felt at the surface. By comparison, in the past week alone, Southern California experienced 333 earthquakes, with 29 of those having magnitudes from 2.0 to 3.9.

Focusing in on a subset of the earthquakes, the report says,

Eighteen [local] magnitude 1.9 to 3.0 events were selected from dense array microseismic plots. These events were selected because they were located adjacent to hydraulic fracturing stages and could be connected to a single stage fluid injection with some confidence. Evidence strongly suggests that all events were triggered by fluid injection at adjacent stages.

They found that eight of those earthquakes happened while the fracking was ongoing and that all eighteen happened within 24 hours of the fracking injections. The fracking-induced earthquakes happened when the fluid injection caused pre-existing faults within the Earth to slip. The strength of the earthquakes got bigger or smaller the closer or further the fracking was from the fault.

This isn’t the first time a link has been seen between fracking and earthquakes, but the pool of observations remains extremely limited—the report cites other known instances in England and inOklahoma.

The ‘fiscal cliff’ hoax

Economist Dean Baker, Co-director of the Center for Economic and Policy Priorities, on deficit confusion and why “fiscal cliff” is a misleading description of the economic forecast:

1. The budget deficit is not “out of control”.

There is enormous confusion about the nature of the country’s deficit problem. There is a widespread belief that there has been a longstanding problem with large budget deficits.This is simply not true. It is easy to show that the large deficits of recent years are a result of the downturn in the economy following the collapse of the housing bubble.

  • The budget deficit in 2007 was just 1.2 percent of GDP.
  • In January of 2008, before it recognized the impact of the collapse of the housing bubble on the economy, the Congressional Budget Office projected that the deficit would remain near 1.0 percent of GDP through 2011.
  • The deficit was projected to turn to a surplus in 2012 after the expiration of the Bush tax cuts.
  • The country could run deficits of this size literally forever. The debt to GDP ratio was actually declining.

This situation changed in 2008 because of the downturn caused by the collapse of the housing bubble.

  • This led to a sharp fall in revenue as taxes fell in response to the fall in output and employment.
  • It also led to an increase in expenditures for items like unemployment insurance and food stamps.
  • In addition, there were tax cuts and spending measures taken to directly counteract the downturn, such as the payroll tax cut and the stimulus package.

The combination of automatic stabilizers and deliberate stimulus measures fully explain the large deficits of the last four years.

  • There were few permanent changes to spending or the tax code that would add to the deficit on an ongoing basis.
  • If the unemployment rate were to return to the pre-recession level of 4.5 percent and we eliminated the tax and spending measures designed to sustain the economy through the downturn, we would again have modest deficits of a size that could be sustained indefinitely.

2. The “fiscal cliff” is not a cliff at all.

The term “fiscal cliff” and the discussion around this impasse have fundamentally misrepresented the problem facing the budget and the economy. While there have been projections from the Congressional Budget Office and others showing that the tax increases and spending cuts scheduled to go into effect on January 1, 2013 can push the economy back into recession, these projections are showing the impact of failing to reach an agreement by the end of 2013.

  • The projections assume not only that no deal is reached by January 1, but also that no deal is reached over the course of the year. In other words, we would not be subject to a higher tax rate for a few weeks or a month, these models examined what would happen if we paid taxes at higher rate for a full year and also saw spending cut for the whole year.
  • As a practical matter, if the end of the year deadline is not met it only means that people will be subject to higher withholding beginning on January 1, 2103. No one would feel anything until they saw their first paycheck of 2013.
  • Furthermore, if Congress and the president seemed about to reach a deal, which would eliminate much of the tax increase, then most people would be able to anticipate getting back the extra taxes in their next paycheck. In this case, the impact on spending and the economy would be minimal.

There is even less cause to be concerned about the spending side of the cliff.

  • The sequester applies to appropriations, not actual outlays. Some of the money appropriated in 2013 may not be spent for years into the future.
  • As a practical matter, there is no reason for the government to do anything to curb spending in January if it appears that a deal is likely to be reached that would lead to levels of spending that are higher than provided for in the sequester.
  • This means that if Congress and the president take a month or two to work through an alternative to the sequester, the pace of spending need not be affected.

As a practical matter, it is always desirable to reduce unnecessary uncertainty and the resolution of the tax and spending debate creates certainty. But there is no reality to the idea that the end of the year presents a deadline of any consequence. It really doesn’t matter whether a deal is reached on December 28th or January 8th, the impact on the economy will be almost exactly the same.

No criminal charges

Of course!

WASHINGTON (MarketWatch) – The Securities and Exchange Commission on Thursday charged a hedge fund manager with allegedly defrauding investors by hiding millions of dollars in losses from mortgage securities. Specifically, the SEC alleges that Walter Morales and hedge fund Commonwealth Advisors, based in Baton Rouge, La., tried to hide $32 million in losses by lying to investors about the amount and value of mortgage-backed assets held by the hedge funds, and purportedly creating phony internal documents to justify their false valuations. The SEC said that Morales also instructed employees to conduct a series of allegedly manipulative trades to conceal the losses.

How global warming made Sandy worse

It makes me a little nuts when people insist they can’t draw a direct line between global warming and extreme weather, because they really don’t understand how it actually works. This Mother Jones piece does an excellent job of explaining the connection:

Superstorm Sandy—and its revival of the issue of climate change, most prominently through Michael Bloomberg’s sudden endorsement—probably aided President Obama’s reelection victory last night. But at the same time, there has been a vast debate about the true nature of the storm’s connections to global warming (as well as plenty of denialism regarding those connections). In fact, there has even been the suggestion, by cognitive linguist George Lakoff, that if we all stopped thinking about causation as something direct (I pushed him, he fell) and rather as something systemic (indirect, probabilistic), then we really could say with full accuracy that global warming caused Sandy. Systemically.

Following this debate, I’ve been struck by the strong impression that people are making things too complicated. Here’s the simple truth: Leaving aside questions of systemic causation—and sidestepping probabilities, loaded dice, atmospheres on steroids, and so on—we can nevertheless say that global warming made Sandy directly and unmistakably worse, because of its contribution to sea level rise.

“I keep telling people the one lock you have here is sea level rise,” meteorologist Scott Mandiaexplained to me recently. “It’s the one thing that absolutely made the storm worse that you can’t wiggle out of.”

Mandia is an expert on the subject at Suffolk County Community College, and coauthor of the new book Rising Sea Levels: An Introduction to Cause and Impact.

And how do we know Mandia is right? Here’s the logic.

First, according to sea level expert Ben Strauss of Climate Central, the sea level in the New York harbor today is 15 inches higher than it was in 1880. Now, to be sure, not all of that is due global warming—land has also been subsiding. Strauss estimates that climate change—which causes sea level rise both through the melting of land-based ice, and through thermal expansion of warm ocean water—is responsible for just over half, or eight inches, of the total. As it happens, the estimated sea level rise seen globally since the year 1880 is also roughly eight inches.

So how, then, did global warming directly make Sandy worse? Simple: Sandy threw the ocean at the land, and because of global warming, there were about eight inches more ocean to throw. “The footprint of the flood was bigger, based on roughly eight extra inches of depth,” Strauss explains—eight inches more than there would have been in an admittedly hypothetical world in which Sandy arrived without our burning of fossil fuels or heating of the atmosphere.

[…] Consider the US Army Corps of Engineers’ “depth-damage” functions, which the Corps uses to study how much flood damage grows with an increasing water level. The upshot here, says Mandia, is that “the damage is exponential, it’s not linear.” Or in other words, as the water level increases, the level of damage tends to rise much more steeply than the mere level of water itself.

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