Month: May 2023

It's worth going back in time a few months and remembering why the debt ceiling even still exists. Why wasn't it raised unilaterally by Democrats during the November/December lame duck session? Janet Yellen was certainly in favor.

Technically, the debt ceiling could have been increased easily via reconciliation. The procedure is straightforward: It starts with the House and Senate budget committees writing budget resolutions that include reconciliation instructions for raising the debt ceiling. These can be discharged immediately for passage on the floor that requires only 51 votes and can't be filibustered by Republicans.

There are two gotchas. The first is a rule that allows 50 hours of debate, which sucks up a vast amount of floor time that could be used for other priorities. The second is a required "vote-a-rama" in which Republicans can offer a theoretically endless set of amendments. In practice, however, since the amendments must be "germane" to the debt ceiling, this puts a limit on how many amendments Republicans can waste time with.

Bottom line: the whole process would have taken 2-3 weeks that Democrats wanted to use for other purposes. That's bad but hardly catastrophic. But this still isn't the real story.

The real story is that the Senate was split 50-50 and Democrats were missing a vote even for reconciliation. I'm sure you can guess whose vote it was:

The administration has determined that if it were to go the reconciliation route on the debt limit, it would face likely opposition from Sen. Joe Manchin (D-W.Va.).

....Already, Manchin has expressed reluctance to act on the debt limit with only Democratic votes, though he’s declined to rule it out completely. “I don’t think it should go to reconciliation,” he said Tuesday. “My goodness, it’s something we’ve always worked together on.”

According to Politico at the time, "That’s left White House officials to all but abandon efforts for a lame-duck move they once hoped might head off a potentially disastrous showdown with the House GOP majority next year."

In short, we are now facing a debt ceiling crisis thanks to Joe Manchin. That's it.

It's Day 31, more than twice as long as I expected to stay in treatment. But we're home now.

Earlier today I had my final consult and everything is going swimmingly. My counts are completely normal; the Bell's palsy is diagnostically gone, though I still feel a few twinges; and my doctor says I'm responding "beautifully" to the CAR-T treatment. For now, anyway, things couldn't be going better.

Our stay at City of Hope has stretched out so long that I'm finally running out of cat pictures. So here's a rare file photo of Hilbert and Charlie playing back when Charlie was still sort of kittenish.

Tyler Cowen points me to some truly remarkable research today. The topic is the pay and productivity of women in a large multinational corporation with offices and factories around the world.

The central insight of the study is that if women face high barriers to entry into the labor market, then only the best, most productive women are likely to work. As barriers go down, the performance of women will become more average.

But not entirely average. Check this out:

On the left side of the chart, where female labor participation is low, women's productivity is astronomically higher than men's. But even on the right, where participation is high, women's productivity is still about 50% higher than men's.

Unsurprisingly, this affects pay too:

The authors conclude across the board that optimal pay for women should be higher (and optimal pay for men should be lower). And the difference isn't small:

Given the productivity differences between men and women, the firm could increase productivity for the same wage bill if they were to change the terms of the wage contract to attract more women....However, we note that such a contract would significantly increase inequality within and between genders; most notably, the difference in pay between women and men would go up by 78%.

And this:

We show that equalizing barriers between genders would bring the pay gap to zero and would increase productivity by 32%, while keeping the wage bill and employment constant.

Among other things, the authors conclude that women perform so well that hiring managers should practically hire them sight unseen if their visible qualifications are even in the same ballpark as a similar man.

I'm unable to judge the methodology of this paper, but I'll offer one caveat: the effects are just too big. I'm always a bit skeptical of gigantic effects since the real world doesn't often produce them.

Also, keep in mind that this is not purely US research. One reason for the big effects is likely that many of the countries under study are poor and have exceptionally high barriers to female work. Under such circumstances it might not be surprising that women are enormously underhired and underpaid. The same wouldn't be true in an advanced economy like the US.

It's inflation day, and the news is once again so-so:

Both core and headline PCE inflation clocked in at around 4.5%, though the headline rate continues to be considerably lower on a trendline basis. Overall, though, it was mostly sideways movement in April. PCE inflation has stayed pretty steady since the end of last year.

In other news, the BEA also released consumer spending data:

Adjusted for inflation, spending ticked up from 2% last month to 2.3% this month (compared to a year ago), but it's still well below its pre-pandemic trendline.

NBC News reports that state officials working for Ron DeSantis are soliciting campaign contributions from lobbyists with business before the state:

NBC News spoke with 10 Republican lobbyists in Florida, all of whom said they couldn't remember being solicited for donations so overtly by administration officials — especially at a time when the governor still has to act on the state budget.

....“What the f--- am I supposed to do?” one lobbyist said. “I have a lot of business in front of the DeSantis administration.”

....“The practice feeds the DeSantis corrupt swampy meme perfectly for opponents. For no f------ reason,” said another veteran Florida Republican. “Hard to be Mr. Break the Internet and Swamp when you do this. Really dumb.”

....“Whoever is telling these kids to do this has lost their damn mind,” said another Florida Republican lobbyist.

Quite the guy, our Ron. Maybe this is illegal; maybe it's not. He doesn't care.

The Supreme Court today severely curtailed the EPA's ability to regulate wetlands under the Clean Water Act. This was a genuinely complicated case, but the big problem is that the court majority was able to do its work only by twisting the clear instructions of Congress. The CWA defines wetlands as anything "adjacent" to lakes, streams, rivers, and so forth, but conservatives on the court just tossed that aside:

To determine when a wetland is part of adjacent “waters of the United States,” the Court agrees with the Rapanos plurality that the use of “waters” in §1362(7) may be fairly read to include only wetlands that are “indistinguishable from waters of the United States.” This occurs only when wetlands have “a continuous surface connection to bodies that are ‘waters of the United States’ in their own right, so that there is no clear demarcation between ‘waters’ and wetlands.”

"Adjacent" is simply not the same thing as "indistinguishable" or "adjoining" or any other word. As Justice Kagan acidly puts it:

One last time: “Adjacent” means neighboring, whether or not touching; so, for example, a wetland is adjacent to water on the other side of a sand dune. That congressional judgment is as clear as clear can be—which is to say, as clear as language gets. And so a clear-statement rule must leave it alone. The majority concludes otherwise because it is using its thumb not to resolve ambiguity or clarify vagueness, but instead to “correct” breadth.

Kagan is clear that the conservative majority is rewriting the words of Congress not because of any ambiguity—there isn't any—but simply because they believe the current wetlands rules go too far. In other words, they are baldly substituting their own water regulation preferences for those of Congress, even though Congress's are clearly expressed. It's an appalling act of transparent judicial activism.

Sunset and fast food on the Louisiana bayou.

According to the Wall Street Journal, same-sex couples account for 1% of all households nationwide. Of that, half are married and a little less than half are unmarried partners. The remainder live alone or in other arrangements.

The American economy is in very squirrely shape right now. I have two things to show you that demonstrate how weird things are.

First, you may recall that there are two basic measures of economic growth: GDP and GDI. They are theoretically identical, but in practice they diverge—sometimes a little, sometimes a lot. For that reason, many economists think the best overall measure of economic growth is an average of the two. Here are the latest figures for that:

If this is correct, we've been in a light recession for the past year. That hardly seems plausible, though, especially with the labor market so tight.

But that gets me to my second, even more astonishing chart. The BLS reported yesterday that overall US employment was up 2.6% last year but weekly wages were down 8.7% after adjusting for inflation. This same dynamic was true in virtually every state and 240 out of 355 big counties. Here's a sample:

This is nuts. Take a look at California: employment growth is strong at 2.3% but pay is down a whopping 13.3% after inflation. In San Francisco alone, employment increased 2.5% but pay cratered by 29%. How is that even possible?

I'm stymied by this. If hiring is strong, how can wages be going down—a lot? Is it related to the overall economy being weaker than we think? I don't know, but one way or another the labor market just isn't as tight as we think it is.