Ezra Klein

According to the New York Times, Republicans are blocking Nobel Prize-winning economist Peter Diamond's nomination to the Federal Reserve Board "in retaliation for a refusal by Democrats to give a full 14-year term to Randall S. Kroszner, who served on the Fed board from 2006 to 2009." Tyler Cowen would like to see this mentioned more often.

MarketWatch says "Kroszner was the Fed's point-man on consumer lending and mortgage matters, a position that led to conflict with Dodd." Moreover, Kroszner's term would've been for 14 years, and Dodd argued that a decision of that length should go to the president about to enter office, not the unpopular leader about to leave it. But the bottom line seems to be this: The Democrats, who held the majority at that point, did not want to confirm Kroszner. George W. Bush did not, to my knowledge, offer up a second candidate.

Of course, Republicans can't say they're obstructing Diamond -- remember, they're in the minority here -- because they're still annoyed over Kroszner. So instead, we're getting this ridiculous dance in which Sen. Richard Shelby (R-Ala.) questions the qualifications of a Nobel Prize-winning economist. And Democrats will of course extract payback next time they're in the minority and the Republicans want to move some Fed nominees.

There's no good argument here for further delaying Peter Diamond's nomination. There's a very good argument, however, for either running fewer nominations through the Senate, or radically revamping the process by which the Senate considers -- or doesn't consider -- nominations.

Melinda Gates on what nonprofits can learn from Coca-Cola:

If "Overhaul," Steve Rattner's book on the auto rescue, has a hero, it's Larry Summers. Summers comes across pragmatic, decisive and fair. Rattner -- who tears into other officials, notably Sheila Bair -- says his discussions with Summers "were the high point of my Washington experience; I would leave convinced that there could be no happier future circumstance than the chance to work for him again."

But Summers is also one of the book's more amusing characters. His intellectual and managerial style are distinct enough that the index has six entries under "Larry Summers; style." Here's my favorite:

Once Diana Farrell began to offer an opinion, but before she passed the mid-point of expressing her thought, Larry interrupted to say (not harshly), "I've already considered that idea and rejected it." This so amused our younger colleagues that for weeks afterward they would say to one another, as they debated one proposal or another, "I've already considered that idea and rejected it."

Over the years, I've gotten a lot of criticism for preferring the term "illegal immigrants" rather than embracing "undocumented immigrants," or something similar. Nicole at PostBourgie explains my thinking better than I could:

For the record, I don’t like the term “illegals.” If you’re going to call people “illegals”, let’s be fair and apply it to everyone who has ever done anything illegal. That would include me, you, Lou Dobbs, jaywalkers, underage drinkers and almost everyone I know over the age of 10.

But “illegal immigrant”? The simple fact is that if one immigrates without a visa, or stays after the visa expires, that is illegal. I’m not saying there aren’t justifiable reasons for doing so, but that doesn’t make it any less against the law.

Adam Serwer agrees. And it's not as if the word games fool anyone. The people who need to be convinced of comprehensive immigration reform -- which must include a path to legal status for illegal immigrants -- are angry about illegal immigration. Trying to paper over that won't help, and might actually hurt.

Better to confront it directly: Yes, there's illegal immigration, and yes, illegal immigrants should have to pay fees and learn English, but no, it's not good for American workers or the American economy to have 12 million illegal immigrants living in the shadows, and no, deporting 12 million people is not a realistic option. Put differently, there are two fundamental facts here: Yes, there are illegal immigrants, and yes, we need to find a way to make them legal residents.

Are Canadians flooding into the United States to get better health care? No. Are Canadian doctors immigrating to the United States to work for our health-care system? No.

The Democrats' attack on foreign campaign contributions is pretty much bunk. The Chamber of Commerce, like many large organizations with an international presence, takes in money overseas. It also spends money here. That does not mean it spends foreign money here. As far as I can tell, no one who has seriously looked into this thinks it's any more than some election-season hardball from the Democrats.

What's more serious is the issue Toles gets at in the cartoon above, and which Democrats have also been hammering (though it hasn't gotten as much attention as the more sensational charge about foreign money): large amounts of domestic money, from domestic groups and corporations, being funneled into elections without any disclosure. As T.W. Farnam and Dan Eggen reported, "the $80 million spent so far by groups outside the Democratic and Republican parties dwarfs the $16 million spent at this point for the 2006 midterms. In that election, the vast majority of money -- more than 90 percent -- was disclosed along with donors' identities. This year, that figure has fallen to less than half of the total."

So contributions are up fivefold and disclosure is down by about half. That's not a good situation. Meanwhile, I really wish the Democrats' push on this issue was connected to a serious campaign-finance agenda. They're not going to win any races by calling for more financial disclosure from the Chamber of Commerce, but maybe they could at least unite the party around something like the Fair Elections Now Act.

There is perhaps no surer signal that Democrats are about to suffer a terrific defeat than to see liberals begin discussing how to define, redefine, or otherwise burnish their "brand." So far as I'm concerned, this falls firmly in the "doesn't matter" category of American politics. In 2004, all liberals could talk about was the power of the conservative brand, and George Lakoff became an icon because of it. In 2006 and 2008, better branding didn't save Republicans from being devastated in the polls, leading Democrats to the first 60-vote Senate majority since the 1970s. So much for brands.

But it is an excuse to discuss an interesting political science paper (pdf) a reader sent in. In it, Christopher Ellis and James Stimson try to untangle an apparent paradox at the heart of our political affairs: "We wish to understand why the American public, in the aggregate, supports 'liberal' public policies of redistribution, intervention in the economy, and aggressive governmental action to solve social problems, while at the same time identifies with the symbols -- and ideological label -- that rejects these policies." In other words, how does a country that self-identifies as conservative keep moving its policy to the left?

To figure it out, they pull together new sources of data to estimate ideological self-identification in the decades before pollsters routinely asked whether we were liberals or conservatives. Here's what they find:

Conservatism, in other words, always outpolled liberalism, but liberalism really collapses in the '60s. Their explanation for this isn't entirely satisfying. In effect, they say that the Great Society created some popular universal programs like Medicare, but also, in its efforts to fight poverty and assure civil rights, created "a new clientele of liberalism, the poor -- and the nonwhite." After that, they say, politicians who were liberals gave up on the label, and so conservatives were able to define it.

Justin Fox says that yesterday's Nobel Prize is part of a longer trend in which the Nobel committee has stopped rewarding economists who make the world look elegant and begun favoring economists who prove that the world is messy:

Diamond wasn't out to further prove the perfection of markets. He was trying instead to show how, with the injection of the tiniest bit of reality, the perfect-market models he'd learned so well in grad school began to break down. Today he won a third of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (it's not technically a "Nobel Prize"), mainly for a paper he wrote in 1971 that explored how the injection of friction between buyers and sellers, in the form of what he called "search costs," prices would end up at a level far removed from what a perfect competition model would predict. The two economists who shared the prize with him, Dale Mortensen of Northwestern University and Christopher Pissarides of the London School of Economics, later elaborated on this insight with regard to job markets (as did Diamond).

The exact practical implications of this work can be a little hard to define -- although Catherine Rampell makes a valiant and mostly successful effort in The New York Times. What this year's prize does clearly indicate is that the Nobel committee believes economic theory is messy and getting messier (no, I didn't come up with this insight on my own; my colleague Tim Sullivan had to nudge me). The last Nobel awarded for an all-encompassing mathematical theory of how the economic world fits together was to Robert Lucas in 1995 for his work on rational expectations. Since then (with the arguable exceptions of the prizes awarded to Robert Merton and Myron Scholes in 1997 for options-pricing and to Fynn Kydland and Edward Prescott in 2004 for real-business-cycle theory) the Nobel crew has chosen to honor either interesting economic side projects or work that muddies the elegance of those grand postwar theories of rational actors buying and selling under conditions of perfect competition. The 2001 prize for work exploring the impact on markets of asymmetric information, awarded to George Akerlof, Michael Spence and Joseph Stiglitz, was probably most similar to this year's model (and, not coincidentally, Akerlof and Stiglitz were also MIT grad students in the 1960s).

President Obama renewed his call for increased infrastructure spending yesterday, making the case both in public remarks and in a report (pdf) released by the Council of Economic Advisers. The report's argument, by this time, will be familiar to readers of Wonkbook: America needs trillions in infrastructure repairs and upgrades. Right now, construction sector unemployment is 17 percent, slack global demand means raw materials are cheap, federal borrowing costs are at their lowest point since the 1950s, and the economy desperately needs jobs. Given the choice between paying for infrastructure repairs today and paying for them tomorrow -- and that is our choice -- we will get more for our dollar, and do more for our economy, if we pay for them today.

The administration's proposal, however, is not a program to meet our infrastructure needs. it is a one-time, $50 billion bump to the surface transportation budget. That would certainly help, but it's too small, and limited to roads, rails, and runways, even though our drinking-water systems and schools also need help. Ask the administration about this, and you'll hear about Congress. And to be fair, Congress is not a hotbed of sound economic thinking lately. Republicans are still blocking the nomination of newly minted Nobel-prize winner Peter Diamond to the Federal Reserve Board. "The Royal Swedish Academy of Sciences does not determine who is qualified to serve on the Board of Governors of the Federal Reserve System," Shelby said.

Happy back-to-not-caring-about-Columbus-Day. And welcome to Wonkbook.

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Obama renewed his call for $50 billion in new infrastructure spending, reports Lori Montgomery: "Also present: former transportation secretaries Sam Skinner and Norman Mineta, who last week released a separate report saying that the nation needs to spend $134 billion to $194 billion just on basic repairs. With concern rising about the nation's growing debt, that figure is more than the federal government can provide, administration officials said. Instead, they are pressing for the $50 billion infrastructure bank as the first portion of a six-year plan for transportation funding that has been under discussion for months in Congress."

Read the administration's infrastructure report (pdf): http://bit.ly/bxK88B

My take -- including three helpful graphs: http://wapo.st/aCC9BQ

The White House doesn't want a foreclosure moratorium, reports Binyamin Appelbaum: "The administration’s basic logic has not changed since it took office in the depths of the financial crisis: Hitting the financial industry, officials argue in private and in public, hurts the broader economy. A moratorium on foreclosures may provide short-term political satisfaction in an overheated election climate, but the administration fears it will only delay the inevitable and necessary process of forcing many Americans out of homes they cannot afford."

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Fed nominee Peter Diamond shared the economics Nobel with Dale Mortensen and Christopher Pissarides, but that doesn't mean Republicans will let him onto the Federal Reserve's Board, reports Neil Irwin: "Diamond was among three academics awarded the Nobel Prize in economics Monday for pioneering research on unemployment that has helped better explain the factors that can keep people out of work...Sen. Richard C. Shelby (R-Ala.) has argued that Diamond may not be qualified to serve at the Fed given that his background is not in monetary policy...Shelby, in a statement, said that 'while the Nobel Prize for Economics is a significant recognition, the Royal Swedish Academy of Sciences does not determine who is qualified to serve on the Board of Governors of the Federal Reserve System.'"

Harvard economist Ed Glaeser explains the work that won the Nobel Prize: http://nyti.ms/a1Gp71

Barney Frank will lead the effort to pass a mortgage industry overhaul next year, reports Zachary Goldfarb: "Senior Obama officials are scheduled to release a proposal in January that would replace the two mortgage giants and rethink federal programs that help make housing affordable... Frank has abandoned hope for Fannie and Freddie, saying they should be abolished. His new goals are to devise a housing finance system to replace Fannie and Freddie, preserve existing affordable housing and set up a trust fund to help pay for more. For all his efforts, Frank readily acknowledges that there are more people needing decent housing than there were when he started in Congress."

Got tips, additions, or comments? E-mail me.

Acoustic session interlude: Warpaint plays "Undertow".

Still to come: The foreclosure jam could lead Fannie and Freddie to lose billions; David Brooks argues that public employee compensation is "the Democratic Party's epic failure"; US ethanol subsidies are due to expire; Obama is amping up his criticism of foreign campaign spending; and Grover is the Monster Your Monster Could Smell Like.

"The idea of the lone genius who has the eureka moment where they suddenly get a great idea that changes the world is not just the exception, but almost nonexistent," says Steven Johnson, author of "Where Good Ideas Come From: The Natural History of Innovation." That's because innovation, whatever the Facebook movie told you, isn't really about individuals. And in making it about individuals, we misunderstand, and thus impede, innovation.

I was not born physically or mentally superior to my grandparents. But I would have been much likelier to invent Facebook than they were. The natural capabilities of human beings don't change much from year to year, but their environments do, and so do the technology and store of knowledge they can access. Better sanitation lets people live in cities, where they can learn from one another. Transportation and communication advances allow ideas to mingle across distances that, a thousand years ago, they would never have traversed. The development of the Internet makes the coding of social networks possible.

When these advances happen, they happen to many people simultaneously, so many people tend to see the next step forward at the same time. In 2003, we were all social network geniuses, at least compared with everyone in 1993.

Consider CU Community, a Facebook competitor started at Columbia University. Adam Goldberg, its creator, programmed his social network over the summer in 2003. It was more advanced than Facebook, with options for pictures and integrated blogging software, though it did lack the elegant minimalism of Zuckerberg's design. (Disclosure: Washington Post Co. Chairman Donald E. Graham is on Facebook's board, and The Post markets itself on Facebook.)

Today, Zuckerberg is many times as rich as Goldberg. He won. Zuckerberg's dominance can be attributed partly to the clean interface of his site, partly to the cachet of the Harvard name and partly to luck. But the difference between Mark Zuckerberg and Adam Goldberg was very small, while the difference between what Mark Zuckerberg could do and what the smartest college kid in 1999 could do was huge. It was the commons supporting them both that really mattered. But the focus on individuals leads us to overinvest in the rewards for individual innovation and underinvest in the intellectual commons that make those innovations possible. We're investing, in other words, in the difference between Zuckerberg and Goldberg rather than the advances that brought them into competition.

Consider the current debates in Congress. Republicans are fighting to add $700 billion to the deficit to extend the Bush tax cuts for income above $250,000. It is hard to imagine the innovations that happen at a 35 percent tax rate for your two-hundred-thousand-and-fifty-first dollar, but not at 39 percent. We're also helping creators and their heirs hold legal monopolies on innovations for much longer, extending individual copyrights to the life of the author plus 70 years, for instance. Would we lose so many great ideas if the monopoly lasted only until 15 years after the inventor's death?

At the same time, the recession has broken the back of state budgets. California is gutting its flagship system of universities. Salaries are dropping, and research money is drying up. And California is not alone. According to the Center on Budget and Policy Priorities, 43 states have cut funding for higher education, while 33 others -- plus the District of Columbia -- have hacked away at K-12. And Congress seems to have given up on the energy and climate bill that could've kick-started our green energy industry -- even as China has committed almost a trillion dollars in green energy funding over the next decade.

Donald Marron thinks that the likeliest path to a carbon tax -- or a cap-and-trade program -- is as a fix to our budget woes:

Perhaps the environmental community should make common cause with the budget worrywarts. In principle, a carbon tax is a powerful two-birds-with-one-stone policy: it cuts carbon emissions and raises money to finance the government. (This is equally true of a cap-and-trade approach in which the government auctions allowances and keeps the proceeds.) Perhaps there’s a future 60-vote coalition that would favor those outcomes even if various energy interests would be opposed?

Such a coalition is unthinkable today. Opposition to energy taxes runs deep, as Senator Graham experienced. But fiscal concerns will continue to grow in coming years, and spending reductions may not be enough to get rising debts under control. If so, maybe we’ll see a day in which a partnership of the greens and the green eyeshades will take a stab at a carbon tax.

I think there's something to this. If you grant that new taxes are inevitable over the next 20 years, then it makes sense for greens to try to get budget hawks to embrace a carbon tax rather than a VAT.

There's a lot wrong with this Greg Mankiw article on taxes. Most of the really egregious bits are summed up by Kevin Drum, but there are a few he doesn't mention.

It's important, first, to understand that Mankiw is comparing three worlds to each other. In one of them, there are no taxes. That world is there to dramatize the effect of taxation. In the second world, the Bush tax cuts for income above $250,000 expire. And in the third, they don't.

The first world is worthless. A world with no taxes is a world in which we're all British, or Mexican, and thus paying taxes to someone else. It's not a world in which economics professors at prestigious universities are paid thousands of dollars to write confusing op-eds, and that money is then invested in corporations at 8 percent interest over 30 years. So let's just set that world aside.

In the two worlds that actually matter, the tax cuts are neither here nor there. Instead, Mankiw's wealth and his children's inheritance are mainly affected by two other factors: The first is how much money Mankiw makes investing his money, and the second is the size of his estate.

Mankiw is assuming 8 percent annual growth over 30 years. That's pretty good, and it allows him to turn his $1,000 into $10,000, at least before factoring in taxes. Here's the thing, though: That's the sort of return you could've gotten in the 1990s, under Bill Clinton's fiscal management. From 1993 to 2001, the inflation-adjusted, annualized return from the S&P; 500 was 10.89 percent. But once the Bush team -- Mankiw included -- came into office, that plummeted. From 2001 to 2009, the return was -2.41 percent. You'd much rather have the Clinton economy than the Bush tax cuts.

Then there's the estate tax. Mankiw is comparing a world with no estate tax to a world with an estate tax. But as of 2009, the first $3.5 million of an estate were exempt from taxation. Before that, it was $2 million. If his estate is below that, the estate tax won't affect him.

And if it's above? Economists measure two separate impacts from taxes. The first, the one most people know about, is that taxes make you work less because they lower the reward. The second, however, is that they make you work more because you need to work more in order to make enough money to live the way you want. When money comes easy, it doesn't encourage you to work.

If Mankiw is passing millions of dollars in tax-free money on to his kids, he's pushing an extreme version of that problem onto them: They'll have very little incentive to work, and much more incentive to paint, or travel Europe. Mankiw's incentive to do more, in this case, is coming at the cost of his children's incentive to do more. From society's perspective, it's not an obviously good deal.

And then there's the factor Mankiw doesn't consider at all: The deficit. Mankiw and his boss passed the tax cuts and didn't pay for them. They passed Medicare Part D and didn't pay for it. So now that money needs to be made up somehow. There are economic costs to raising taxes on the rich. But there are also economic costs to cutting financial aid for the poor, or delaying needed investments in infrastructure. More, I'd bet, than reducing Mankiw's incentive to write opinion articles.

Speaking of infrastructure, this time-lapse video of a building being demolished and reconstructed over three years is very cool:

3 Years At The Same Place (english version) from Ramon on Vimeo.

We called Senator Coburn's Washington office to find out his annual operating budget. His assistant revealed that Coburn's office has an estimated annual budget of $3 million, and that none of that recurrent funding has led to a cure for cancer.

Context here.

The Council of Economic Advisers has a report (pdf) out today making the case for more infrastructure investment. Most of the arguments will be familiar to folks who read last week's column on the subject, but the CEA presses one button that I wish I'd had the space to emphasize more: Jobs.

Lots of stimulus programs can create jobs. But infrastructure investment creates the right jobs, for the right people, doing the right things -- and at the right time. Or, to say it more clearly, infrastructure investment creates middle-class jobs for workers in a sector with high unemployment and it puts them to work doing something that we actually need done at a moment when doing it is cheaper than it ever will be again.

Remember that the Great Recession was driven by a collapse in real estate -- which meant a collapse in the construction industry. About 21 percent of the eight million jobs lost between December 2007 and December 2009 were in the construction industry. Unemployment in the sector is still at about 17 percent.

Repairing the nation's infrastructure is a lot more like building a house than writing a book. As such, the people it employs are, well, people who build things, and folks from related industries. The CEA predicts that the unemployment rate among those who would get work from infrastructure spending is currently 15 percent -- so you're drawing workers from the really high-unemployment groups, which is both good for those workers and good for the workers left in those groups, as now there's less competition for the few private-sector jobs that are available to them.

And then there are all the other arguments you've heard me make. Raw materials are cheap. Labor -- due to the high unemployment rate -- is cheap. Borrowing money is cheaper than at any time since the 1950s. And this is one sector where the normal deficit objections simply don't apply. "You run a deficit both when you borrow money and when you defer maintenance that needs to be done," Larry Summers told me. "Either way, you're imposing a cost on future generations." Not spending a dollar on infrastructure repairs today means we'll have to spend it tomorrow -- and by that time, it will cost more than a dollar. More so than anything else I can think of in the economy, infrastructure investment is win-win-win-win, and I'm not certain I've tacked enough "wins" on there.

You may not know the term "hysteresis." It's the "lagging of an effect behind its cause," and it's an ugly word that sounds like a foot fungus. It's also an ugly thing to have happen to your economy. And it may be what's happening to ours.

We understand that our economy is growing too slowly and that our labor market is taking too long to recover. We lost 95,000 jobs in September, and though the Obama administration tried Friday to focus attention on the 64,000 jobs the private sector created -- it was the ninth straight month of private-sector gains -- that's still well below the 100,000 jobs we need to add just to keep up with population growth. What gets less attention is the way that slow job growth begets slow job growth. What gets less attention, in other words, is hysteresis.

Adam Posen is a member of the Bank of England's Monetary Policy Committee, an adviser to the Congressional Budget Office, a senior economist at the Peterson Institute for International Economics and a leading expert on Japan's lost decade. He doesn't think we're taking the threat of an extended period of crummy growth nearly seriously enough.

When people worry about what comes next for the economy, he said in a speech to the Bank of England, they worry about a double-dip recession or a temporary period of deflation. Those, he explained, are not close to how bad things can get. "The risks that I believe we face now are the far more serious ones of sustained low growth turning into a self-fulfilling prophecy," Posen said, "and/or inducing a political reaction that could undermine our long-run stability and prosperity."

To see what he means, consider a Michigan construction worker laid off in early 2008. He didn't lose his job because he was bad at it but because his firm lost access to credit. He hasn't been able to find another job, because no one is hiring in his area, and he can't sell his house, because it's now worth less than what he owes on his mortgage.

Cap-and-trade has been dead for months, but that didn't stop West Virginia governor (and Senate candidate) Joe Manchin from shooting it -- yes, with a gun -- in his latest ad:

In case you were wondering, Manchin is the Democrat in the race.

Donald Marron -- as summarized by Pete Davis -- has some ideas:

1. Increase economic growth. Each percentage point of addition growth would add approximately $2.5 trillion to federal revenues over the next decade. That's real growth. A point of additional inflation raises revenues by a similar amount, but federal spending would rise about $3.0 trillion, so that doesn't work. Americans may work longer. We could allow more immigration, particularly of better educated immigrants, because they tend to pay more taxes than they consume benefits.

2. Cut tax expenditures. Many spending programs masquerade as tax incentives, often with perverse effects. For example, the home mortgage deduction rewards high income taxpayers, who would own a home anyway, for taking on more debt. Better to convert it to a credit so those on the cusp of owning a home would get more help.

There was some confusion over this, so just for the record, Wonkbook takes federal holidays off. Blogging will also be a bit slow today, or at least end earlier than usual.

For months now, Sen. Richard Shelby has been blocking the nomination of economist Peter Diamond to join the board of the Federal Reserve. "I do not believe he’s ready to be a member of the Federal Reserve Board," Shelby said, "I do not believe that the current environment of uncertainty would benefit from monetary policy decisions made by board members who are learning on the job.”

Today, Diamond won the Nobel Prize in economics. Of course, Shelby never said he wasn't a "skilled economist." He said he didn't know monetary economics. But that's foolish: Before serving on the Federal Reserve Board, Elizabeth Duke worked at a bank. Kevin Warsh worked for George W. Bush. Sarah Bloom Raskin was a financial regulator in Maryland. Ben Bernanke was an economist, and prior to that, one of Diamond's students. They all learned on the job.

And there's really no other choice. You can't serve on the Federal Reserve Board before you serve on the Federal Reserve Board. Shelby's argument against Diamond is cover for his actual objections against Diamond. One of those objections is simple partisan politics. But another, I've heard, is odder: Shelby hates behavioral economics.

This White House, as has been endlessly pointed out, is big on behavioral economics. See Peter Orszag, Jeff Liebman and Cass Sunstein for more on that. But the administration's embrace of the discipline has provoked a response that the White House never anticipated. Republicans have grown suspicious of behavioral economics. And Diamond, it turns out, has done a fair amount of work in the field (for instance, here). Insofar as Shelby's got an actual objection to Diamond, that's it, and one of the things he wants is another hearing focusing on Diamond's behavioral work.

Ah well. For those actually interested in Diamond's work, here's a post from Tyler Cowen on Diamond's academic papers and influence. Diamond has published in many areas, but two particular points of expertise are labor markets and entitlement programs, both of which the Federal Reserve will need considerable knowledge of over the next few years. Without Diamond -- or someone like him -- on the Board, it's no exaggeration to say they'll be learning on the job.

Recap: How the anti-stimulus destroyed the jobs report; "the biggest fraud in the history of the capital markets"; and health-care reform notches a win in court.

Elsewhere:

1) Who are the winners and losers from the foreclosure crisis?

2) Jonathan Bernstein argues that John Boehner would be a far more effective speaker of the House than New Gingrich was.

3) "The harshest and most telling critique of Gen. James Jones' tenure as national security adviser is that his absence will barely be noticed."

4) The prison-to-poverty cycle.

5) I'll be talking jobs with Keith Olbermann at the top of the show.

Recipe of the day: Yam, zucchini, and chickpea salad.

Most blogs that have a partial RSS feed don't stay in my RSS folder. Paul Krugman's is the exception, for reasons that this afternoon's almost dadaist offerings illustrate:

I wanted to write a long post on the Michigan judge who, in the first ruling on the subject, declared health-care reform -- and the individual mandate -- comfortably constitutional. Then the day got busy and plenty of other people wrote the post I was going to write. So head over to Andrew Sullivan's place for a round-up of links and commentary.

I'll only add that the arguments being tossed around by the two sides are essentially meaningless. There's no "right" argument here. No one doubts that health-care reform would be constitutional if Antonin Scalia decided to pursue his passion for beekeeping and allowed President Obama to appoint his replacement. The only reason there's any question about the law's constitutionality is that conservatives appointed five of the nine sitting justices, and conservatives have organized against the constitutionality of a proposal they once considered not just constitutional, but desirable as a matter of public policy.

And so it goes. Politics is politics, and the Supreme Court is, at this point, deeply and unquestionably political. I continue to think it unlikely that they will want the sort of direct confrontation with the political system, and with the Democratic Party, that overturning health-care reform would entail. But only time will tell.

Amid the wave of Republican nostalgia for Bill Clinton's moderate instincts, it's worth reminding people that Barack Obama's health-care plan was the moderate Republican plan that emerged as a counter-proposal to Clinton's big-government vision.

Paul Krugman says I'm wrong to suggest that Europe's debt crisis interrupted the recovery:

I don’t know where Ezra got that, but it’s just not right. It’s not as if we had a solid recovery, then Greece came along. We never had the basics for self-sustaining recovery in place: aside from the stimulus and inventory bounce, demand remained weak. And financial jitters from the eurozone crisis had nothing to do with the US slowdown; growth is flagging because both the stimulus and inventory effects are fading.

And this isn’t after-the-fact rationalization; like many others, I saw this coming.

I guess what bothers me about Ezra’s remarks here is that they perpetuate the all-too-common tendency to frame everything in terms of financial market confidence. That is not the issue right now.

I'm not sure Krugman and I are as far apart as he thinks. Financial market confidence is certainly not the issue. Business confidence is. They've got a lot of money and a lot of hiring capacity, and they're not putting the two together. The reason, as Krugman says, is largely the absence of demand. So up till here, we're in agreement.

But a lot of the economists, business types and policymakers I've talked to have pinned the European debt crisis as a moment when whatever confidence various players had in the recovery collapsed. It was a whole new world moment: We hadn't just gone through one horrible, unlikely event and now we were recovering, and people should plan for a slow return to normal. The debt crisis was emphasized that there are a lot of risks out there and the world economy is vulnerable to them. The danger for businesses looking to invest wasn't just that demand could come back slowly but that everything could totally fall apart.

My guess is Krugman would dismiss that as rationalization. If government had responded to the crisis correctly and the economy was gaining more jobs and people were buying more things, businesses would be investing to meet the demand. And I agree with that. But in the absence of the correct government response, there's certainly a range of possible ways the private sector could've reacted, and I think it's plausible that their extreme caution is partly a response to seeing the world economy as vulnerable to all sorts of unpredictable shocks, which is leading them to wait for much more solid evidence of recovery than might otherwise be the case.

On the other hand, Krugman has a Nobel, and I, well, don't.