Category: Equitablog

Lots of people are going to be saying lots of things in and around the Federal Reserve Bank of Kansas City’s Annual Jackson Hole Conference this weekend. To help me (and you) keep your thoughts from being buffeted by the noise and drifting off into various forms of macroeconomic idiocy, here is an updated version of a graph I have found useful since 2009 in keeping my thoughts clear, coherent, and (I hope) correct.

It plots four major components of real aggregate demand: exports, business investment in equipment and software, Government purchases, and residential construction. All are measured as shares of potential GDP. And all are measured as percentage-point-of-potential deviations from the values they attained at the last business cycle peak. And it teaches nine lessons.

Here it is:

1. The claim that US employment is low and wages are stagnant because US businesses and workers are uncompetitive in world markets flies in the face of the fact that the export share a potential GDP is significantly higher than of the last business cycle peak (and, moreover, significantly higher than it has ever been).

2. The claim that US employment is low and wages are stagnant because US businesses fear “uncertainty” of any kind–let along “uncertainty” produced by ObamaCare–flies in the face of a relatively-healthy pace of real investment in equipment and software (not to mention historically high stock-price valuations).

3. The claim that Obama administration housing policy has been enough to restore normal functioning to housing finance fails. By the business-cycle peak the housing boom had already cooled off enough to restore housing construction to its normal share of GDP. During the housing bubble, for six years America spent an average of 0.75% of GDP overinvesting in housing relative to its historical trend–a total of +4.5%-point-years of housing overinvestment. Since the peak, America has underinvested in housing relative to its historical trend by 2.0% of GDP times 7 years–a total of 16.0%-point-years of GDP, or $2.6 trillion at today’s values. America is now extraordinarily under housed relative to its long-run growth trend. Why doesn’t pent-up demand cause a housing recovery as all the people who are living in their sisters’ basements move out? Because housing finance continues to be broken.

4. And in 2013 the austerity shortfall in government purchases crossed residential construction as the major contributor to slack demand for the products of America’s workers are businesses. The claim is that reducing the size of government spurs growth in the private economy by crowding-in the private sector. But how does the private sector get crowded in? When government shrinks, interest rates are supposed to fall, and interest-sensitive and future tax-sensitive spending by businesses on investment and by construction companies on housing and other buildings are supposed to rise. But since 2008 interest rates have been unable to fall: there is no channel by which the crowding-in can have taken place.

5. Add to the netted-out total shortfall of these four components of demand the shortfall in consumption spending relative to trend caused primarily by reduced incomes relative to trend and secondarily by the burden of debt on those households still excessively leveraged, and you have a complete explanation of why the U.S. economy is depressed.

6. You also have a strong argument that the Federal Reserve would have a very difficult time rebalancing demand: that we need fiscal policy to boost government purchases and housing policy to fix mortgage finance to restore the economy to anything like health.

7. Moreover, you also have a strong argument that it was the financial crisis and not the collapse of the housing bubble that was the lead violin in this catastrophe. Construction reached its housing-bubble peak in the third quarter of 2005. From then until the third quarter of 2008, through the business cycle peak and out the other side, the market economy adjusted as smoothly to the recognition of a sectoral disequilibrium as the most optimistic of macroeconomists could have hoped: interest rates fell as demand for loans to finance construction eased off, and exports and business investment took up the slack resources released by the shrinking construction sector. The NBER’s Business-Cycle Dating Committee did not conclude that the U.S. economy was in a full-blown recession until more than halfway through the fourth quarter of 2008.

8. The graph points out the extraordinary inadequacy of the Obama administration’s Recovery Act to the magnitude of the problem created by the late-2008 shocks to demand of 4% of potential GDP or so. $800 billion of headline “stimulus” included $300 billion of ineffective tax preferences, and was at least half offset by austerity starting in early 2009 at the state and local level. CEA head Christina Romer’s estimate at the end of 2008 that a $1.8 trillion three-year stimulus was prudent dwarfs the $250 billion of fiscal stimulus actually provided to the economy. Better than nothing–much better than nothing–but much less than was needed.

9. And, of course: given that the rest of the government have failed in their jobs (1) to use government purchases to fill in holes in aggregate demand when necessary, and (2) to provide the proper structure of finance for housing so that builders and Americans who ought to be able to get credit can get credit, it is no time for the Federal Reserve to be tapering its asset purchases, let along actually to be thinking about selling assets to raise interest rates. It is especially no such time given the total absence of any evidence of any present or future upward deanchoring of inflation expectations.

That is all. It should be enough.

I used to think (and say) that there was one clear place where low hanging fruit in healthcare cost control could be obtained: we had tried Medicare Advantage–putting Medicare patients into HMOs–and it turned out that they cost the federal government more money when we did that, and the patients were less satisfied and did worse. Medicare HMOs thus looked like a bad bet for the health care system of the future, and one that we should not make.

But now comes Austin Frakt, who convinces me that it is clearly time to change my mind: Medicare Advantage–Medicare HMOs–are, it turns out, looking good enough that we should let our bet on it ride for a while…

Austin Frakt: The quality of Medicare Advantage: “Medicare Advantage plans…

…underperform traditional Medicare in one respect: They cost 6 percent more. But they… offer higher quality… according to research summarized recently by… Joseph Newhouse and Thomas McGuire…. In the early 2000s,Medicare Advantage plans also cost taxpayers more than traditional Medicare… [and] provided poorer quality…. MedPAC found that relatively healthier beneficiaries were switching into Medicare Advantage and relatively sicker ones were switching out. This suggested that Medicare Advantage didn’t provide the type of coverage or the access to services that unhealthier beneficiaries wanted or needed. Since the point of insurance is to pay for needed care when one is sick, it was tempting to condemn the program as having poor quality and failing to fulfill a basic requirement of coverage.

But things have changed…. [By 2007] sicker beneficiaries were not switching out of Medicare Advantage and healthier ones were not switching in… [and] Medicare Advantage is superior… on a variety of quality measures… more likely to receive mammography screenings… blood sugar testing and retinal exams… cholesterol testing… flu and pneumonia vaccinations… about as likely to rate their personal doctor and specialists highly….

Is Medicare Advantage worth its extra cost? A decade ago… the answer was easy: No. Today one must think harder…. Newhouse and… McGuire hedge but lean favorably toward Medicare Advantage…

It would be wonderful and extraordinarily good if the HMO model could be made to work for the Medicare population. Certainly the fee-for-service model in which the federal government pays what is “typical and customary” for non-Medicare patients or in which the federal government tries to effectively run and manage its own Taylorized classification of all possible medical procedures does not seem to provide the right balance between keeping costs where they should be and keeping patient access and treatment where they should be also. ‘ Plus the fee-for-service model shows no signs of ever being able to provide the proper incentives to manage chronic conditions that are an increasing part of our healthcare costs.

What I do not understand is why it was so clear that Medicare advantage was not working a decade ago and yet is working now. What has changed? And why has it changed? And how can we keep it from changing back?

It is at moments like now that I wish I were a real healthcare economist rather than simply somebody who plays one on the Internet…

Must- and Shall-Reads:

1. Graeme Wearden: Bank of England split 7-2 over interest rates: “The Institute of Directors, which represents Britain’s bosses, is delighted to see two hawks emerge at the Bank of England. The IoD suggested that the seven MPC members who voted for no-change are wrong to focus their attention on weak wage growth (!), and should crack on with raising rates–ideally before Christmas…. The British Chambers of Commerce believes the UK economy isn’t strong enough to support higher interest rates…. Professor Danny Blanchflower, a former (dovish) member of the MPC, reckons the two hawks have blundered…. Jonathan Pryor, head of FX dealing at Investec Corporate and Institutional Treasury, says the 7-2 split is a surprise, given how dovish the Bank’s Inflation Report was last week: ‘This vote is likely to leave UK businesses scratching their heads about the direction of sterling and the best way to guard against potential volatility over the coming weeks and months.'”

2. Stefan Wagstyl: Europe pessimistic on income equality as Americans cling to dream: “Most Europeans think their societies are far less equal than they are, while Americans are unusual in believing that their country is somewhat more equal than it really is…. Judith Niehues is due to present her findings this week at Germany’s Lindau economic conference…. People in Europe underestimate the proportion of middle-income earners and overestimate the proportion of the poor…. Only the US has a more unequal income distribution than its citizens imagined…”

3. Rajiv Sethi: The Agent-Based Method: “It’s nice to see some attention being paid to agent-based… models, but Chris House has managed to misrepresent the methodology so completely that his post is likely to do more harm than good…. ‘Probably the most important distinguishing feature is that, in an ABM, the interactions are governed by rules of behavior that the modeler simply encodes directly into the system individuals.’… [House is,] to say the least… grossly misleading…. We could start from the premise that our high-frequency traders want to maximize profits…. Agents can be as sophisticated and forward-looking in their pursuit of self-interest in an ABM as you care to make them…. What you cannot have in an ABM is the assumption that, from the outset, individual plans are mutually consistent. That is, you cannot simply assume that the economy is tracing out an equilibrium path. The agent-based approach is at heart a model of disequilibrium dynamics, in which the mutual consistency of plans, if it arises at all, has to do so endogenously through a clearly specified adjustment process…. In failing to understand this, House makes claims that are close to being the opposite of the truth…”

4. Jonathan Chait: The Republican Party’s Geriatric Trap: “Frum’s essay actually understates the party’s failure…. The GOP’s old-person problem is on inadvertent display in a Wall Street Journal op-ed by Andrew Biggs…. Biggs is professionally committed to cutting Social Security… [and] finds himself dancing awkwardly around the reality that Obama is the one who has proposed to do the thing he advocates, and Republicans are the ones who stopped him. His excruciating contortions highlight the impossible predicament faced by Republican entitlement hawks trying to defend the party line…. At no point anywhere in his op-ed does Biggs mention Congressional Republicans, not to mention their repeated refusal to accept Obama’s deal that would have cut Social Security spending in return for closing tax deductions for the affluent…. The Republican Party constructed a geriatric trap for itself. Just how it will escape is hard to see. It is a small-government party whose base is wedded to the programs that constitute a large and growing share of government…. Frum, interestingly, identifies another side effect of the geriatric trap: It infuses the party and its public spokesmen with mournful sensibility…”

5. Cullen Roche: More Thoughts on the CAPE and Valulations: “I’ve made my opinion on valuations and the use of CAPE pretty clear–these sorts of metrics don’t tell us much…. If investors are willing to pay more for stocks today than they were in 1950 then maybe a CAPE of 15 has no bearing on what a CAPE of 25 means [today]…. I don’t know what the “value” of stocks are today. And I don’t think anyone else really does. And I think trying to put a value on them through these sorts of metrics is just a big waste of time that leads some people to believe they’ve been able to pinpoint… ‘value’… when… they’ve simply tried to calculate, with  precision, something that is very imprecise…”

6. Adam Posen: Keep rates low until the hidden jobless return to work “[In] any decision by the Federal Open Market Committee to hold off raising interest rates… two… judgments are involved. The first concerns the relative costs of erring in one direction or another…. Under conditions of persistent low inflation and slow growth… [inflation] expectations are well-anchored… [while] long-term unemployment… does lasting damage…. [Will] keeping interest rates low will do some other form of harm[?]… Financial imbalances can be tackled directly using macroprudential tools…. By contrast, increasing interest rates has little effect on asset price booms…. This is the conclusion that ought to emerge from Jackson Hole. The Fed should hold off raising rates, for the sake of fuller employment.”

7. Esther Inglis-Arkell: Ancient Roman Tech Cache Shows How Horror Movies Would Really Play Out: “In 1961… Professor Ian A. Richmond of Oxford University happened on a trove that no Briton was meant to discover hidden by… the most powerful and technologically innovative empire the world has ever seen. Forced into retreat by the Kelts, a Roman legion had hidden this incalculably valuable technology. They’d gone to great lengths, picking it out of the remains of their destroyed fort, and burying it deep underground, where no one could ever find it. That is, until one archaeology professor, searching for knowledge, uncovered a weapon so powerful it might have changed the face of the Earth…. The artifacts were nails. They were steel nails, and thus incredibly valuable and dangerous. Steel is an alloy of iron and carbon. Getting one’s hands on a great deal of iron is hard enough. Processing it into a material with just the right amount of carbon–over 4% will render the alloy brittle and useless–is another long learning process…. The eventual success of the project didn’t just lead to stronger weapons. It led to the ability to make superfortresses–like the one that held the 5,000 men in the legion…. The fort contained seven tons of nails, which is quite a cache of versatile tech to be left in the hands of the enemy. The legion picked through the ashes of the fortress to find their tech, and buried it. Until the archaeologists discovered it…”

And:

• Richard Mayhew: Reading the Manhattan Institute so you don’t have to: Part 1 | Part 2 | Part 3
• Philipp Hildebrand: There will be no robust growth without properly capitalised banks
• Asger Lau Andersen et al.: Household debt and consumption during the financial crisis: Evidence from Danish micro data
• Laura Tyson: Bridges to Somewhere
• Ken Liu
• Nick Bunker: Deep data matters when assessing global income inequality
• Jay Rosen: When quoting both sides and leaving it there is the riskier call
• Dan Frommer: Google’s growth since its IPO is simply amazing

Should Be Aware of:

1. Menzie Chinn: Implications of Procyclical Fiscal Policy: Wisconsin Edition: “Recent actions have pushed the balances in the 2015-17 biennium into deficit. But even the news for the 2013-15 biennium has turned dark. By June 2014, it was apparent that there were both tax revenue shortfalls and outlays in excess of planned…. The shortfall in revenues is not surprising. The administration has implemented a contractionary fiscal policy…. My predictions of what would occur have been borne out in actual developments in aggregate economic activity. Wisconsin has experienced substantially slower growth than it otherwise would have…. Note that a regional comparator, Minnesota, that embarked upon a different fiscal path has experienced substantially faster growth, as documented above. To sum up: A procyclical fiscal policy has been undertaken in the past three and a half years, with predictably counterproductive results. The depressed level of economic activity has resulted in a revenue shortfall.”

2. Duncan Black: (G)Libertarianism: “There are people such as Radley Balko who take this stuff on! Good for them! Liberals would like libertarians more if they spent more time on the militarization of the police and the approved abuse of (especially) minority populations rather than, say, seatbelt laws and top marginal tax rates. Because top marginal tax rates aren’t actually a libertarian issue, just a conservative one.”

3. D.K.: Armed police: Trigger Happy: “Civilians—innocent or guilty—are far more likely to be shot by police in America than in any other rich country. In 2012, according to data compiled by the FBI, 410 Americans were “justifiably” killed by police—409 with guns. That figure may well be an underestimate…. Last year, in total, British police officers actually fired their weapons three times. The number of people fatally shot was zero. In 2012 the figure was just one…”

4. Ezra Klein: Why Obama won’t give the Ferguson speech his supporters want: “The White House no longer believes Obama can bridge divides… [but] that he widens them…. Nor is Obama able to bridge the red-blue divide anymore. Presidents are polarizing figures, and Obama is more of a polarizing president than most…. President Obama’s speeches polarize in a way candidate Obama’s didn’t…. When Obama gave the first Race Speech he was a unifying figure trying to win the Democratic nomination. Today he’s a divisive figure who needs to govern the whole country…. There probably won’t be another Race Speech because the White House doesn’t believe there can be another Race Speech. For Obama, the cost of becoming president was sacrificing the unique gift that made him president.”

5. Brianne Gorod: There They Go Again: “Opponents of the Affordable Care Act apparently will say anything…. In a brief that’s as thin on credible legal analysis as their underlying lawsuit, the ACA opponents in Halbig have said the full D.C. Circuit shouldn’t rehear the case. Instead, they argue that the Supreme Court ‘must’ decide… because only the Supreme Court can ‘giv[e] a definitive answer’…. There’s just one problem.  As any lawyer knows, the vast majority of lawsuits in this country are ‘definitive[ly]’ decided without Supreme Court review…. The D.C. Circuit decides to rehear Halbig en banc… vacate[s the] panel decision… eliminate[s] the split with the Fourth Circuit… [and] the full D.C. Circuit might well agree with the Fourth Circuit…. Two judges on the D.C. Circuit may have been willing to buy their arguments, but if the full D.C. Circuit decides to rehear Halbig en banc (as it should), it’s very unlikely the full D.C. Circuit will.”

Graeme Wearden: Bank of England split 7-2 over interest rates: “The Institute of Directors, which represents Britain’s bosses…

…is delighted to see two hawks emerge at the Bank of England. The IoD suggested that the seven MPC members who voted for no-change are wrong to focus their attention on weak wage growth (!), and should crack on with raising rates–ideally before Christmas…. The British Chambers of Commerce believes the UK economy isn’t strong enough to support higher interest rates…. Professor Danny Blanchflower, a former (dovish) member of the MPC, reckons the two hawks have blundered…. Jonathan Pryor, head of FX dealing at Investec Corporate and Institutional Treasury, says the 7-2 split is a surprise, given how dovish the Bank’s Inflation Report was last week: ‘This vote is likely to leave UK businesses scratching their heads about the direction of sterling and the best way to guard against potential volatility over the coming weeks and months.’

This is astonishing to me–both the two MPC members who see inflation and bond market vigilantes on the horizon when I see none, and a group whose members are short the future debt factor and long the future capacity utilization factor calling for policies that raise the cost of taking on their debt and lower the sales that their corporations will make. Doesn’t anybody know, not how to play this game, but what this game is? Either on the macroeconomic-forecasting or on the political-economy interest-group side

Rajiv Sethi: The Agent-Based Method: “It’s nice to see some attention being paid to agent-based… models…

…but Chris House has managed to misrepresent the methodology so completely that his post is likely to do more harm than good…. ‘Probably the most important distinguishing feature is that, in an ABM, the interactions are governed by rules of behavior that the modeler simply encodes directly into the system individuals.’… [House is,] to say the least… grossly misleading…. Agents can be as sophisticated and forward-looking in their pursuit of self-interest in an ABM as you care to make them…. What you cannot have in an ABM is the assumption that, from the outset, individual plans are mutually consistent. That is, you cannot simply assume that the economy is tracing out an equilibrium path. The agent-based approach is at heart a model of disequilibrium dynamics, in which the mutual consistency of plans, if it arises at all, has to do so endogenously through a clearly specified adjustment process…. In failing to understand this, House makes claims that are close to being the opposite of the truth…

Menzie Chinn: Implications of Procyclical Fiscal Policy: Wisconsin Edition: “Recent actions have pushed the balances…

…in the 2015-17 biennium into deficit. But even the news for the 2013-15 biennium has turned dark. By June 2014, it was apparent that there were both tax revenue shortfalls and outlays in excess of planned…. The shortfall in revenues is not surprising. The administration has implemented a contractionary fiscal policy…. My predictions of what would occur have been borne out in actual developments in aggregate economic activity. Wisconsin has experienced substantially slower growth than it otherwise would have…. Note that a regional comparator, Minnesota, that embarked upon a different fiscal path has experienced substantially faster growth, as documented above. To sum up: A procyclical fiscal policy has been undertaken in the past three and a half years, with predictably counterproductive results. The depressed level of economic activity has resulted in a revenue shortfall.

Stefan Wagstyl: Europe pessimistic on income equality as Americans cling to dream: “Most Europeans think their societies are far less equal…

…than they are, while Americans are unusual in believing that their country is somewhat more equal than it really is…. Judith Niehues is due to present her findings this week at Germany’s Lindau economic conference…. People in Europe underestimate the proportion of middle-income earners and overestimate the proportion of the poor…. Only the US has a more unequal income distribution than its citizens imagined…

Must- and Shall-Reads:

1. Dean Baker: Stock Returns: Between Shiller and DeLong: “Stocks still look like a pretty good deal, since even if there is some decline in the profit share of income and also some reversion toward long-term trends in price to earnings ratios (my bet is that the ratio stays above 20), then the real returns are still likely to be well above 3.0 percent. In short, I can’t see the basis for Shiller’s big fears. On the other hand, the high price to earnings ratios in the stock market means returns will almost certainly be lower in the next decade or so than their long-term average. (There actually is a very good paper on this topic, see Baker, Delong, and Krugman, 2005.)”

2. Humans Need Not Apply:

3. Heidi Przybyla: Obamacare Losing Punch as Campaign Weapon in Ad Battles: “Republicans seeking to unseat the U.S. Senate incumbent in North Carolina have cut in half the portion of their top issue ads citing Obamacare, a sign that the party’s favorite attack against Democrats is losing its punch. The shift–also… in… Arkansas and Louisiana–shows Republicans are easing off their strategy of criticizing Democrats over the Affordable Care Act now that many Americans are benefiting from the law and the measure is unlikely to be repealed. ‘The Republican Party is realizing you can’t really hang your hat on it’, said Andrew Taylor…. Republican pollster Whit Ayres, who has advised U.S. Senate candidates including Marco Rubio…. ‘Obamacare will not be the most important issue’, and Republicans will have to ‘target people very directly’… said Ayres, who co-wrote a memo this month for outside spending groups such as Crossroads GPS and the American Action Network…”

4. Lawrence Summers (1982): The Nonadjustment of Nominal Interest Rates: A Study of the Fisher Effect: “There is no evidence that interest rates respond to inflation in the way that classical or Keynesian theories suggest, For the period 1860-1940, it does not appear that inflationary expectations had any significant impact on rates of inflation in the short or long run. During the post-war period interest rates do appear to be affected by inflation. However, the effect is much smaller than any theory which recognizes tax effects would predict. Furthermore, all the power in the inflation interest rate relationship comes from the 1965-1971 period…. The relationship between inflation and interest rates remains weak even at low frequencies…. Cyclical factors or errors in measuring inflation expectations cannot account for the failure of the results to bear out Fisher’s theoretical prediction. Rather, comparison of real interest rates and stock market yields suggests that Fisher was correct in pointing to money illusion as the cause of the imperfect adjustment of interest rates to expected inflation.”

5. Andrew Brown: The Great Chinese Exodus: “Recently, Ms. Sun flew to San Francisco to shop for a school for her daughter, browse for property and handle the paperwork for permanent U.S. residency. She insists that she’s not leaving China forever—-a sentiment expressed by many on their way out who see a foreign passport as an insurance policy in case things go badly wrong in China. ‘I’m just giving my family another option’, she says. A college professor, who insisted on anonymity… takes a darker view of China’s prospects as he prepares to emigrate to the U.S., joining his two children…. In China, he pronounces, ‘Once you get rich, they arrest you’…. His real concern is that to get ahead, he’s had to make compromises with his principles… and now he worries that it could all be snatched away. In China, a weak, corrupt legal system may sometimes work in favor of entrepreneurs while they’re clawing their way up, cutting corners along the way, but it is almost always a liability once they’ve made it…. China, he concludes, is still ‘a very backward country’…. Beijing takes an intense pastoral interest in the Chinese diaspora. It has some 48 million members—-about double the number of Indians living outside their country…. And the outflow has only just begun…. The Chinese government has no desire to slow the flow of students…. Not even Deng could have imagined the human torrent his ‘open door’ reforms would eventually unleash. Try 100 million—and counting.”

6. Roger Farmer: The Treasury and the Fed are at Loggerheads over QE: “How successful was operation twist at changing the maturity structure of Treasury securities held by the public? In Figure 4, I break down Treasuries held by the public as a fraction of total debt outstanding. This figure shows that although the Fed switched its holdings from yields of three months to two years to yields in the two to ten year range (Figure 3) this operation was swamped, after November of 2008, by Treasury operations that increased the supply of maturities in the two to ten year range (Figure 4). The end result was that the public ended up holding more of these two to ten year bonds in 2010 than before the recession hit. Could we have a little coordination here guys?”

And:

• Izabella Kaminska: Kinder Morgan, MLPs and the sell case
• File770: “The bloc vote for Vox Day’s Opera Vita Aeterna kept Ken Liu’s ‘The Litigation Master and the Monkey King’ off the ballot…”

Should Be Aware of:

1. Ben Adler: Joel Kotkin thinks you want to live in Houston. Here’s why you don’t: “There are people who have made a career out of being consistently wrong, and then there’s Joel Kotkin…. Kotkin has based his main thesis on not understanding basic economics…. If prices are high in a handful of elite, dense, coastal cities such as Boston, Washington, New York, San Francisco, and Portland, that’s because demand to live in them is high. If prices are low in the sprawling metropolitan regions of Houston, Dallas, Phoenix, or Atlanta, that’s because demand to live in them is relatively low. And yet, for the last decade, Kotkin, an urban studies professor at Chapman University in Orange, Calif., has been churning out op-eds in leading national newspapers such as The Wall Street Journal, arguing that suburban-style Sun Belt cities are the future and Americans want suburban sprawl precisely because prices are high in dense cities and low in sprawling Southern and Western regions. Yes, you read that correctly. Kotkin repeatedly claims that because population growth is greater in Sun Belt cities and their suburbs than in urban coastal cores, it shows that most Americans, especially middle-class families, prefer living in those places…”

2. Simon Maloy: The right’s “bombshell” deceit: Why the left’s defense of Perry reveals so much: “The Hack Gap is defined as the relative lack of left-leaning pundits and media types who will abandon principle in order to move the political ball forward. ‘Conservatives outscore us considerably in the number of bloggers/pundits/columnists/talking heads who are willing to cheerfully say whatever it takes to advance the party line, no matter how ridiculous it is’, Mother Jones’ Kevin Drum wrote of the Hack Gap back in 2012…. Consider the liberal reaction to the legal acrobatics underway in Texas and compare that to the conservative reaction to the D.C. Circuit Court panel’s ruling in… Halbig…. Up and down the line, from right-wing magazines to think tanks to Fox News to talk radio, all the organs of the conservative movement were praising the legal wisdom of the decision and obvious illegality of the Affordable Care Act’s subsidies. Even as reporters began digging through the decision and finding obvious errors of logic and instances of the Halbig plaintiffs contradicting themselves on their own argument, conservatives kept the faith. It got to be that conservative pundits were rewriting the political history of the ACA and arguing that everyone involved in writing and analyzing and covering the bill simply failed to notice this critically important question of intent that they now hope will undermine the entire law. Some left-leaning writers have devoted a lot of time to explaining this phenomenon, like Brian Beutler and Jonathan Chait, who used a certain sitcom episode as a devastatingly effective Halbig analogy…. Conservatives fell in line to advance their political goals, and got busy tearing down everything they once believed in order to build a rickety support structure…. The difference in reaction is no less striking. The Hack Gap, for better or worse, is very real.”