Tag Archives: Derek Thompson

You Can’t Reinvent The Wheel, But You Can Reinvent The Scribe, Part II

Lee Bollinger at WSJ:

The idea of public funding for the press stirs deep unease in American culture. To many it seems inconsistent with our strong commitment, embodied in the First Amendment, to having a free press capable of speaking truth to power and to all of us. This press is a kind of public trust, a fourth branch of government. Can it be trusted when the state helps pay for it?

American journalism is not just the product of the free market, but of a hybrid system of private enterprise and public support. By the middle of the last century, daily newspapers were becoming natural monopolies in cities and communities across the country. Publishers and editors drew on the revenue to develop highly specialized expertise that enhanced coverage of economics, law, architecture, medicine, science and technology, foreign affairs and many other fields.

Meanwhile, the broadcast news industry was deliberately designed to have private owners operating within an elaborate system of public regulation, including requirements that stations cover public issues and expand the range of voices that could be heard. The Supreme Court unanimously upheld this system in the 1969 Red Lion decision as constitutional, even though it would have been entirely possible to limit government involvement simply to auctioning off the airwaves and letting the market dictate the news. In the 1960s, our network of public broadcasting was launched with direct public grants and a mission to produce high quality journalism free of government propaganda or censorship.

The institutions of the press we have inherited are the result of a mixed system of public and private cooperation. Trusting the market alone to provide all the news coverage we need would mean venturing into the unknown—a risky proposition with a vital public institution hanging in the balance.

Ironically, we already depend to some extent on publicly funded foreign news media for much of our international news—especially through broadcasts of the BBC and BBC World Service on PBS and NPR. Such news comes to us courtesy of British citizens who pay a TV license fee to support the BBC and taxes to support the World Service. The reliable public funding structure, as well as a set of professional norms that protect editorial freedom, has yielded a highly respected and globally powerful journalistic institution.

There are examples of other institutions in the U.S. where state support does not translate into official control. The most compelling are our public universities and our federal programs for dispensing billions of dollars annually for research. Those of us in public and private research universities care every bit as much about academic freedom as journalists care about a free press.

Yet—through a carefully designed system with peer review of grant-making, a strong culture of independence, and the protections afforded by the First Amendment—there have been strikingly few instances of government abuse. Indeed, the most problematic funding issues in academic research come from alliances with the corporate sector. This reinforces the point that all media systems, whether advertiser-based or governmental, come with potential editorial risks.

To take a very current example, we trust our great newspapers to collect millions of dollars in advertising from BP while reporting without fear or favor on the company’s environmental record only because of a professional culture that insulates revenue from news judgment.

Derek Thompson at The Atlantic:

Is it time for another bailout? Should the government save the news? Lee Bollinger argues yes, for at least two reasons.

First, we depend on publicly funded news, already. The BBC, PBS and NPR all receive federal funding. The artery from federal coffers isn’t always large or direct — NPR applies for competitive grants and gets about 2 percent of its funding from the federally supported organizations like the Corporation for Public Broadcasting and the National Endowment for the Arts — but it’s undeniably public funding. And yet, the BBC, PBS and NPR are consistently among the most trusted sources of news.

Second, as Bollinger points out, there are other publicly funded institutions we commonly accept as independent from federal control. “The most compelling are our public universities and our federal programs for dispensing billions of dollars annually for research,” he write. “Those of us in public and private research universities care every bit as much about academic freedom as journalists care about a free press.”

Bollinger’s broader point — serious news struggles to pay for itself — isn’t special to the recession. Newspapers rarely made bank on the kind of undercover investigative stories about City Hall, or Kabul. The money came from somewhere else. Somewhere else used to mean classifieds and lucrative leisure sections. But as James Fallows wrote in his cover story on Google and the news, “the Internet has been one giant system for stripping away such cross-subsidies.”

So there are a few ways to recoup the missing subsidy. For some companies, that will mean seeking rich benefactors (obvious example: Carlos Slim). For others, it will mean relying on foundations. For others, it might mean relying — partially, even indirectly — on government-funding. All of these additional sources of income theoretically compromise news-gathering, because the news is beholden to outside sources who might themselves become newsworthy. But some combination of outside support will probably become increasingly necessary as journalism continues to undergo wrenching change and unspectacular revenue growth. It doesn’t have to be a terrifying future. In fact, we’ve been living with it for decades.

Mark Tapscott at The Washington Examiner:

Bollinger thus makes common cause with the intentionally misnamed Free Press coalition led by the neo-Marxist McChesney, an Illinois university professor of communications who, presumably with a straight face, claims “aggressive, unqualified political dissent is alive and well” in the thug state formerly known as Venezuela.

Several of the Free Press coalition’s flawed assumptions are prominent in Bollinger’s argument, including the notion that America never had a pure free market in news. We can’t do that because “trusting the market alone to provide all the news coverage we need would mean venturing into the unknown – a risky proposition with a vital public institution hanging in the balance.”

Never mind that the Internet with no federal subsidies to preferred media outlets today provides more independent news gatherers and analyzers – they’re called “bloggers” – than ever worked in all the newsrooms combined in the old media’s glory days.

Or that the Internet is driving news delivery technology in new directions at warp speed, thus promising more independent checks on politicians and bureaucrats than Publius could ever have dreamed.

In place of this present and future reality, Bollinger wants to preserve and extend the “hybrid system of private enterprise and public support” he claims has always existed in America. So subsidized postal delivery of publications in Ben Franklin’s day is no different from federal bureaucrats collecting billions of tax dollars to hand out to favored media organizations, as advocated now by Free Press?

Not to worry, though, because we have the comforting example of heavily subsidized colleges and universities where, according to Bollinger, “those of us in public and private research universities care every bit as much about academic freedom as journalists care about a free press.”

Somehow I doubt Bollinger would understand that those of us fighting to preserve freedom of the press are anything but comforted by his example, publicly assisted schools being among the least free-thinking institutions in America, owing to their pervasive speech codes and other forms of censorship.

See, for example, this New York Sun story in 2007 on how Columbia, just one week after proclaiming itself a bastion of free speech for hosting a speech by Iran’s Mahmoud Ahmadinejad, insisted on exercising pre-publication censorship reviews of documentary filming shot on its grounds.

But then maybe we shouldn’t be surprised that Columbia University’s president sees no difference between a government-subsidized university system that perpetuates a suffocating academic orthodoxy and government-subsidized news media like that praised by an apologist for Hugo Chavez’s suppression of the Venezuelan media.

After all, his final argument is a warning that other countries are doing it, countries like still-communist China, with its state-run Xinhua News and Central China Television. Clearly, independent journalism is doomed if it must depend for its defense upon “friends” like Bollinger.

Roger Pilon at Cato:

The argument, in essence, is this. The communications revolution has decimated media budgets. Indeed, “the proliferation of communications outlets has fractured the base of advertising and readers,” leading to shrunken newsrooms, especially in foreign bureaus. Thus the FCC and FTC are now studying the idea of enhanced public funding for journalism. Not to worry, Bollinger assures us, since “we already have a hybrid system of private enterprise and public support” – to wit, public regulation of the broadcast news industry and the Corporation for Public Broadcasting. And the most compelling example of state support not translating into official control, he continues, can be found in our public and private research universities, which receive billions of government dollars annually with no apparent problem.

Really? Try getting your hands on some of those funds, or an appointment in one of those departments, if you have reservations about global warming. Or do we need any better example than the case of Elena Kagan, now before us. When the good dean took her principled stand against admitting military recruiters to the Harvard Law School, the larger university community reminded her of the government funds that were thus put in jeopardy, and she adjusted her position accordingly.

But here comes the kicker: Like those who imagine that there’d be no art without the National Endowment for the Arts, Bollinger tells us that “trusting the market alone to provide all the news coverage we need would mean venturing into the unknown—a risky proposition with a vital public institution hanging in the balance.” Was there no news before the invention of NPR, all things considered? And back on the academic analogy, he adds, “Indeed, the most problematic funding issues in academic research come from alliances with the corporate sector. This reinforces the point that all media systems, whether advertiser-based or governmental, come with potential editorial risks.” True, but government is categorically different than private businesses, of which there is no shortage. Yet those who fail to notice that difference, or discount it, are forever drawn to government because it is, as we say, so easy to get in bed with.

Stephen Spruiell at The Corner:

Bollinger anticipates that the public’s chief concern with his plan will be that a press that gets its paychecks from the government cannot effectively perform its function as democracy’s watchdog. That is not my concern. My concern is that journalists on the public payroll will become even more fervently dedicated to the idea of higher taxes and more spending. If you thought the press had a big-government bias before, wait until it is officially run by quasi-government employees.

Bollinger’s example of how a government-funded enterprise can carry on without its ties to the government compromising its mission is academia. I’d say that illustrates my concern perfectly. I do not think it is any coincidence that the academy has drifted further leftward as its reliance on public funding has grown.

Bollinger’s conception of “watchdog” is too narrow: I am sure the press would continue to try to expose corruption on the part of public officials, as it does now. But I am also sure that many journalists would, consciously or subconsciously, fall victim to the already common tendency to look a little more carefully for corruption on the part of those public officials who oppose missions for thegovernment that fall beyond the protection of basic liberties and the defense of the nation’s strategic interests — missions such as, say, subsidizing newspaper writers and TV reporters.

Jennifer Rubin at Commentary:

What if viewers and readers, um, don’t think they need what Big Government News is serving up? And how do we know what we “need”? Ah, Bollinger and his fellow Ivy Leaguers will tell us. Such is the state of liberal thinking and the mind of an Ivy League president. Yeah, I’m thinking the same thing: people spend money to send their kids to these places?

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How Low Will He Go? How Low Will He Go?

Dan Balz and Jon Cohen at WaPo:

Public confidence in President Obama has hit a new low, according to the latest Washington Post-ABC News poll. Four months before midterm elections that will define the second half of his term, nearly six in 10 voters say they lack faith in the president to make the right decisions for the country, and a clear majority once again disapproves of how he is dealing with the economy.

Regard for Obama is still higher than it is for members of Congress, but the gap has narrowed. About seven in 10 registered voters say they lack confidence in Democratic lawmakers and a similar proportion say so of Republican lawmakers.

Overall, more than a third of voters polled — 36 percent — say they have no confidence or only some confidence in the president, congressional Democrats and congressional Republicans. Among independents, this disillusionment is higher still. About two-thirds of all voters say they are dissatisfied with or angry about the way the federal government is working.

CBS News:

Economists have declared the economic recession over largely over, but most Americans don’t share their optimism, and they are increasingly blaming President Obama for their money woes.

Mr. Obama’s approval rating on the economy has tumbled five percentage points from last month, according to a new CBS News poll, with just 40 percent of those polled expressing full confidence in his actions.

More than half of those questioned (54 percent) said they disapproved of Mr. Obama’s handling of the economy. Last month, 45 percent approved. The drop in approval has been seen mostly among independents, just 35 percent of whom now say they approve.

Jennifer Rubin at Commentary:

In short, Obama has lost the confidence of the voters on the issues that matter most. (”Just 43 percent of all Americans now say they approve of the job Obama is doing on the economy, while 54 percent disapprove.”) They will take it out on those with a “D” next to their names in November.

DiA at The Economist:

Things look bad for the Democrats, but I’m not sure I agree with Jennifer Rubin’s oversimplified assessment that the poll “has nothing but bad, very bad, news for Obama.” Buried deep in the Post‘s report is the surprising news that Mr Obama’s overall job-approval rating stands at 50%. Granted, “those who strongly disapprove now significantly outnumber those who strongly approve”, according to the paper. But with the unemployment rate at 9.5%, I’d expect much worse. Mr Obama’s rating puts him in a similar position to Bill Clinton in 1994, and ahead of where Ronald Reagan was in 1982, when he too struggled with a severe recession. Mr Clinton’s Democrats lost both the House and the Senate, and Mr Reagan’s Republicans lost a bunch of seats in the House, but both went on to easily win re-election two years later. So, bad news for the president’s party, but not all bad for the president himself. The worse news for Mr Obama is that voters seem to be prioritising deficit reduction over further stimulus spending, which will make it hard for the president to do anything about that sticky unemployment rate.

John McCormack at The Weekly Standard:

One bright spot for President Obama in an otherwise dreary Washington Post/ABC News poll:

On the issues tested in the poll, Obama’s worst ratings come on his handling of the federal budget deficit, where 56 percent disapprove and 40 percent approve. He scores somewhat better on health-care reform (45 percent approve) and regulation of the financial industry (44 percent). His best marks come on his duties as commander in chief, with 55 percent approving.

Voters also disapproved of Obama’s job performance on the one other issue tested by the Post: 54 percent disapprove and 43 percent approve of how he’s handling the economy.

So Obama’s head was above water on just one of the five issues tested by the Post: his performance as commander in chief. Yet his overall approval rating is at 50 percent, which suggests that perhaps the president’s determination to prosecute the war in Afghanistan is propping up his overall job performance rating.

Jonathan Chait at TNR:

At the same time, the poll also shows that the public clearly favors the Democrats over the Republicans. The Post story about the poll leads with the fact that only 43% of the public has confidence in President Obama to make the right decisions for the country’s future. That’s low. But only 26% have confidence in Republicans in Congress to make the right decisions, which is far lower than Obama, and even lower than Congressional Democrats, in whom 32% have confidence. That’s not an anomaly. Asked which party will do a better job of handling the economy, 42% say the Democrats and 34% say the GOP.

So, in sum, there’s a crucial swing vote bloc that prefers the policies of the Democrats over the Republicans but plans to vote for the Republicans anyway.

Why would anybody do that? Delving into the psychology of voters is tricky. But clearly, it vindicates the sense that voters hold the governing party responsible for the state of the country, which mainly means the state of the economy. Voters in the middle are not going to compare the policies of the two parties. They’re just going to vote yay or nay on how things appear to be going. That makes more sense when you consider things from the perspective of voters who don’t follow politics very closely.

Tom Maguire:

A new WaPo/ABC News poll shows Obama is still taking on water as he continues his Titantic fail.  Two bright spots for Dems – although Dems are moving down, Republicans are not really moving up.  And the poll didn’t ask about immigration, thereby sparing Obama more mortification:

Confidence in Obama reaches new low, Washington Post-ABC News poll finds

By Dan Balz and Jon Cohen
Washington Post Staff Writer
Tuesday, July 13, 2010; A01

Public confidence in President Obama has hit a new low, according to the latest Washington Post-ABC News poll. Four months before midterm elections that will define the second half of his term, nearly six in 10 voters say they lack faith in the president to make the right decisions for the country, and a clear majority once again disapproves of how he is dealing with the economy.

As a aside, I am sort of missing the fawning coverage of Obama’s oh-so-sweet date night in Manhattan with Michelle.  I wonder if we will be seeing any more date nights like that before the election

Derek Thompson at The Atlantic:

Finally, this analysis requires a big asterisk. Democrats are almost certainly doomed to fall by the dozens in the House this November. It’s not the candidates, it’s the conditions: plus-nine percent unemployment; slow business investment; continuing weakness in the housing sector. (As the graphs below demonstrate, income growth is a particularly accurate indicator of losses.)

History will debate and determine whether the Obama/Bernanke regime wisely handled the recession. In the nearer term, the voters will make that judgment themselves, and there isn’t much evidence from July 2010 to suggest that the recovery, or the Democrats’ fortunes, are ready to pick up any time soon.

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You Feel Hot And Itchy, Cut Taxes… Your Foot Run Over By A Lawnmower, Cut Taxes… Your Daughter’s Marrying Pol Pot, Cut Taxes

Sam Stein at Huffington Post:

Top Senate Republican Jon Kyl (R-Ariz.) insisted on Sunday that Congress should extend the Bush tax cuts for the wealthiest Americans regardless of their impact on the deficit, even as he and other Republicans are blocking unemployment insurance extensions over deficit concerns.

“[Y]ou should never raise taxes in order to cut taxes,” said the Arizona Senator during an appearance on Fox News Sunday. “Surely Congress has the authority, and it would be right to — if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that’s what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.”

Ezra Klein:

What’s remarkable about Kyl’s position here is that it appears to be philosophical. “You should never have to offset cost of a deliberate decision to reduce tax rates on Americans,” he said. Never! This is much crazier than anything you hear from Democrats. Imagine if some Democrat — and a member of the Senate Democratic leadership, no less — said that as a matter of principle, spending should never be offset. He’d be laughed out of the room.

Back in the real world, tax cuts and spending increases have the exact same affect on the budget deficit. This sort of comment is how you tell people who care about the deficit apart from people who are interested in exploiting fears of the deficit to shrink the size of government. It’s also the sort of comment that makes clear that the deficit commission’s work is doomed, even if they do go with three-quarters spending cuts. Democrats won’t accept an unbalanced product and Republicans won’t accept a balanced product.

Daniel Foster at The Corner, responding to Klein:

First of all, I’m not sure where the “gotcha” moment is. The most natura way to interpret Kyl’s statement is that a tax cut paid for by a tax increase is no tax cut at all. It’s a tax redistribution. Second of all, I’m sure if you asked Senator Kyl, he’d tell you thattax cuts should be offset — by spending cuts. That also seems a fairly natural inference to draw here.

On the point I’ve bolded, that Kyl’s position is “philosophical.” You’re damned right it is. So is Klein’s.

Klein says, “Back in the real world, tax cuts and spending increases have the exact same affect on the budget deficit.” Of course, and to a big-government technocrat, they have the same moral status.

Not so for conservatives. To put it plainly, conservatives tend to think you need a better reason to raise taxes, to grow government, and to infringe liberty than you do to cut taxes, shrink government, and increase liberty. Klein may think disagree with that, but it is not an incoherent position — or for that matter, a position without a rich and noble tradition.

UPDATE: Actually, these comments suggest Kyl is openly advocating some “starve the beast” unfunded tax cuts. The point about the contradictory nature of a tax cut “offset” by tax increases elsewhere holds. And I still bet Kyl’s preferred route would be to offsettax cuts with spending cuts. But it seems, failing that, he’s okay adding to the deficit. Maybe Senator Kyl should read some Kevin Williamson.

Steve Benen:

To my mind, Kyl’s remarks were every bit as ridiculous as House Minority Leader John Boehner (R-Ohio) comparing the financial crisis to “an ant,” or Rep. Joe Barton (R-Texas) apologizing to BP. Kyl’s entire defense was sheer nonsense.

Bush’s tax cuts, which failed miserably in their stated goal of producing robust economic growth, also failed to keep the balanced budget Clinton left gift-wrapped on Bush’s desk. Kyl insists we should keep the failed policy in place, which in and of itself is a reminder of how truly bizarre the Republican approach to the economy really is.

But for all the talk about how desperate Republicans are to lower the deficit, when asked how the GOP would pay for $678 billion in tax cuts, Kyl said what he actually believed: he wouldn’t pay for them at all. Spending requires budget offsets, tax cuts don’t. Indeed, in Kyl’s confused mind, one should “never” even try to pay for tax cuts.

It’s quite a message to Americans: Republicans believe $30 billion for unemployment benefits don’t even deserve a vote because the money would be added to the deficit, but Republicans also believe that adding the cost of $678 billion in tax cuts for the wealthy to the deficit is just fine.

The lesson couldn’t be any more obvious: the GOP’s economic agenda is a pathetic charade. Kyl and his cohorts failed with Bush’s tax cuts, failed to prevent massive deficits, and failed when given a chance to set things right. That one of the Senate’s most powerful Republicans wants to go right back to the policies that didn’t work, and put the tab on future generations, is, as Jay Bookman put it, “both very telling and very worrisome.”

David Dayen at Firedoglake:

The ultimate example of this deficit fraudulence comes with the cuts to the military budget that the Pentagon and the political establishment have talked a good game about of late. Conservatives nod their head, rhetorically, but in the end, they work as hard as possible to maintain outdated weapons systems.

The White House has jumped on Kyl’s comments about tax cuts never needing to be paid for, at least. But you could spend the rest of your life pointing out this misinformation and never catch up to it all.

Derek Thompson at The Atlantic:

The statement “You should never raise taxes in order to cut taxes,” is masterful in its internal logic. Raising taxes to cut taxes … how paradoxical, and absurd!

But tax cuts don’t pay for themselves. Renewing the entire 2001/03 tax cut will add more than $3 trillion to our debt/ Obama’s plan would shave off about $700 billion. So if you’re a true deficit hawk suggesting alternatives, you’ve got a few choices. You can start looking for $700 billion in offsets from spending cuts, tax increases, or tax expenditure cuts. Or you can implicitly acknowledge that you were never really serious about that deficit thing anyway. But Republicans’ intellectual slavishness to tax cuts as the Alpha and Omega of public policy is just exhausting and sad at this point.

Doug Mataconis:

Leaving aside Gibbs’ rich v. poor rhetoric, the real mistake here is the same one that Republicans made during the Bush years when they cut taxes without cutting spending and, in the process, added to the budget two wars and a trillion dollar Medicare prescription drug benefit program.  The consequences were inevitable; in the course of eight years, Bush and the GOP added to the national debt the same amount that had accumulated during the previous 212 years of the Republic. Now, we’re caught in a debt cycle that will have unforesable consequences in the future.

I happen to agree with Kyl that the Bush tax cuts should be extended. Raising taxes in the middle of an anemic economic recovery that seems as if it could turn into another recession at any money strikes me as a monumentally stupid idea. At the same time, though, it seems to me that Republicans would sound much more credible on issues like this if they came out and identified spending cuts that could be made to offset the tax revenue that would be lost. Otherwise, they’re just making the same mistakes all over again.

UPDATE: Paul Krugman

More Benen

Brad DeLong

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This Young Man In The New York Times Article Needs But One Word… Plastics

Chart via Catherine Rampell at NYT

Louis Uchitelle at NYT:

For young adults, the prospects in the workplace, even for the college-educated, have rarely been so bleak. Apart from the 14 percent who are unemployed and seeking work, as Scott Nicholson is, 23 percent are not even seeking a job, according to data from the Bureau of Labor Statistics. The total, 37 percent, is the highest in more than three decades and a rate reminiscent of the 1930s.

The college-educated among these young adults are better off. But nearly 17 percent are either unemployed or not seeking work, a record level (although some are in graduate school). The unemployment rate for college-educated young adults, 5.5 percent, is nearly double what it was on the eve of the Great Recession, in 2007, and the highest level — by almost two percentage points — since the bureau started to keep records in 1994 for those with at least four years of college.

Yet surveys show that the majority of the nation’s millennials remain confident, as Scott Nicholson is, that they will have satisfactory careers. They have a lot going for them.

“They are better educated than previous generations and they were raised by baby boomers who lavished a lot of attention on their children,” said Andrew Kohut, the Pew Research Center’s director. That helps to explain their persistent optimism, even as they struggle to succeed.

Abe Greenwald at Commentary:

The New York Times is running a story about the “millennial” generation in America and its inability to find employment. The article is supposed to convey the challenges for young Americans due to bad economic times but will probably exacerbate the hopelessness of older Americans, who won’t recognize this strange, new definition of ambition:

Mr. Nicholson, 24, a graduate of Colgate University, winner of a dean’s award for academic excellence, spent his mornings searching corporate Web sites for suitable job openings. When he found one, he mailed off a résumé and cover letter — four or five a week, week after week.

Over the last five months, only one job materialized. After several interviews, the Hanover Insurance Group in nearby Worcester offered to hire him as an associate claims adjuster, at $40,000 a year. But even before the formal offer, Mr. Nicholson had decided not to take the job.

Rather than waste early years in dead-end work, he reasoned, he would hold out for a corporate position that would draw on his college training and put him, as he sees it, on the bottom rungs of a career ladder.

“The conversation I’m going to have with my parents now that I’ve turned down this job is more of a concern to me than turning down the job,” he said.

A 24-year-old man is more fearful of a parental lecture than unemployment. If that doesn’t capture the dreary state of able-bodied America, nothing does. Meanwhile, this same person, living off of mom and dad, is so certain of his worth on the job market, he won’t consider pocketing an expense-free annual $40,000 because it requires dead-end work.

Daniel Indiviglio at The Atlantic:

Wait. You mean he found a job with the national underemployment rate at 16.5%, with no professional work experience, that paid $40,000 per year, and didn’t take it because it wasn’t exactly what he wanted? There must be some confusion here about the American Dream. The idea that every 24-year old lands their dream job straight out of college isn’t the American Dream: it’s a fantasy.

Anyone who grew up throughout the 20th Century could attest that the American dream isn’t about always getting precisely what you want. It’s about taking what life hands you, working extremely hard, and having the ability to live a relatively satisfying life. Millions immigrated to the U.S. over the years seeking an opportunity to succeed, not to be provided precisely the opportunity they wanted.

Look back at those Americans of past generations who lived the American Dream. Did the coal miner who had a brutal job but decent wages that allowed him to provide for his family live the American Dream? How about the worker who drove railroad spikes into the ground under the hot sun all day? What about the factory employee who sat on a monotonous assembly line for hours on end? They all attained the American dream, because they had an opportunity to work, raise a family, earn enough money to live relatively well, and find some joy in life. They may have preferred to be a professional golfer, a famous novelist, or high-powered corporate executive making millions of dollars per year. But not everyone has such luck, but in America they can live relatively fruitful, pleasant lives nonetheless.

Certainly, millennials will have a different job path than their parents and grandparents. It will likely take them longer to gain their footing in the labor market. But that hardly means they’re hopeless, it just means they will have to work a little harder to end up in a job they like and attain a higher income. They won’t be able to walk into any manufacturing jobs and succeed like their predecessors, but they will have opportunities in technology, the service economy, and other U.S. industries that will endure.

The American Dream that so many other nations envy isn’t to live a perfect life. It’s to have the opportunity to succeed if you work hard. You don’t get that in some places, but you do in the U.S. The millenials won’t lose out on that, but they may have to work a little harder to attain it.

Catherine Rampell at NYT:

The chart above, adapted from a recent Bureau of Labor Statistics report, shows the difference in weekly pay between people with a given education level today and their counterparts from a generation ago.

As you can see, most men today earn less than equally educated men in 1979, with the exception of the most highly educated.  The opposite is true for women: Most women today earn more than their equally educated counterparts from 1979, with the exception of the least educated.

There are a few forces behind these trends. One is that generally speaking, it’s harder to make it in today’s job market than it was a few decades ago if you don’t have at least a high school degree, since the expectations for what educational credentials workers should possess have risen. This is in part because the economy is less dependent on lower-skilled, manual-labor-intensive industries like manufacturing, and more reliant on industries that require formally credentialed education and training, like health care. Thus, in general, the earnings potential for the most educated has risen, and that for the least educated has fallen.

Another consideration is that the gap between men’s and women’s pay has narrowed over the years. One effect of this is that women’s wages, at most levels of education, have grown.

Felix Salmon on the chart:

But in fact what we’re seeing here understates how bad things have been for most men over the past generation. If you go to the source, this chart only shows data for people working full time. And, at least when it comes to men, that’s much less common now than it was in 1979.

The labor force participation rate for men 20 years and older was 79.8% in 1979; today, it’s just 74.4%. And I don’t think that most of that drop can be explained in terms of a larger number of students: the rate was as high as 77% as recently as August 2000, and then dropped to a low of 73.9% in December 2009.

You can be sure that most of the drop in labor force participation is coming from the less well educated Americans. Which means that if you’re a man with less than a high school diploma, your real wages have fallen by 28% over the past 30 years if you’re lucky enough to have a job at all. At the same time, the number of such men without a job has been growing steadily. It’s a depressing set of data, and there’s no sign of it turning around in the foreseeable future.

Matthew Yglesias:

What I would also add to that is the observation that college educated men typically marry college educated women, creating very high earning households. Working class people tend to marry each other, and also have much higher rates of divorce, meaning that on the household level the inegalitarian impacts are magnified.

James Joyner:

In 1979, most married women stayed at home with the kids or simply tended house; that almost immediately changed.   And, while being a high-school dropout wasn’t exactly a road to riches even then, there were still entry level jobs that would take you and allow you to work yourself up if you were good enough.  Why, “self-service” was still a necessary descriptors for gas stations that didn’t have attendants to pump it for you.   The personal computer was a novelty item and the Internet as we know it was nearly 15 years into the future.

Good thing that our levels of education have changed to keep up with the trend:

Americans are more educated than ever before, with a greater percentage graduating from high school and college than a decade ago, U.S. Census data released Tuesday show. Eighty percent of Americans are graduates of high school or higher, compared with 75.2% in 1990, the 2000 figures show. That change came about in part because of a decline in the rate of students dropping out before ninth grade: 7.5% in 2000, compared with 10.4% in 1990.

That report, based on the 2000 Census, came out in 2002.  It’s almost surely even more stark now, at least for native-born Americans.

That’s not to say that these trends are sustainable.  We can’t keep increasing our level of meaningful education.   Everyone isn’t college material or capable of doing intellectual work.   But the nature of modernity is that more skills are necessary to do median level jobs.

Derek Thompson at The Atlantic:

The upshot is that even as the cost of college comes under scrutiny, the evidence continues to suggests that four expensive years is the price our generation has to pay if we expect to earn more than our parents.

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Filed under Economics, Families, The Crisis

The End Of Orszagmania Is Nigh

Heather Horn at The Atlantic with the round-up

Obama budget director Peter Orszag–he of the power engagement, love child, and famously baffling sex appeal–is resigning. Set to leave in July, according to The New York Times, he would be “the first official to leave the Obama cabinet.” Here’s the roundup of regulars on what that means:

Why Now? Because It’s Time “Eighteen months is approximately the median amount of time for the OMB director position,” notes ABC’s Jake Tapper. Furthermore, “Orszag was director of the Congressional Budget Office for two years before becoming OMB in January 2009.”

Noam Scheiber at TNR:

If nothing else, the press reports stress that Obama wanted Orszag to stick around, something I’ve heard independently. To the extent that members of the economic team hold somewhat different policy views, I get the impression the president likes it that way, as the administration official quoted above suggests.

As I understand it, the reason Orszag has decided to step aside now is that the upside to sticking around just wasn’t that great after he’d successfully overseen two budget cycles and helped manage a once-in-a-generation healthcare reform effort. (To say nothing of that stimulus bill…) What you have to understand about Orszag is that he’s an extremely bright guy who’s excited by intellectual, as opposed to, say, managerial, challenges. What you have to understand about being OMB director is that it’s an incredibly taxing job—there’s a huge amount of work that has to get done in a short period of time, year in and year out. Put that together and what you had was a grueling job that Orszag found pretty exhilarating when the learning curve was steep, and which became a little less exhilarating but no less grueling once the learning curve flattened out. Between that dynamic and his impending wedding in September, which roughly coincides with the start of the new budget season, it makes perfect sense for him to hang his slide rule elsewhere.

Update: I shouldn’t minimize the role of Orszag’s upcoming marriage. He is known to be very devoted to his fiancee, which makes the decision not to sign on for another grueling year all the more understandable.

Alan Mascarenhas at Newsweek:

While Orszag is not exactly a household name, he is something of a celebrity inside the D.C. Beltway (and, among other things, surely the first ever OMB chief to inspire his own fan site; evocatively titled Orszagasm with the tagline “Putting the OMG back into the OMB”). Rumors of his departure—which would represent the first from President Obama’s cabinet—have been building for some time. He is getting married in September and is reportedly keen to leave enough time for his successor to organize President Obama’s next budget in February.

Orszag’s office has not publicly confirmed the reports. “Peter’s focused on his work, not on Washington speculation,” said his spokesman, Kenneth Baer.

Christopher Beam at Slate:

Peter Orszag became famous for making health care cost control sexy. His replacement will have an even harder task: Doing the same for deficit reduction.

Reducing the deficit is the Washington equivalent of eating one’s vegetables. It’s preached mainly by stern fogies, who don’t make it sound very appetizing. Whoever replaces Orszag as director of the Office of Management and Budget—the top names floated so far are Clinton administration vets Laura Tyson and Gene Sperling—will have to change that.

Derek Thompson at The Atlantic:

The two pillars of Orszag’s legacy are the massive $800 billion stimulus bill passed in early 2009 and the health care reform bill passed about a year later. It’s fair to say that both bills were policy successes and popular failures. The Recovery Act was the macroeconomic equivalent of throwing everything but the kitchen sink at the recession. It included hundreds of billions of dollars in tax cuts for working families, extended unemployment benefits, unburdened the states of massive Medicaid and education responsibilities, and seeded infrastructure projects across the country.

The Recovery Act might have stimulated the economy — or at least built a floor to the downturn — but it did not stimulate much gratefulness. Poll after poll in the last year and a half demonstrates consistent pessimism that the stimulus did much to create jobs. This is easily explained: the administration said that unemployment wouldn’t rise above 9 percent after the bill passed. Instead it rose above 10 percent since the recession was deeper than predicted. That looks like failure, even if it’s relative success.

Orszag’s second achievement is another kitchen-sink bill and another liberal policy success that failed to inspire public approval. Health care reform created a new entitlement for tens of millions of uninsured Americans, planned cuts to Medicare and threw a smorgasbord of missiles at the real long-term monster of medical inflation, including: comparative effectiveness research, a Medicare advisory counsel, an innovation center and more cost-cutting experiments. But once again, folks aren’t applauding. In a June Gallup poll, 50 percent of respondents said they wanted health care partially or completely repealed.

James Pethokoukis:

But there is little doubt Orszag will depart as the most consequential Office of Management and Budget director since the notorious David Stockman nearly torpedoed Reaganomics in the early 1980s by calling supply-side economics a sham. In hindsight, of course, Reaganomics looks pretty good, including 17 million net new jobs and a collapse in inflation.

But Orszag was no whistle-blower of some perceived fiscal sleight-of-hand. Instead, it was just the opposite. He was a facilitator and enabler, providing the intellectual firepower and energy behind Obama’s drive for healthcare reform. Orszag made the case to the president that reducing healthcare costs was an important element to slashing the long-term budget deficit. More importantly, he persuaded Obama the U.S. healthcare system was so inefficient, overall spending could be restrained while also providing near-universal health insurance coverage. In effect, “bending the curve” was a free lunch. Or at least close enough for government work.

It was an audacious claim, mostly based on a single controversial academic study. Republicans never bought into the theory, and neither did Orszag’s successor at the Congressional Budget Office, Uncle Sam’s fiscal scorekeeper. In the end, Obama was forced to cut future Medicare spending and raise taxes to make the numbers balance out — at least on paper. Few Washington observers think those cuts will happen, meaning that the budget deficit could explode if Orszag’s novel theories don’t pan out. And even if the cuts occur, many budget hawks were counting on them to make Medicare sustainable over the long-term, not create a new entitlement.

Too bad Orszag didn’t use his considerable political skills – Larry Summers was supposedly warned to be careful of the guy “wearing the cowboy boots and bad toupee” – to make the case for entitlement reform first. In that regard, Orszag’s legacy is uncertain at best.

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Has Anyone Thought Of Asking Pixar To Fix The Oil Spill?

Christopher Orr at The Atlantic:

As Charles de Gaulle dryly observed, the graveyards are full of indispensable men. One might add, in a related vein, that the attics are full of indispensable toys–once central players in a childhood fantasy, now upstaged, outgrown, and consigned to the corrugated purgatory of a cardboard box.

Such is the cruel afterlife facing the eponymous heroes of Toy Story 3 as the film opens. In the 11 years since the last installment of the Pixar franchise, their half-pint custodian, Andy, has grown up, and as he prepares to debark for college, retirement looms for Buzz Lightyear, Jesse, Rex, Ham, the Potato Heads, and the rest of their narrow Toyverse. (Though not Woody, who initially appears fated to accompany Andy to school as a childhood memento–a touching plan, but one that, if my own collegiate memories are any guide, would likely entail Woody being refashioned into a bong by sophomore year.)

Andy, however, makes the mistake of putting his attic-bound ex-playmates into a plastic garbage bag, and his mother makes the mistake of assuming this was not a mistake. After a brief flirtation with the sanitation department (it will not be the last), the gang finds themselves delivered to a local daycare, presided over by a Strawberry-scented pink bear named Lotso (short for “Lots-o’-Huggin’ Bear“), who promises them an endless stretch of play-filled days with a rotating cast of kids who will never grow old. This Paradise is no sooner found than it is lost, though, and the bulk of the film delightedly toys (so to speak) with the conceits and conventions of the prison-break genre.

John Nolte at Big Hollywood:

What gives this refreshingly simple, perfectly paced, and absolutely flawless story the kind of emotional depth that creeps up and catches you off guard, is a richly complicated theme that explores the struggle between the loyalty and faith required to slug ones way through the ups and downs of any relationship and the universal need and understandable desire for constant validation and affection. The toys feel, for lack of a better term, jilted. Andy’s moved on, grown a little bored with them, and now they live in that awful in-between world filled with the artificial highs that come with any sign things might go back to the way they were and the unavoidable lows that are a natural part of the insecurity that comes with the fear of being discarded.

Essentially, “Toy Story 3” is about the consequences of disloyalty, of losing faith and giving up on an imperfect relationship to go off in search of something better. But what consequences! Through an immersion into wondrous detail that boggles the mind and Pixar’s uncanny ability to effortlessly and fully exploit any concept – in this case, a world where toys come to life when humans aren’t around – the adventure and, yes, the humanity makes for the best time you’ll have at the movies since, well, Pixar’s last go-round, “Up.”

And your kids will enjoy themselves even more.  The action set-pieces rival the best of the Indiana Jones’ films and this is easily the funniest of the three thanks to a cast of well-rounded characters whose relationships continue to develop realistically and with honest warmth and clever humor.

Dana Stevens at Slate:

The idea-generating table at Pixar must be one lively and raucous place, because if there’s a toy-related visual gag conceivable by the human imagination, it’s somewhere in this movie. Shot after shot bursts with whimsical weirdos popping out of boxes and scuttling atop shelves: There’s a Fisher Price rolling telephone who communicates only by ringing up his interlocutor. A monster robot guy who toggles in between two expressions—happy and mean—by pounding his own head. A lederhosen-clad hedgehog (hilariously voiced by Timothy Dalton) who fancies himself a gifted thespian. And a brilliant long-form gag that raises the ontological question: In what feature of a Mr. Potato Head (voiced by Don Rickles) does the spud’s spiritual essence reside? But somehow, the profusion of characters, jokes, and action sequences never feels disorienting or excessive. Through it all, the toys’ motivation remains simple and crystal-clear: They must get back home to the boy who, grown up or not, still loves them. As for that last sequence after they do—hold up. I need a moment.

Go ahead and sneer it: Is there anything wrong with Toy Story 3? Well, the addition of 3-D to the franchise’s universe does seem like a move motivated more by marketing than artistic necessity (which was also the case, I thought, with Up). The depth effect looks crisp enough, but with a couple of somewhat gimmicky exceptions, it rarely gets used. (That weakness is more than overcome in Day & Night, a wordless short that precedes the movie and is the most inventive use of animated 3-D I’ve ever seen.) And I guess—racking my brains here—that a few of the newly introduced characters are a little underwritten. (Though Ken is a marvel—one of the most complex characters, animated or otherwise, to appear on screens this year.)

Anyway, nitpicking a movie this abundantly stocked with wonderments feels like an act of ingratitude. Toy Story 3 is a near-perfect piece of popular entertainment, a children’s classic that will be watched and loved when my daughter’s (and one day, her daughter’s) now-beloved toys are gathering dust in a basement. Shit—now I’m crying again.

Jonah Lehrer at Wired:

Screenwriter William Goldman once famously declared that the most important fact of life in Hollywood is that “nobody knows anything.” It was his way of describing a reality that continues to haunt the movie business: Studio executives have no idea which pictures will make money.

Unless, of course, those pictures are made by Pixar Animation Studios. Since 1995, when the first Toy Story was released, Pixar has made nine films, and every one has been a smashing success.

Pixar’s secret? Its unusual creative process. Most of the time, a studio assembles a cast of freelance professionals to work on a single project and cuts them loose when the picture is done. At Pixar, a staff of writers, directors, animators, and technicians move from project to project. As a result, the studio has built a team of moviemakers who know and trust one another in ways unimaginable on most sets.

Which explains how they can handle the constant critiques that are at the heart of Pixar’s relentless process. Animation days at the studio all begin the same way: The animators and director gather in a small screening room filled with comfy couches. They eat Cap’n Crunch and drink coffee. Then the team begins analyzing the few seconds of film animated the day before, as they ruthlessly “shred” each frame. Even the most junior staffers are encouraged to join in.

The upper echelons also subject themselves to megadoses of healthy criticism. Every few months, the director of each Pixar film meets with the brain trust, a group of senior creative staff. The purpose of the meeting is to offer comments on the work in progress, and that can lead to some major revisions. “It’s important that nobody gets mad at you for screwing up,” says Lee Unkrich, director of Toy Story 3. “We know screwups are an essential part of making something good. That’s why our goal is to screw up as fast as possible.”

The proof is in the product. The average international gross per Pixar film is more than $550 million, and the cartoons are critical darlings—the studio has collected 24 Academy Awards. Nobody in Hollywood knows anything. Pixar seems to know everything.

More Orr

Derek Thompson at The Atlantic:

But Pixar’s specialness must come from something on top of that omnipotence. After all, there are plenty of animated movies that were horrible (the last one I saw was Shrek 3). What’s more, the novel provides authors with similar omnipotence, and without naming names, let us merely agree that some novelists are downright bad. In short, control is not the only key to narrative brilliance.

I used to rationalize Pixar’s otherworldly consistency by thinking the time and resources needed to produce a CGI picture were so overwhelming, one had to aim for perfection. But that’s an incomplete answer, too. The first Toy Story movie was completed on a $30 million budget with a staff of 110, according to Wikipedia, and it spearheaded an entire genre. Kevin Costner’s Waterworld was released the same year on a $175 million budget, and it spearheaded a lot of jokes about Waterworld.

Maybe looking for the secret to Pixar’s sauce is pointless. They make beautiful, familiar, old-fashioned stories about relationships that happen to use monsters, toys and fish for characters, and they do it almost perfectly time every time because … well, they’ve just figured out how to do it.

John Tyler at Cinema Blend:

Until a few hours ago, Toy Story 3 had a 100% fresh rating on the review compiler Rotten Tomatoes. It’s a feat almost never accomplished by modern movies. The few other films to carry the 100% fresh rating all pre-date the modern era or they were reviewed by a small handful of critics, usually fewer than forty or fifty. Yet with more than 130 reviews in, Toy Story 3 had a 100% fresh rating. Enter two assholes.

Their names are Armond White and Cole Smithey, and they’re the only two critics in the world who hate Toy Story 3. Thanks to them, and only them, Toy Story 3 now has a 99% fresh rating on RT. And they’re wrong. Flat out wrong.

Armond attempts to justify his hatred by accusing you, and everyone else who loves the Toy Story movies of being brainwashed. He slanders Toy Story 3 as being one big advertisement, overwhelmed by ridiculous amounts of product placement. This actually isn’t an opinion, it’s an accusation, and it’s the entire point of his review. One problem: It’s untrue.

White would have you believe that simply using a Barbie doll in your movie means you’ve sold out to some corporation. But if that were what Pixar was doing, they’d have used the latest Barbie and decked her out in all the latest outfits to dazzle viewers into running out and buying one. But this Barbie is frumpy, her wardrobe is outdated, and she’s clearly trapped in the 80s. Instead what Toy Story has done, and has always done, is use something specific. They could have thrown in some random Barbie-like doll, but you’d have been distracted by it and left wondering why they didn’t use the real thing. Instead they use Barbie and in the process make an instant connection between your memories of playing with that specific toy and what’s going on in the film. It’s your window into their world. It’s not product-placement, it’s good storytelling.

Armond White’s review is full of hatred, unfounded accusations, and condescension. It rails against anything which is popular and begs people to watch obscure movies instead, just because they’re obscure. He actually thinks Small Soldiers is better than anything Pixar has to offer, and that’s not just a bad opinion, it’s insanity.

A look back at Armond’s past reviews reveals that he’s not someone who should be allowed to review movies. He’s more a negative film critic stereotype than an actual reviewer. He’s the kind of guy that’s getting fired from newspapers in droves, and no one seems to miss them. This is a man who hated Avatar and Up in the Air, but loved The Losers and From Paris With Love. His review record indicates that he’s a contrarian. If everyone else likes it, he hates it. If everyone else hates it, he likes it. If it’s an obscure indie movie nobody cares about, he’s given it a positive review. If it’s a Hollywood blockbuster which most people enjoyed, he thinks it represents the end of modern cinema. This is not someone that anyone should listen to.

Cole Smithey’s review (which I refuse to link to) is slightly more reasonable, but perhaps that’s only because he barely managed to write three paragraphs about the film. His website proclaims him “The Smartest Film Critic in the World”, yet he doesn’t seem to have anything to say. He’s writing one of the only negative reviews of one of the most universally loved movies of all time, yet he can barely come up with three small paragraphs to justify his position. Scratch that, two paragraphs. One of them is devoted entirely to plot synopsis. He seems less interested in the film than he is in ancillary issues. He spends most of his review complaining about the film’s rating, an issue to take up with the MPAA and no fault of Toy Story 3’s. The closest he comes to a real criticism is in complaining about how much money the movie cost to make.

Yet Cole Smithey loves Marmaduke of all things and didn’t seem to be bothered by its bloated budget. And he loves Shrek Forever After, which cost as much to make as Toy Story 3 but had less to say. He managed four paragraphs about that one. Look through his resume and you’ll find yourself asking this question: Did Cole Smithey really hate Toy Story 3, or did he like the traffic hating it would bring to his website? He is, after all, the Smartest Film Critic in the World.

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Waste Not, Want Not

Tom Diemer at Politics Daily:

President Obama’s top budget adviser wants federal agencies to identify “laggard programs” that they can trim as a step toward reducing spending by 5 percent. The idea is to “make it easier” to comply with the president’s plan to freeze some federal outlays for three years beginning with the 2011 federal budget.

But there are caveats and exceptions. Budget Director Peter Orszag said in a speech Tuesday to the Center for American Progress that the proposed cuts would not begin until 2012 and would apply only to non-defense and non-security-related agencies. In other words, the Pentagon and Department of Homeland Security would be immune — so too would be entitlements such as Social Security.

In addition, it appears the 5 percent pinch is not mandatory on the bureaucracy. “We are asking each agency to develop a list of their bottom 5 percent performing discretionary programs, as measured by their impact in furthering the agency’s mission,” Orszag said.

Matthew Yglesias:

A few observations on this:

— The case for cutting or eliminating ineffective programs is always strong.
— That issue is logically independent from the case for reduced overall spending, which is weak in the short term.
— The case for lower-than-projected long-term spending is strong, but this is primarily a matter of health care costs.
— “Defense” and security-related spending can’t be exempt from fiscal scrutiny. Montgomery reports that Defense Secretary Robert Gates “seems to be something of a budget-cutting inspiration for Obama” but the ask here is much bigger in percentage terms that anything Gates has proposed for the Pentagon.
— It’s never a good idea to just look at “spending” without scrutinizing tax expenditures.

Which is all just to say that I believe in what we at CAP call doing what works and not doing what doesn’t work. But I don’t like to see the objective of trimming or eliminating ineffective programs run together with with discussions of fiscal policy as a macroeconomic matter. It’s also worth noting that though the concern in public opinion about wasteful government spending is very real, it’s not clear that the public’s idea of “waste” corresponds very closely to a wonk’s conception of an ineffective program. People tend to like programs that they think benefit them, or people like them, and view other programs as wasteful. What’s more, bad economic times erode faith in public institutions and make people more inclined to see programs as wasteful. That’s really a different issue from the wonk’s worry about programs that don’t work well.

Conn Carroll at Heritage:

This spasm of fiscal responsibility can mean only one thing: the Obama administration is about to go on another wild spending binge. And sure enough Politico reports that while Blue Dogs in the House managed to whittle what was a $200 billion “jobs” bill down to $146 billion last month, the Senate is now larding it back up again with a $24 billion Medicaid bailout and a $23 billion teachers union bailout.

This spend-now/cut-later act has become a staple for the Obama administration. In February 2009, after signing the largest single-year increase in domestic federal spending since World War II, President Obama held a “fiscal responsibility” summit designed to “send a signal that we are serious” about putting the nation on sounder financial footing. Then in June 2009, the day after promising faster deficit spending to stimulate the economy, Obama called on Congress to pass “pay-as-you-go” legislation (PAYGO), a rule Speaker Nancy Pelosi (D-CA) has violated by a mere $1 trillion since she took power in 2006. And then after President Obama signed his trillion-dollar health spending plan, he convened his toothless National Commission on Fiscal Responsibility and Reform.

Kathryn Nix at Heritage:

There’s plenty of waste to go after.  In 2004, Heritage budget expert Brian Riedl listed duplicative programs that could, but have not yet been, eliminated.  These include 343 economic development programs, 130 programs serving the disabled, 130 programs serving at-risk youth…the list goes on.  Riedl explains that “having several agencies perform similar duties is wasteful and confuses program beneficiaries who must navigate each program’s distinct rules and requirements.”  Moreover, duplicity in government programs makes it more difficult for each one to achieve its goal.

Wasteful spending doesn’t stop at program redundancy, either.  In Heritage’s 2010 edition of Federal Spending by the Numbers, Riedl points to plenty of areas where lawmakers could make painless cuts.  For example, Washington spends $25 billion each year to maintain unused or vacant federal properties, and $92 billion on corporate welfare.  Then there’s the less costly but no less absurd $2.6 million that Washington spends to train Chinese prostitutes to drink more responsibly.

In the last five years, Government audits have shown that 22 percent of all federal programs fail to show any positive impact towards their intended objectives yet cost taxpayers $123 billion? Million? annually.

However, this should be seen as just the beginning.  To have a profound impact, more drastic changes will be needed.  This proposal alone would create at most $20 billion in savings, addressing just 2 percent of the federal deficit.  The next step should be deep impact reforms such as repealing the stimulus and the trillion plus health care bill, and enacting major entitlement reform, targeting the unfunded liabilities created by Medicare, Medicaid, and Social Security.

Finally, the White House’s budget cuts wouldn’t require agencies to report on expendable programs until September 13, and effects wouldn’t occur until 2012.  If the White House is serious about cutting spending, they could—and should—start right now.  The Impoundment Control Act of 1974 gives the president the ability to rescind enacted spending by sending a message to Congress with directions, which a Member can then introduce in a bill.  Since 1974, presidents have submitted 1,178 rescissions totaling $76 billion.  Since Republicans expressed their desire for the president to offer a rescission package, an immediate request from the president would be almost sure to come to a vote in the House.

Baby steps towards fiscal responsibility are a positive turn for the administration, but to show the American people they mean business, the White House should also begin cutting spending immediately and pursue reform with larger impact on the federal deficit.

Veronique de Rugy at The Corner:

According to the Post, though, many budget analysts around town are complimentary about the proposal. Well, I guess I am just hard to please, because I think this is a joke. The federal government is spending almost $4 trillion this year. Our deficit is $1.4 trillion. Our debt held by the public is $7.5 trillion. Our long-term entitlement deficits are huge and growing. All of these figures will be larger the next time I blog about them. I don’t have much patience for agencies that need to be given incentives to do what is right. This money isn’t theirs. It’s taxpayers’ money, and the spending needs to stop.

But then again, considering that the Deficit Commission itself needs to be bailed out by the White House, nothing should surprise me anymore. See Daniel Foster on the issue here. And speaking of commissions, my colleague Jerry Brito has a very good study on the BRAC Commission of the late 1980s and early 1990s. It just came out last month and is very informative about the likelihood that today’s Deficit Commission will succeed. A shorter version of his study is here.

Derek Thompson at The Atlantic:

The federal deficit has stretched to $941 billion in the first eight months of Fiscal Year 2010, and politicians are getting nervous that all that red ink is starting to stink. That puts the White House in the awkward position on standing behind more stimulus — which would raise the deficit — while claiming the mantle of fiscal responsibility. How do you pull that off?

Well, you suggest small-ball reforms — or, as some critics contend, gimmicks. First, President Obama has proposed a three-year freeze on non-security discretionary funding, which amounts to about a fifth of the budget. Second, he’s requested the authority to lightly edit spending bills and send them back to Congress for an expedited vote without amendments. Third, he’s asking agencies to make plans to cut 5% of their budget.

These ideas tend draw much mocking from politicians and the commentariat, and maybe it seems a little weird to grow a trillion-dollar deficit and pare it down with limited freezes (like planting a Redwood and pruning it with a nail file). But I see nothing wrong with these ideas. They’re non-binding, forward looking, and potentially useful. Do we think government agencies should never have to identify programs they consider marginally unecessary? Is it pointless to even threaten to rein in earmarks with a light veto power? We should be running a large deficit in 2010, and we should be thinking about small ways to improve our medium-term budget.

Ezra Klein:

The news in Peter Orszag’s speech this morning is that the White House is “asking each agency to develop a list of their bottom 5 percent performing discretionary programs” in order to make cuts more obvious. On the one hand, reducing inefficient spending is good. On the other hand, reducing aggregate spending is not, at the moment, a good idea. This 5 percent isn’t much in the scheme of things, but it’s a buy-in to the idea that deficits are too high right now rather than an effort to convince people that the time for countercyclical spending hasn’t passed.

So that’s not the news in the speech. But it’s also a small part of it. The bulk of the address is about the need to modernize the federal government’s IT infrastructure, and it’s worth reading. Orszag notes, for instance, that “public sector productivity growth matched the private sector’s until about 1987,” at which point it began falling rapidly behind. If you’ve identified this as roughly coinciding with the rise of personal computing and the Internet eras, well, ding-ding-ding.

“At one time,” Orszag says, “a federal worker went to the office and had access to the most cutting-edge computer power and programs. Now, he often has more of both in a device clipped to his belt.” Oh, snap!

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iDominance

Ed Oswald at Technologizer:

In a sign of Apple’s continuing ascension to the top of the technology heap, at 2:30pm ET today the company became the most valuable technology company in the world with a market capitalization of $227.1 billion. This was slightly morethan Microsoft’s $226.3 billion.

Both shares took a significant tumble late in the afternoon as the market gave up its gains and then some in the final hour of trading. Even so, Apple still finished in front at $222.1 billion, far ahead of Redmond at $219.2 billion.

How important is this? On the entire New York Stock Exchange there is only one American company that is more value, and that is oil giant Exxon Mobil. It also completes what could really be called a stunning comeback for Apple, which as recently as teh years ago had been in bad financial shape.

One ironic point: Microsoft itself could be credited with helping bring back Apple from the dead: in 1997, the company made a $150 million investment in the company shortly after Steve Jobs returned for his second and current stint as CEO

MG Siegler at TechCrunch:

Some publications reported this milestone happened back in April, but that was a slightly different metric. That was the market cap on the S&P 500, which uses float-adjusted numbers. Today’s milestone is straight-up market cap: numbers of shares outstanding multiplied by share price.

Of course, just how much this number means is a matter of debate. The truth is that it really doesn’t mean that much in terms how strong or weak a company is from a financial perspective. But it is a good indicator of trends, and obviously stock performance. That trend is obviously that over the past five years or so, Apple has been destroying Microsoft is gaining stock value.

Over those past five years, Microsoft’s stock has been largely stagnant: it’s up about 4%. Apple’s stock, meanwhile, is up some 550% over that same time frame.

Regardless of how the market closes today, you can likely expect Apple market cap to surge ahead in the coming days. A week from this coming Monday is Steve Jobs’ keynote at Apple’s WWDC event. There, he’s widely expected to unveil the new iPhone — and undoubtedly some other things. The mere speculation about what he’ll unveil will fuel the price. Microsoft, meanwhile, is losing key executives.

Dylan Tweney at Wired:

Ten years ago, Apple was all but written off by most expert commentators. An also-ran computer company that once dominated geeks’ hearts and minds with the Apple II and the Macintosh, Apple made serious missteps in the 1990s that relegated it to a tiny niche of the overall computer market, with market share in the low single digits. It was all but certain that its share would continue dwindling until the company faded away entirely, like Commodore, Atari, Tandy and dozens of other computer makers before it.

What the commentators didn’t count on was the string of hits Apple would deliver over the next 10 years. Founder Steve Jobs returned to Apple in 1996 and removed then-CEO Gil Amelio in 1997, making himself interim CEO (and then eventually dropping the interim title).

Jobs then instituted what can now clearly been seen as a far-reaching strategy to consolidate and simplify Apple’s product line, while gradually leveraging the company’s strengths (ease of use, consumer-friendly branding, attractive design, and high margins) to expand into new areas of consumer technology.

Jobs also carefully created a new company culture, one that’s centered on innovation, control and secrecy. That approach has alienated many people — and runs counter to Silicon Valley received wisdom about the value of openness and sharing — but the proof is in the pudding. With a CEO of Jobs’ caliber, at least, that kind of top-down control works.

This list of product rollouts tells the story:

  • iMac (Bondi Blue) – 1998
  • iBook (clamshell) – 1999
  • iPod with scroll wheel – 2001
  • Mac OS X – 2001
  • iTunes Store – 2003
  • MacBook (switch to Intel) – 2006
  • iPhone – 2007
  • App Store + iPhone SDK – 2008
  • iPad – 2010

By 2010, Apple had firmly established its dominance (in mindshare and innovation, if not in absolute numbers) in three areas: computers, MP3 players and smartphones; the company also controls an increasingly large marketplace for music, video and applications with iTunes, which counts its users in the hundreds of millions and has served more than 10 billion songs, 200 million TV shows, 2 million films and 3 billion apps. Apple’s now the largest distributor of music in the United States with 26.7 percent market share, according to a Billboard analysis.

The recent introduction of the iPad — Apple claims over a million have been sold so far — may not move the needle much in terms of revenue, but it’s probably what pushed the company’s stock over the top. Early numbers of 200,000 sales per week suggest that Apple’s iPad is on track to outsell the Mac.

Macs still account for fewer than one in 10 computers sold, but its market share has increased significantly in recent years and the company has built a consumer juggernaut that extends well beyond the computer.

As for Microsoft, the company remains highly profitable, but investors and analysts alike are concerned that Microsoft remains dependent on its Office and Windows franchises for the lion’s share of its profits. The company has poured billions into its cell phone, online advertising and other new businesses that have yet to really help the company’s balance sheet.

Even its desktop franchises are seen as vulnerable in the longer term, particularly as Google aims to deliver many of the same capabilities through the browser.

So where will things go from here? Will Microsoft be able to transform itself into a company whose cloud computing and search efforts someday produce returns on the scale of Windows and Office? Will Apple’s remarkable run continue? Sound off below.

Derek Thompson at The Atlantic:

Where’s Google, you wonder? A bit behind, with a market cap value of about $150 billion according to Yahoo Finance. Rounding out the top six, as of March 2010, according to the Financial Times Global 500, are Wal-mart, Berkshire Hathaway, and General Electric.

Kevin Kelleher at Big Money

UPDATE: Reihan Salam at The Daily Beast

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I Am Greece… I Am Greece… I Am Greece

Heather Horn at The Atlantic has a lot of this at a round-up

David Leonhardt at NYT:

It’s easy to look at the protesters and the politicians in Greece — and at the other European countries with huge debts — and wonder why they don’t get it. They have been enjoying more generous government benefits than they can afford. No mass rally and no bailout fund will change that. Only benefit cuts or tax increases can.

Yet in the back of your mind comes a nagging question: how different, really, is the United States?

The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.

The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.

We, the people, are.

Ryan Avent at Free Exchange at The Economist:

The people are, he says, because they prefer a high level of services and low taxes. Indeed, America’s primary deficit is clear evidence that they prefer this; otherwise, they’d vote tax increases and service cuts until the budget balanced. They haven’t, just as the Greeks didn’t, and so the trajectories appear similar.

But slow down a moment. Degree is important here. America’s trend growth rate is higher than Greece’s. Its political system is less dysfunctional. Its economy is overwhelmingly on the books and taxed. Its labour markets are more flexible, its public sector is smaller, and its unions are less powerful. Its currency floats, and its monetary policy is its own.

The bottom line is that it’s not clear that there is any set of policies Greece can adopt which will prevent default. Debt costs are too high and growth is too slow. There are many different ways that America could close its budget gap; it’s merely having an intense political debate over which way is the best way. This could potentially be a problem, but it’s a different problem from the one in Greece. The Greeks have a massive current primary deficit that markets no longer want to fund. The Americans have a political debate over how to rein in the growth of health costs over the next three decades. Ultimately, casting the American fiscal situation in a Greek light obscures more than it illuminates.

Paul Krugman:

I would really question this comparison:

The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.

Um, that’s comparing a (highly uncertain) projection of debt 20 years from now — a projection that’s based on the assumption of unchanged policy — with actual debt now. Actual US federal debt is only about half that high now. And it’s worth pointing out that Greek debt is projected to rise to 149 percent of GDP over the next few years — and that’s with the austerity measures agreed with the IMF.

Here’s a more or less apples-to-apples comparison of the medium-term outlook. I’ve taken the Auerbach-Gale projections for the US budget deficit as a percentage of GDP outlook under Obama policies, and compared them with the IMF projections for Greece, subtracting out “measures” — that is, the austerity measures agreed in return for official loans. Here’s what it looks like:

DESCRIPTIONIMF, Tax Policy Center

Basically, the United States can expect economic recovery to bring the deficit down substantially; Greece, which has a larger structural deficit and also faces a grinding adjustment to overvaluation with the eurozone, can’t.

Derek Thompson at The Atlantic:

Now, that’s short-term. Before you interpret those shrinking red bars as evidence that we’re in the clear by 2012, remember that the United States’ projected pain is slated to begin later in the decade, when health care inflation hitches a ride on the retirement of tens of millions of baby boomers, sending the government’s Medicare responsibilities soaring into the 2020s.

We’re not Greece for a lot of reasons: we control our own currency, we’re more productive, we have a much stronger economy and while we suffer from tax avoidance like many countries, Greece faces epic shortfalls.

But we are like Greece in the simple respect that we’ve conditioned the electorate to expect more services and fewer taxes ad infinitum. And We the People consistently elect politicians who promise to preserve that imbalance. I’ve been asked a few times to produce something like a dream budget for America 2020. Here’s a start:

1) Institute a revenue-neutral VAT with off-sets to employer payroll taxes to make it slightly progressive, but grow the VAT to 8 or 10 percent over the next five to ten years. (I’d also entertain arguments for a carbon tax, but I’m less sold on Pegouvian taxes as dependable money machines and we’ll need a dependable money machine before we “solve” the medical inflation conundrum.) Eliminate the mortgage interest deduction. Broaden the corporate income tax base by eliminating loopholes especially on repatriated income, but lower the rate.

2) Raise the retirement age for Social Security, indexed to longevity. It’s important to do something with Social Security before Medicare because it’s easier to move the full retirement age than to put a straitjacket around medical inflation. Tweaking this entitlement would be an important signal to international investors that we can be serious about our deficit drivers. (We should be open to other SS adjustments, like raising the taxable income ceiling.)

3) Put a freeze on discretionary spending — not on each department, but the whole thing, to allow for flexibility. Keep PAYGO. Convene a commission on defense spending to find costly weapons programs to cut, bases to sell, and other savings.

Stephen Spruiell at The Corner:

Ok, let’s start with what we know. As things stand in 2010, the U.S. and Greece are in the same boat, deficit-to-GDP-wise (with a number of obvious differences: The U.S. can print its own currency, has better prospects for growth, etc.). After that, one has to rely on projections. Here’s where Krugman manages something remarkable: On the one hand, he criticizes colleague David Leonhardt (who has a piece up today comparing the U.S. and Greece) for relying on projections “based on the assumption of unchanged policy.” Krugman corrects the error in his own analysis by using projections that assume most of Obama’s policies will be implemented going forward.

But for Greece, he commits the same error for which he faults Leonhardt. He uses the IMF’s projections for Greece’s future debt-to-GDP, but subtracts out the effects of the austerity measures Greece agreed to in exchange for its bailout. In other words, Krugman has matched the worst-case scenario for Greece with a more optimistic scenario for us. It’s not surprising that the resulting comparison looks so lopsided.

Now, I’m not naive enough to think that Greece will do everything asked of it to shrink the size of its deficit — the challenge is just too daunting, and the moral hazard left in the wake of the bailout leaves Greece with little incentive to enact the most painful reforms. But it’s also unrealistic to pretend there will be no changes, and it’s downright tendentious to compare an unchanged fiscal picture of Greece to a picture of the U.S. in which Obama has defied political reality and gotten his way on everything, with all of his policies —including tax hikes and regulations — having static and predictable effects on the deficit.

Let’s re-run the numbers. For Greece, we’ll only subtract out half of the projected effects of the austerity measures, and for the U.S. we’ll use the Auerbach-Gale “extended policy baseline” — which assumes that Congress will act like Congress and thwart the administration’s deficit-reduction plans in key areas. Greece is still worse off, but the differences suddenly aren’t so stark:

Greece_US_2

Krugman obviously has a point, which is that the U.S. is in better shape than Greece and isn’t going to spontaneously generate serious doubts about its ability to service its debt. But we are walking a finer line than he lets on. The more credible concern is that an external event, such as a wave of sovereign defaults, leads investors to think twice about the safety of all sovereign debt, including ours.

David Leonhardt responds to Krugman:

Neal Conan at Talk of the Nation, the public-radio show, just asked me about today’s New York Times debate over the deficit. I compared Greece’s fiscal problems to the long-term ones facing this country. Paul Krugman thinks the comparison is overblown.

I certainly agree that the two situations are not equivalent. Greece’s fiscal problems are worse than ours, and both our underlying economy and our political institutions are stronger than theirs. But the last statistic Mr. Krugman cites highlights why I think the comparison is relevant: “we have a long-run fiscal imbalance of 6-plus percent of G.D.P.” So to get our budget in order, we would need to come up with revenue equal to more than 6 percent of gross domestic product, either through tax increases or spending cuts. (That number comes from this paper, by the economists Alan Auerbach and William Gale.)

That’s an enormous amount of money. Military spending, for instance, is now less than 5 percent of gross domestic product. Medicare’s budget is now about 3 percent of G.D.P. Coming up with the necessary cuts and tax increases — even over many decades, the relevant time frame — will not be easy.

In essence, the country needs to figure out how to pay for the government that its citizens want. It’s a version — albeit a less extreme one — of the problem facing Greece right now.

Ryan Avent responds:

On the face of things, the problems are similar: revenues minus spending equals a negative number in both America and Greece. And Mr Leonhardt seems stuck on that similarity.

But the differences are crucial. Greece needs to come up with that 6% right now, in the space of a couple of years, in an environment of negative economic growth, because markets are close to refusing to lend Greece any additional money. America needs to close that 6% gap over the space of several decades, during which time it is likely to grow at a real annual rate of about 2.5%.

Do you see how these situations are different? Greece needs to make massive, immediate budget cuts all without plunging its economy into a recession so deep that the cuts generate a larger deficit as revenues tumble. It’s quite possible that there is no way to make this happen without massive external assistance. America, by contrast, simply needs to slow the rate of growth of government spending. That’s it. An increase in revenues would help, too, but what we’re basically talking about is slowing spending growth by enough that economic growth can generate the revenues to fund the government’s budget.

Now, slowing spending growth is no piece of cake. There are big demographic headwinds, huge challenges where health cost controls are concerned, and sharp ideological differences over the proper size of government. If fixing the mess were easy it wouldn’t be a mess. But America really is different from Greece, in a fundamental way.

More Krugman:

The truth, however, is that America isn’t Greece — and, in any case, the message from Greece isn’t what these people would have you believe.

So, how do America and Greece compare?

Both nations have lately been running large budget deficits, roughly comparable as a percentage of G.D.P. Markets, however, treat them very differently: The interest rate on Greek government bonds is more than twice the rate on U.S. bonds, because investors see a high risk that Greece will eventually default on its debt, while seeing virtually no risk that America will do the same. Why?

One answer is that we have a much lower level of debt — the amount we already owe, as opposed to new borrowing — relative to G.D.P. True, our debt should have been even lower. We’d be better positioned to deal with the current emergency if so much money hadn’t been squandered on tax cuts for the rich and an unfunded war. But we still entered the crisis in much better shape than the Greeks.

Even more important, however, is the fact that we have a clear path to economic recovery, while Greece doesn’t.

The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. Put those projections together with the Obama administration’s policies, and they imply a sharp fall in the budget deficit over the next few years.

Greece, on the other hand, is caught in a trap. During the good years, when capital was flooding in, Greek costs and prices got far out of line with the rest of Europe. If Greece still had its own currency, it could restore competitiveness through devaluation. But since it doesn’t, and since leaving the euro is still considered unthinkable, Greece faces years of grinding deflation and low or zero economic growth. So the only way to reduce deficits is through savage budget cuts, and investors are skeptical about whether those cuts will actually happen.

It’s worth noting, by the way, that Britain — which is in worse fiscal shape than we are, but which, unlike Greece, hasn’t adopted the euro — remains able to borrow at fairly low interest rates. Having your own currency, it seems, makes a big difference.

In short, we’re not Greece. We may currently be running deficits of comparable size, but our economic position — and, as a result, our fiscal outlook — is vastly better.

J.D. Foster at Heritage:

So, no, we are not Greece. Our political system is no beauty, but it tends to work. Our society is under the inevitable strains of a big country with a heterogeneous population, yet we press on. Our economy should recovery smartly if Washington can stop throwing monkey wrenches into the operation. But then there’s the matter of the federal government’s finances (and state finances, but that’s for another day).

We’ve long know that the long-run fiscal outlook is unsustainable because spending on Social Security and Medicare in particular are set to soar. Yes, Paul, it is the spending. Krugman appears to be the only person in America who does not understand this. Certainly the leftish folks in think tanks such as the Brookings Institution, the Urban Institute, the Progressive Policy Institute and others don’t dispute this fact.

But now, under the dual pressures of time passing and Obama spending, the long-run isn’t so long any more. Many will explain away the current Grecian formula budget deficits as the obvious and temporary outcome of recession. Fine to a point, but in between the supposed long-run and the short-run is the medium run, and in this medium run (say the period from 2012 to 2010, America’s debt-to-GDP ratio is projected by the Congressional Budget Office (CBO) to reach a very French-like 90 percent under Obama’s policies. And, of course these numbers don’t reflect the budget busting Obamacare or all the other emergency, important, or just plain excessive spending Obama and friends will be working on over the next couple of years.

Krugman seeks to dismiss those on the right and the left who see trouble ahead. But he cannot dismiss the growing wariness in credit markets toward all countries with fiscally irresponsible governments. What Greece faces today fiscally is a window on our future if we continue down the debt-laden road. We’re not Greece, yet. But we will be if we don’t find an exit. Fortunately, there are many exits, and they all involve a turn to the right at a spending stop.

If the Grecian crisis does befall the United States, and all the journalists and pundits are then screaming, “How did this happen and who’s to blame?” A big finger of the blame will go to the likes of Krugman and his fellow apologists for the “progressive”, read socialist vision. My bet is America will come to its senses first, however, so Krugmanism will quietly join its fellow doctrines in the trash heap of history.

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CW Watch: Arrows Down On Newsweek

Images from Instant History

Newsweek:

The Washington Post Co. announced Wednesday that it has retained Allen & Company to explore the possible sale of NEWSWEEK magazine. The newsweekly, which has struggled in recent years, was launched in 1933 and purchased by The Washington Post Co. in 1961.

Washington Post Co. Chairman Donald E. Graham came to New York to tell the magazine staff at a 10:30 a.m. ET meeting on Wednesday. “We have reported losses in the tens of millions for the last two years,” he said. “Outstanding work by NEWSWEEK’s people has significantly narrowed the losses in the last year and particularly in the last few months. But we do not see a path to continuing profitability under our management.”

Graham said the company decided to go public with the news to invite as many potential buyers as possible, and said the sale could be completed within a few months. “Our aim will be–if we can do it–a rapid sale to a qualified buyer,” he said. “We’re a public company and we have to consider the price offered. But we’ll have a second and third criteria: the future of NEWSWEEK and the future of those who work here.”

In a later meeting, NEWSWEEK Editor Jon Meacham told the editorial staff that he continues to believe in the mission of the company. Meacham said he would do everything he could to ensure the continuation of the magazine, including personally pitching potential buyers. He also reminded the staff that NEWSWEEK wasn’t closed today, but was put on the market.

Chris Rovzar at New York Magazine

Colby Hall at Mediaite:

The writing was on the wall a few weeks back when news broke that Newsweek would be moving its staff, from its brand-new and cushy Tribeca offices, to its more mundane confines in Midtown Manhattan. These would be the offices that they JUST MOVED INTO last June, and the fact that Kaplan would be taking over…well, it just reinforced what everyone already knew. Kaplan is another subsidiary of the Washington Post company, that has become a cash cow best known for its higher education programs, professional training courses and test preparation products. So it would make sense for them to have the coolest offices.

But while moving was admittedly a pain, sources within the magazine spun this as a smart move, not just because it solved a serious space problem for Kaplan, but also saved Newsweek significant money each year. Cynics might see this as a “cheap” and effective way to quickly improve the bottom line, ostensibly to impress prospective buyers.

And what of prospective buyers? Who would want to buy a weekly title that lost a bunch of money last year? Well the truth is that the financial picture of Newsweek is much healthier than one might think. Last year was a big financial loss, which made a number of headlines. But as we said then, it wasn’t nearly as bad as it was reported.

It is true that Newsweek lost roughly $28 million in the last year. But to fully appreciate that number, one need remember that roughly two-thirds of that amount came in the the first quarter of last year, and included a write-down of over $6MM in severance packages. Further, Q2 of ‘09 saw roughly $5MM in losses, and Q3 roughly $4MM. Q4? Newsweek actually turned a small yet significant profit of $400k in Q4 of 2009.

Sources close to the title tell us that the first quarter of 2010 was also encouraging – ad sales efforts met their budget and print ad numbers for the months of March and April, perhaps owing as much to the end of the ad recession as anything else. The bottom line is that Newsweek is seeing ad revenues return to pre-recession levels, and combined with a rather dramatic reduction in losses, the weekly news title is moving very close to hitting their break even target for 2011.

Matthew Yglesias:

And I’m actually sort of surprised Graham took such a dour line. I would have just said that in a digital paradigm it doesn’t make sense for one company to own both a daily news product and a weekly news product. In an “ink on paper” world, there’s a big difference between a good Newsweek story and a good Washington Post story but in a “pixles on the internet” paradigm there isn’t. If the Washington Post Company is going to operate two different web products they would have to be differentiated along a different axis—one could be a local news site about the DC metropolitan area and one could be a site about about politics and national affairs. But the Post/Newsweek alignment didn’t make sense. The two print publications were supplements while the two websites are competitors.

Choire Sicha at The Awl:

In today’s meeting, at which the announcement was made that Newsweek was being put up for sale by the Washington Post Company, the magazine’s editor Jon Meacham said that he will be lining up financiers and trying to make a bid to buy the magazine himself. He has already had inquiries from some very well-off types this morning. Tonight’s “Daily Show” appearance—he’s been booked for ages—should be really something! Meacham is currently talking to reporters and juggling calls, so expect more soonish.

John Koblin at New York Observer:

Newsweek is up for sale, and editor Jon Meacham is going to explore the possibility of rounding up some bidders to buy the magazine himself.

“I believe this is an important American institution,” he said in an interview. “I just do. Maybe that’s quixotic, maybe that’s outdated, but it’s what I believe.”

He said he had two voicemails from “two billionaires” after the news was announced this morning that The Washington Post Company was going to try to sell the magazine. He said he had not called them back.

Mr. Meacham won a Pulitzer Prize last year and he has a new TV show that will debut on May 7 on PBS. In other words, he has plenty of options he can explore.

But for now, he said he’s dedicated to figuring out how to save Newsweek.

“We have to figure out what journalism is going to be as the old business model collapses all around us,” said Mr. Meacham. “And I want to be–I want to try to be–a part of that undertaking. Will it work? Who the hell knows. But I’m at least going to look at this.”

Jon Friedman at Market Watch:

I have another idea: Why can’t the Washington Post Co.  combine Newsweek and Slate, another of its well regarded media holdings, into one all-online operation?

The move would accomplish one big priority: saving money. Newsweek would go forward with a smaller staff and still preserve some of the jobs of staffers currently at the magazine.

The news that the Post Co. may unload the money-losing Newsweek should hardly come as a shock. All over the industry, big names, new and old, have been vanishing, such as Gourmet and Portfolio. BusinessWeek received a stay of execution when Bloomberg stepped in at the 11th hour and acquired the publication from McGraw-Hill.

Traditionalists have bemoaned the changes that Bloomberg has put in place. They seem to forget that without Bloomberg’s involvement, BusinessWeek would probably have disappeared by now.

Derek Thompson at The Atlantic:

The Washington Post Co. is looking to sell Newsweek, its vaunted but money-losing magazine jewel. Media analysts are in a frenzy, and many are envisioning a future in which Newsweek has no paper edition. Some are wondering whether the magazine should merge with Slate, an all-online magazine also owned by the Post. Others like Gabriel Sherman are worried about branding: will the company struggle to find buyers considering the words “news” and “week” don’t really work on the Web?

The sale and possible electronificiation of Newsweek just a year after its redesign is one of those stories that epitomizes the challenges of the media landscape. Newsweek is still one of America’s two most famous newsmags, the other being Time. Its rebranding effort last year tried to merge the soul of a weekly news digest with … well, something else. The first few issues looked as though a design team had been instructed to empty their brains onto all 50 of its thin pages. Large pictures peeked out of unexpected corners of the magazine, faint blocks of color invaded the feature section, and the back of the book looked more like a collage of design ideas than a unified theory of magazine layout.

[…]
Newsweek grew up learning how to tell people what happened. Today, everybody knows what happened. So Newsweek’s reinvention needs another reinvention. I wish them the best of luck.

UPDATE: Rod Dreher

James Fallows

UPDATE #2: Michael Kinsley at The Atlantic

UPDATE #3: Ross Douthat

UPDATE #4: Jim Newell at Gawker

UPDATE #5: Mike Allen at Politico

Meenal Vamburkar at Mediaite

Nat Ives at AdAge

UPDATE #6: Peter Lauria at Daily Beast

Stephen Spruiell at The Corner

Michael Calderone at Yahoo News

UPDATE #7: Jack Shafer at Slate

UPDATE #8: Chris Rovzar at The New York Magazine

Derek Thompson at The Atlantic

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