Ezra Klein

What's amazing -- and, for the Democrats, terrifying -- isn't just that 57 percent of Americans are "somewhat" or "very" concerned about making their next mortgage payment. It's that two years ago, when the macroeconomy was in worse shape, that number was a comparatively modest 37 percent. Most Americans, in other words, have gotten more insecure over that period, at least on this metric.

There are all sorts of ways to explain this, of course. Unemployment drives foreclosures, and it's a lagging indicator. The financial crisis was driven by the expectation of this housing insecurity, not just the foreclosures that had happened in late-2007. Financial crises always take a long time to work through, and if you're a Reinhart and Reinhart fan, you know that housing crises and credit bubbles take years, not months, to work through.

But that's all cold comfort to the 57 percent of Americans who walk around with a knot in their stomach. They're hurting now. And they're about to vote.

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With outside groups included, this election cycle's cost could hit $4 billion, reports Dan Eggen: "There are three general tides of money swamping this year's elections, according to CRP's data: House and Senate candidates, who have reported raising $1.7 billion; the political parties, with about $1.1 billion; and outside interest groups, which have raised at least $400 million. That adds up to $3.2 billion, but the numbers are incomplete amid the frenzy of ad buys and other activity in the week before the election...Donations from Wall Street, medical and insurance firms, energy conglomerates and other corporations have shifted decisively toward Republicans over the past year because of policy disputes with Democrats and anticipation of a possible GOP takeover in Congress."

Democrats are amping up their secret campaign spending: http://wapo.st/bAq5ju

Most Americans say they worry about making mortgage or rent payments, report Ariana Eunjung Cha and Jon Cohen: "In all, 53 percent said they are 'very concerned' or 'somewhat concerned' about having the money to make their monthly payment. Worries are the most intense among those with lower incomes and among African Americans... there's now even more unease about making next month's rent or mortgage payment than there was two years ago. Back then, 37 percent of respondents said they were somewhat or very concerned about their monthly housing costs. Since that time, the economy has modestly improved."

To triangulate or not to triangulate, that is the White House's question, report Laura Meckler and Peter Wallsten: "Strategists in both parties see two options for President Barack Obama. He could seek deals on issues including trade, taxes and spending, following the model of President Bill Clinton, who after losing Congress in 1994, compromised with the GOP to overhaul welfare...Mr. Obama could also follow the model of Harry Truman, who dug in and successfully portrayed an opposition Congress as obstructionist. That would lay the foundation for a 2012 reelection campaign where the president could draw contrasts with his opponents... White House Chief of Staff Pete Rouse, in investigating the various options, is consulting with people who worked for Mr. Clinton in the mid-1990s."

Special guest interlude: Belle & Sebastian and Jenny Lewis play "Lazy Line Painter Jane".

Still to come: Sen. Kent Conrad is sticking up for TARP and the stimulus; Matthew Yglesias thinks Obama's biggest economic mistakes came in neglecting the Fed; Milton Friedman would support quantitative easing; and There Will Be Blood as a Super Nintendo game.

Recap: A great graphic matching deficits to economic growth; introducing the "climate hawks"; and some insight into the type of Speaker John Boehner will -- or at least wants -- to be.

Elsewhere:

1) Nate Silver on his House projections.

2) Really, really glad I didn't go to law school.

3) "Cutgo," huh?

4) Everything you ever wanted to know about the Consumer Financial Protection Bureau.

I'd assumed the slight deterioration in health-care reform's poll numbers since June was part and parcel of the deterioration in the Democrats' position since June, and the deterioration in perceptions that the economy is recovering. But Greg Sargent catches a New York Times story suggesting that there might be more to it than that:

Opponents of the legislation, including independent groups, have spent $108 million since March to advertise against it, according to Evan L. Tracey, president of the Campaign Media Analysis Group, which tracks advertising.

That is six times more than supporters have spent, including $5.1 million by the Department of Health and Human Services to promote the new law, Mr. Tracey said.

To keep things in perspective, though, the bill is almost exactly as popular -- and unpopular -- as the day it was signed into law. What's happened is that the bill got slightly more popular between March and June, and then slightly less popular again.

From Alicia Parlapiano, one of the Post's graphics wizards:

What you're seeing there is that it's not the composition of the government, but the growth of the economy, that drives the deficit. Wide gaps open up during the 1973, 1981, 1991 and 2008 recessions, and they close as the economy recovers. That's holding true now, too: The annual deficit fell by $125 billion between 2009 and 2010 -- the single largest drop in our history.

At this point, I'd say it's extremely likely that Republicans will win the House, and if they do that, it's similarly likely that John Boehner will become speaker. So what sort of speaker will he be? Paul Kane's interview with the Ohio Republican offers some clues. First, he's not the arm-twister that Nancy Pelosi is, or that Tom DeLay was:

His hands-off style has its critics among Republicans. Some believe he isn't a forceful enough presence to lead lawmakers where they are reluctant to go. In late September 2008, Boehner headed the effort to secure votes to pass the $700 billion bailout of the financial industry, something the Bush administration was pushing.

Privately, he told his colleagues that the legislation was a "crap sandwich," but they had to support it or the entire financial sector would implode. On Sept. 29, 2008, only a third of the GOP conference -- 65 Republicans -- supported Boehner as the legislation went down and the stock markets plummeted nearly 800 points.

Inside his office an hour later, Boehner, taking long drags on his ever-present Camel cigarettes (he is exempted from the Capitol's smoking ban while in his office), explained that it was almost impossible to pull off the vote. He stuttered over the words "break arms," saying it just wasn't something he could do.

Four days later, when the House voted again and approved the measure, Boehner couldn't get his closest friends, such as Latham and Rep. Steven C. LaTourette (R-Ohio), to back the legislation.

Perhaps more to the point, he doesn't want to be remembered or seen as an arm-twister. He'd like to be seen as the leader who returned comity to the House of Representatives:

He insists he will be a very different kind of politician if the GOP wins Congress and he is elected speaker. He'll help bring the animosity between the two sides under control, he says, by allowing Democrats greater freedom to have their say on the floor of the House and letting them bring their proposals to a vote.

As it is now, the party in power routinely uses rules and procedural tricks to prevent the minority from offering bills and amendments. In retaliation, members of the minority use what few tools they have to obstruct the majority.

That's how it has been ever since the combative Newt Gingrich (R-Ga.), once a mentor to Boehner, became House speaker in 1994, the last time the GOP retook Congress from the Democrats. After Gingrich, Republican leader Tom DeLay, known as the "Hammer," took this punitive style of leadership to the next level. And the current Democratic speaker, Nancy Pelosi (Calif.), has advanced a similar zero-sum approach to politics.

"A lot of scar tissue has been built up on both sides of the aisle," said Boehner, who says he would create an atmosphere in which Democrats wouldn't have to resort to the kind of tactics he has used against them.

"If there's a more open process, and members are allowed to participate, guess what? It lets the steam out of the place," he said in a speech last month at the conservative American Enterprise Institute in Washington.

I don't look back at the last two years and think of Boehner as a real stickler for civility and bipartisanship, and it's hard to believe that he'll have an easier time of it when he's the only Republican with the power to block President Obama's initiatives and when his caucus is full of fire-breathing freshmen, but I guess we'll see.

Photo credit: By Ricky Carioti -- The Washington Post

That's health-care coverage in every OECD nation -- all 33 of them -- from the ’90s till today. It's really hard to see about 29 of them. That's because they're all clustered at the top, which means pretty much every resident in the country has health-care coverage. We're the big red line in the middle. We're doing better than Chile, Mexico and Turkey, but that's about it. And how often does America pat itself on the back for being number 30?

Graph credit: Aaron Carroll

In 2001, Bill O'Reilly interviewed the Insane Clown Posse. Hilarity -- and some serious discussions bout drugs and kids -- ensued and, in 2010, YouTube noticed:

You may have noticed some talk in recent days about Treasury selling inflation-protected bonds at a negative yield. This talk may have made your eyes glaze over. The short version is that it means investors think the Federal Reserve will be successful in its efforts to pump some inflation into the economy. But how successful? Annie Lowrey* crunched the numbers and found that "annual inflation for the next five years needs to be somewhere north of about 1.55 percent for the investors to break even. Any more inflation than that, and they make money."

That's better than no inflation, but it's well below the Federal Reserve's target of 2 percent.

John Sides tracks down a political science paper testing the effect of divided government on state deficits from 1968 to 1987. The answer? It made it worse, because the parties had more difficulty coordinating on unpopular choices and voters were more confused about who to blame.

This conflicts with our intuition a bit, as divided government brought federal deficits down in the 90s, but perhaps there's something different about national politics, or perhaps the era's economic boom simply made fiscal contraction easier because people didn't feel it amidst an economic expansion.

I'm sorry if you, or anyone else, took offense when I had no choice but to stomp on your head while you lay defenseless on the ground.

David Roberts has been trying to popularize the term "climate hawk," and he's got me -- and others -- convinced. Here's how Matthew Yglesias describes it:

What’s a climate hawk? Well of course much like a deficit hawk or a national security hawk or an inflation hawk, a climate hawk is tough-minded and awesome and entitled to worshipful media coverage. We’re very serious people who want to confront the major challenges of our time. Are we environmentalists? Perhaps. But many of us aren’t really “nature-lovers,” we just think it would be unfortunate if low-lying areas were flooded, while vast new regions of the earth are stricken with drought. We recognize that the particulate pollution from burning coal and the geopolitical consequences of oil dependence are both dire enough to make a compelling case for energy reform even apart from the greenhouse gas issue.

We think it’s unfortunate congress didn’t pass a comprehensive climate bill, but we’re determined to do the best we can with EPA regulation and hope responsible people recognize that it’ll be better for everyone if congress takes another bite at this. And we’re hoping for a serious bite. After all, we’re climate hawks!

Now we just need jackets.

If you were going to wring the mockery and hypocrisy out of David Brooks's column yesterday and extract a serious critique from it, I think it would be this: Should public disapproval of a piece of legislation force its supporters to rethink its merits?

In general, public opinion doesn't have much impact on the judgments of policy elites. Deficit hawks take a certain pride in the fact that actual people are going to hate everything that needs to be done, while the hawks themselves are willing to make the tough choices that fiscal responsibility requires (and that, in most cases, won't affect them at all). When the Iraq war was unpopular, its backers said that you can't lead by polls, and when Social Security reform tanked, David Brooks lamented that Americans want the impossible combination of "high entitlement spending and low taxes."

In the specific case of health-care reform -- a bill that hasn't yet been implemented -- there's also the question of what the poll is testing. There's a difference between learning about people's impressions of the bill they think passed and learning about what people think of the bill that actually passed.

Health-care reform, of course, got a lot of coverage, over a long period of time. But a lot of that coverage was coverage of demagogic attacks ("death panels," for instance, or most every word out of Rush Limbaugh's mouth) and partisan conflict. Is anyone confident that most Americans -- or even 10 percent of Americans -- really had the exchanges explained to them, or the interaction between the mandate and the subsidies and the insurer regulations? Do most people realize the bill's total price tag will be about 4 percent of what we spend on health care in a year? And that its savings and new revenues will actually amount to more than that, and so the deficit will go down? And what of the polls showing the bill's component parts are popular?

Moreover, there's good evidence that this bill will be popular when it actually goes into effect. In Massachusetts, a bill that works the same way was implemented years ago, and it's so popular that even noted health-care reform opponent Scott Brown supports it.

Now, you may hold the view that unpopular bills shouldn't be implemented no matter their merits, that it's a typical elite failure to think that policy can or should move despite public disapproval. The problem is, I don't know anyone who holds to this view when the policy under question is policy they themselves support. If you hold that view but didn't believe we should go into Iraq when the people seemed to support it and then withdraw our forces as soon as they began to oppose it, you don't really hold that view. And I don't know of anyone who took those positions, for those reasons, on the Iraq War.

Which isn't to say that people who support a given piece of legislation shouldn't be unnerved when the public opposes it. But the problem isn't that polls reflect on the substance of policy. It's that they reflect on the difficulties -- or ease -- policy will have being passed, and then implemented. Very good policy can poll quite poorly, and very bad policy not only can -- but often does -- poll quite well. As a policy writer, I have the luxury of making judgments about the merits of these questions, but obviously I don't have to run for reelection or represent my constituents or implement legislation. I don't envy those who do.

Chart credit: Pollster.com.

If you ask most candidates or political consultants what this election is about, they'll say "jobs." If you ask them what the next Congress will actually do about jobs -- no matter who wins -- they'll get rather quiet. Voters may be angry about unemployment, but there's little reason to believe the 112th Congress will solve, or even substantially ameliorate, the problem.

At this point, that seems largely up to the Federal Reserve. So reports that the Fed is likely to kick off its effort to reinvigorate the economy with $500 billion in asset purchases are arguably the most important news on jobs this week, and the Fed's announcement of its actual policy choice -- and not the election results -- will be the most important news on jobs next week. It's true, of course, that the Fed's asset purchases, which give the economy access to new money, would do much more if Congress would commit to actually spending that money so that it creates jobs in the real economy rather than sitting around in the Treasury Department. But since no such commitment seems to be forthcoming no matter who wins on Tuesday, all eyes are -- or should be -- on Ben Bernanke.

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The Fed will likely announce $500 billion in new asset purchases over six months, reports Robin Harding: "William Dudley, president of the New York Fed, suggested in a recent speech that $500bn of asset purchases 'would provide about as much stimulus as a reduction in the federal funds rate of between half a point and three-quarters of a point'...Given that the central bank also needs to buy about $30bn of Treasuries a month to reinvest early repayments from its portfolio of mortgage-backed bonds, if the target figure were $500bn, six months is likely to be the minimum time needed to get there. The big question for markets - and the big debate within the Fed - is about what to do beyond the initial move. The immediate issue for November is whether to signal a bias towards further easing."

Tea Partiers might be disappointed by the GOP House's committee chairmen, reports Janet Hook: "The most politically sensitive post is leading the House Appropriations Committee, which has been a central target of the tea-party critique of earmarks and growth of spending even during years of GOP control of Congress...The leading candidates for the panel's chairmanship, Reps. Jerry Lewis (R., Calif.) and Rep. Harold Rogers (R., Ky.), are longtime members of the panel who have been stalwart defenders of earmarks."

The White House should have been more aggressive at combating unemployment, writes David Leonhardt: "White House officials respond to these criticisms by pointing out that they helped break the back of the worst financial crisis in 80 years and that Republicans opposed nearly every tax cut or spending increase Democrats proposed. That’s all true. But I keep coming back to the fact that this administration is full of people who knew that financial crises tended to produce weak recoveries -- and that the typical policy mistake was being too timid. 'We’re just not going to make that mistake,' Timothy Geithner, the incoming Treasury secretary, told me, as Mr. Obama was preparing to take office. 'We’re not going to do that. We’ll keep at it until it’s done, whatever it takes.'"

A $1.2 trillion stimulus wouldn't have saved Democrats, writes Kevin Drum: "For calendar 2010, CBO estimates that the stimulus bill reduced unemployment by something between 0.7 and 1.8 points. Split the difference and the consensus average is about 1.2 points. A stimulus bill that was 50% bigger would therefore probably have reduced unemployment by 0.6 points more than the actual bill. If this is in the ballpark, it means that with a bigger stimulus bill unemployment today would be 9%, not 9.6%. That would have been well worth the price, but just because it was worth doing doesn't mean it would have made a big electoral difference."

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

Acoustic version interlude: Superchunk plays "Detroit Has a Skyline".

Still to come: The GOP might be wiling to go after tax deductions; education reform doesn't look good in the next Congress; an non-governmental panel wields considerable power over Medicare spending; better chairs might save our schools; and a walrus does situps.

Recap: Handicapping the deficit under divided government; the problems with a small-tent strategy; and David Brooks vs. David Brooks.

Elsewhere:

1) What will happen after the election.

2) Isn't it a bit early for the "this time, we really could have a major third-party candidacy!" fantasies?

3) The Chamber of Commerce does not speak for American business.

4) Fix the desks, save the world?

Recipe of the day: Never too early to start thinking about your Thanksgiving turkey.

David Brooks has a sharp column today mocking Democrats for being proud of their accomplishments despite facing a loss at the polls. He also had a sharp column in 2005 criticizing Republicans for accomplishing nothing despite having just won a major victory at the polls. The two make for an interesting contrast.

The story Democrats are telling themselves, Brooks archly explains, is that they "are lagging this year because the country appears incapable of appreciating the grandeur of their accomplishments."

Flash back to 2005: "Having skimmed decades of private-account proposals, Republicans did not appreciate how unfamiliar this idea would seem to many people. They didn't appreciate how beloved Social Security is, and how much they would have to show they love it, too, before voters would trust them to reform it."

So when, exactly, is it acceptable to blame public opinion on political communication?

Brooks goes on to suggest a drinking game. "Take a shot every time a White House official is quoted blaming Republicans for the Democrats’ political plight," he writes, joking that you'll quickly find yourself unconscious.

And if you played the same game with his 2005 column? Well, there's the part where he says "the Democrats played the Yasir Arafat role at Camp David. They made no counteroffers. They offered no plan. They just said no." There's the bit about how "the Howard Dean hotheads declare that they hate the evil Republicans, making compromise seem like collaborating with Satan." There's the sad shake of the pen at the Democrats' "demagogic speeches about Republican benefit cuts." There's the diagnosis that Democrats "are still traumatized by their own losses" and "focused on past defeats, not future opportunities, and interested in revenge, not governing and accomplishment." I'm counting 13 shots, though I admit the rules are a bit unclear (does "they offered no plan" and "they just said no" count as one or two shots?).

Finally, Brooks says Democrats are lazily telling one another that "Americans are nearsighted and ill-informed." Perhaps you will not be surprised to learn that the vox populi was less infallible in 2005, when Brooks wrote, "Oh, yes, there's one more group to be criticized: the American voters. For the past 30 years, Americans have wanted high entitlement spending and low taxes. From the looks of things today, they - or more precisely their children - are going to live with the consequences." It's funny: That sort of sounds like "Americans are nearsighted and ill-informed."

Dan Gross wants to see us holding elections every year, or maybe every two years. But it's not because of the salutary effect they have on democracy. It's because of the stimulative effect they have on the economy:

Every four years, when Michael Bloomberg runs for Mayor, the Big Apple is transformed into a winter wonderland where it's Christmas all year round — at least for the consultants, ad salespeople, canvassers, caterers, and hangers-on whom the mayor employs. In 2009, Bloomberg injected $102 million into the city's economy in order to win a third four-year term for a job that pays him only $1 per year.

No wonder the city's leaders decided to overturn the law limiting a mayor to two terms. Having Bloomberg run for re-election is like staging a Super Bowl, NBA All-Star game, and World Series.

Meg Whitman is doing Bloomberg one better. In her bid to replace Arnold Schwarzenegger as California's governor, the former EBay CEO has already plowed $140 million into the Golden State's stricken economy. One can only hazard a guess as to how much higher California's unemployment rate (12.4 percent in September) would be without Whitman.

In Connecticut, where I live, another CEO is having an even greater proportional impact. Former WWE CEO Linda McMahon through mid-October had spent more than $41 million of her own money on a Senate campaign -- about $25 for every voting age adult in the state. McMahon is single-handedly boosting Connecticut's office and retail vacancy rates by renting out storefronts, and has saturated the airwaves with ads the way Starbucks has saturated Seattle.

Self-funders are only part of the equation. With political passions running high in recent years, millions of citizens have made small donations. Sharron Angle, who is challenging Senate Majority Leader Harry Reid, raised a stunning $14 million in the third quarter, mostly from small donors.

Then there's corporate money. In the past two years, America's CEOs have become a bunch of Scrooge McDucks. Unwilling to hire and slow to boost dividends, they hoard cash and loosen purse strings only for overseas expansion (or CEO compensation). But now that it's easier to make big donations without having to disclose them, corporations are getting involved in politics in a big way. The U.S. Chamber of Commerce has hit up members to fund tens of millions of dollars in campaign spending. Bush adviser Karl Rove, eager to get back into the game, set up American Crossroads, which has raised tens of millions of dollars from corporations and other donors.

Surely some economist somewhere has done a study investigating whether high-cost elections stimulate local economies, right? It seems like a perfect natural experiment.

When I heard that Ari Berman's book on the Democratic Party would come out quite awhile after the 2008 election, I felt bad for him: By that time, I figured, there wouldn't be particularly large intra-Democratic arguments. I was wrong. “Herding Donkeys” turns out to be incredibly well-timed, and I imagine you'll be hearing a lot more about it next month. You'll get a taste of Berman's argument -- which is, in short, to kick out the conservative Democrats -- in this New York Times op-ed:

Democrats would be in better shape, and would accomplish more, with a smaller and more ideologically cohesive caucus. It’s a sentiment that even Mr. Dean now echoes. “Having a big, open-tent Democratic Party is great, but not at the cost of getting nothing done,” he said. Since the passage of health care reform, few major bills have passed the Senate. Although the Democrats have a 59-vote majority, party leaders can barely find the votes for something as benign as extending unemployment benefits.

A smaller majority, minus the intraparty feuding, could benefit Democrats in two ways: first, it could enable them to devise cleaner pieces of legislation, without blatantly trading pork for votes as they did with the deals that helped sour the public on the health care bill. (As a corollary, the narrative of “Democratic infighting” would also diminish.)

Second, in the Senate, having a majority of 52 rather than 59 or 60 would force Democrats to confront the Republicans’ incessant misuse of the filibuster to require that any piece of legislation garner a minimum of 60 votes to become law. Since President Obama’s election, more than 420 bills have cleared the House but have sat dormant in the Senate. It’s easy to forget that George W. Bush passed his controversial 2003 tax cut legislation with only 50 votes, plus Vice President Dick Cheney’s. Eternal gridlock is not inevitable unless Democrats allow it to be.

This doesn't make much sense to me. Berman admits that a more ideologically cohesive caucus would mean fewer votes. But that would mean more "blatantly trading pork" -- and worse -- "for votes," not less. The reason you make deals for votes is that you don't have enough of them. The more votes you need, the more deals you have to make. So insofar as Berman's recommendations mean fewer votes, they mean more deals.

He then says that slimmer majorities will mean that Democrats finally confront the filibuster. But will it? There have been plenty of 51- or 52-vote majorities in recent years. None of them have ended, or even changed, the filibuster. And feelings on the filibuster have as much -- or more -- to do with reverence for the institution than ideology. Sens. Evan Bayh and Michael Bennet are both conservative Democrats who want to reform the filibuster. Sen. Chris Dodd is a liberal Democrat who wants to preserve it.

As for reconciliation, George W. Bush got the tax cuts done through reconciliation and the Democrats finished health-care reform through reconciliation, so there's no obvious evidence that the Democrats are less willing than the Republicans. They avoided doing health-care reform entirely through reconciliation, but that's because the rules of reconciliation would've meant not doing major parts of health-care reform, like the ban on preexisting conditions.

Moreover, majority rule doesn't mean you don't have to make compromises. Consider the House of Representatives, where Nancy Pelosi had to cut a deal with Bart Stupak and his friends in order to pass health-care reform, and with Collin Peterson and his friends to pass cap-and-trade. Turn Stupak and Peterson into Republicans rather than conservative Democrats and those deals either get much worse or those bills simply don't pass.

Berman ends by saying that a more ideologically cohesive caucus will make for a "more united and more productive" party. More united, sure. But more productive? Fewer votes means getting less done. And the proof is in the 111th Congress: Say what you will about the ugly deals and the missed opportunities, but no recent group of congressional Democrats has even come close to their productivity, and that's solely a function of no recent group of congressional Democrats being nearly as large as this one was. It's very difficult to do big things inside a small tent.

Photo credit: By Bill O'Leary/The Washington Post

I think one of the more interesting technological trends in the next couple of decades will be watching places like India and China reverse=engineer high-cost innovations that we take for granted in the West into low-cost forms that people can afford in the East :

One of the stimulus's lesser-known but more-important efforts was the massive push to get doctors to use electronic medical records. The legislation included $20 billion to help them and, perhaps more importantly, penalties -- in the form of a cut in Medicare and Medicaid reimbursements for providers who are still using paper in 2015 -- for those who didn't make the move. It looks like it's working:

As many doctors and hospitals are rushing to implement electronic medical records and other health IT systems by 2014 (as mandated by the stimulus bill), IT trade group CompTIA will release this week a snapshot of where things stand. CompTIA's research finds that half of health-care providers are using some form of EMR -- 34 percent are using full EMRs while 16 percent have a partial system. Of the remaining, 29 percent are evaluating EMR options while 20 percent have not yet considered using the technology.

There's an argument that we're eventually going to look back at the stimulus bill's investment in electronic medical records as the most important improvement the Obama administration made to the health-care delivery system -- and, if the more optimistic assessments are right, as a crucial piece of infrastructure that allowed us to eventually get costs under control.

There's a critique of the Affordable Care Act that argues that it doesn't save money. This critique is wrong. It doesn't save money if the bill is changed and its cost controls are repealed. But as written, our best estimate is that it saves money -- and it's as likely to save more than projected as it is to save less.

There's another critique, however, that is more persuasive: It saves money slowly. That frustrates me, too. But if you want to go faster, you need to figure out a way around the roadblocks that Jon Cohn describes:

Uwe Reinhardt, the Princeton economist, always reminds people that every dollar of wasted spending in health care is also a dollar of somebody's income. Take it away and that person is going to be unhappy. And while not every health care interest group has the credibility of the medical profession, everyone has money to finance advertising, organizing, and contributions -- not to mention well-connected lobbyists who know how to deliver messages in Washington.

This doesn't make cost control hopeless. It just makes cost control really, really slow. In most cases, you have to settle for reducing future earnings -- that is, allowing incomes for these groups to grow more slowly than they otherwise would. And that's precisely what the Affordable Care Act does.

This is also true for things like entitlements like Social Security and pricey tax-based entitlements like the mortgage-interest deduction. But a world in which most of your savings have to be phased in slowly is a world in which Congress has to be credible when it tells the public and the bond market that future congresses won't simply overturn its decisions.

Congress's record actually is pretty good on this front. The Social Security changes recommended in the early 1980s are being phased in on schedule. The vast majority of the budget cuts made in the '90s were implemented with little fanfare. But there's been an effort in the past few years to use the sad case of Medicare's doctor payments -- where a policy that people expected would mean tiny cuts proved flawed and required giant cuts that would've disrupted Medicare -- to undermine confidence that Congress can uphold any cost containment, and of course the current conservative fad for repealing the cost controls in the health-care law further suggests that the mere fact that legislation passed doesn't mean the bonds market can relax.

I've said it before and it's still true: If Republicans were really worried about the market's confidence in our finances, they'd have strengthened the cost controls in the Affordable Care Act and, whatever else they wanted to do to the bill, loudly embraced things like the excise tax and the Independent Payment Advisory Board. As it is, they've steadily tried to persuade the market to ignore the cost controls we've passed and assume instead that Congress won't follow through when it promises to pare back the tax breaks for employer-provided health care or allow a commission to actually get Medicare's spending under control.

That's good politics, but it comes at the cost of telling the bond market that it can't trust us even when we do pass cost controls. And that might mean that, down the road, the bond market demands deficit reduction happens quickly, rather than gradually, and that will be much more painful.

If Republicans take the House, how much likelier is a full extension of the Bush tax cuts? I'd say the odds that the cuts for income over $250,000 remain in place for at least a few more years go up by at least 50 percent, and if those cuts are extended once, I think it's also likelier that they get extended again.

If Republicans take the House and the Senate, how much likelier is a full extension of the Bush tax cuts? I'd say it goes up to 70 percent, and the only reason I don't say 100 percent is that President Obama has more incentive to pick a fight with Congress. Nevertheless, the compromise will almost surely include a temporary extension of the tax cuts for income over $250,000.

Now, if Republicans take the House, how much likelier is a deficit-reduction deal that increases revenues or cuts spending by at least $700 billion over the next 10 years, thus making up for the tax cuts? Maybe 10 or 20 percent? And I think I'm being generous here.

What if the Republicans take the Senate, too? I'd think the chances might actually go down, as Obama would need to fight on behalf of his base if he's going to remain viable for 2010. You might see some changes made to Social Security, but nothing on the order of $700 billion over the next 10 years.

When you get concrete, in other words, it's much easier to see how divided government worsens the deficit and very hard to see how it reduces it. The vehicle for worsening the deficit already exists and has Republican support. The vehicle for reducing the deficit doesn't. And that's before we talk about health-care reform, where Republicans have supported both repeal and, more specifically, repeal of the bill's cost controls, either of which would worsen the deficit picture further.

That, anyway, is where I'd put the odds. For those who disagree, what are the deficit-reducing bills divided government will pass that will have more impact on the deficit than the tax cuts (and, if you think it'll happen, repealing health-care reform, which CBO says will worsen the budget outlook)?

Photo credit: White House.

And I mean that literally.

Over the past month or two, Democrats tried a variety of new messaging strategies to shake up the election. President Obama became, at least for a time, more partisan and confrontational in an effort to fire up the base. Secret money and the Chamber of Commerce became dominant themes in the Democratic argument. And to what end?

You can't run the counterfactual here, of course. Maybe other messages would've lost ground for the Democrats. Maybe the perfect combination of communication strategies would've secured more statistically significant improvements. But I doubt it.

In an environment where both parties have highly paid strategists running endless focus groups and polls, neither is likely to really outmaneuver the other in the "what voters want to hear" category. Outside events -- something happens in the world, or in a race -- can shake things up, and ground game can help at the margins, but that's about it. The problem is, outside events aren't controlled by campaigns and ground games are largely invisible until the day of the election. So all eyes are on the messages because, well, that's all there is to look at.

We're one week out from the election, and divided government seems a serious possibility. The optimistic spin on that goes something like this: Remember the 90s? Democrats and Republicans didn't like each other, per se, but they came together and took tough votes to reduce the deficit. This has led to more than a bit of Clinton-nostalgia among the very conservatives who once loathed the man.

Divided government, some say, is actually the only time we can really reduce the deficit. Deficit reduction is a second-order priority for both parties. When they control government, they work first on the things they want government to do, rather than the things they want government to stop doing. It's only when neither party can achieve any affirmative objectives that deficit reduction stands a chance.

And maybe that'll prove true again. But as Jackie Calmes argues in today's New York Times, it might not. For one thing, compromise has become a dirty word. "If I haven’t been clear enough yet," Rep. Mike Pence told conservative radio host Hugh Hewitt, "let me say again: No compromise." For another, the election is likely to wipe out a lot of the conservative Democrats who would've been party to a deal, and it's taken down a few of the establishment Republicans who would've joined them at the table. There is nothing intrinsic to divided government that will reduce the deficit. That's particularly true if the only compromises are to increase the deficit -- for instance by extending the Bush tax cuts. Reductions will require compromise. But compromise is likely to be in short supply come January.

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House and Senate campaign spending will pass $2 billion this year, reports Dan Eggen: "The Public Campaign Action Fund, a watchdog group, will release a study Tuesday predicting that House candidates alone could spend nearly $1.5 billion by the time the dust settles on Election Day. The calculation is based on previous elections in which about half of a campaign's money was spent in the final month of the contest. Senate campaigns are also on track to exceed the $550 million mark from 2006, bringing the likely total to $2 billion or more by the time the ballots are counted. The surge is driven in part by the unusually broad battlefield in the House, where an estimated 90 seats are in play, almost all of them held by Democrats."

A divided government does not necessarily mean more deficit reduction, writes Jackie Calmes: "In interviews, a number of Democrats and Republicans agreed on one thing: For all the pre-election talk that a divided government could force the parties to work together, especially on cutting annual deficits, the opposite could just as well be true."

"Democrats are all but certain to lose a number of seats and perhaps their majorities. Most of the casualties will be fiscally conservative Democrats from Republican-leaning areas, leaving a smaller, more solidly liberal caucus less inclined to support cost-saving changes in future Social Security benefits, for example. Republicans’ ranks will almost certainly be strengthened by a wave of conservatives, including Tea Party loyalists, who are opposed to raising any taxes and to compromising with Democrats generally — a stand Congressional Republican leaders have adopted. And incumbents otherwise inclined to make deals are now wary, Republicans say privately, mindful of colleagues who lost primary challenges from Tea Party candidates."

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The Treasury is selling bonds with negative interest rates, suggesting the market believes the Federal Reserve will succeed in boosting inflation, report Aline von Duyn, Michael Mackenzie, and Nicole Bullock: “'The Fed has been sending the message that its cheque book is ready and it will do what it takes to reflate the economy,' said Jan Loeys, head of global asset allocation at JPMorgan Chase. 'What no one knows is whether inflation will start to show in two weeks or two years.'”

This is "something I never in my wildest dreams thought I would see in my lifetime," says Brad DeLong.

Neil Irwin "interviews" Fed chair Ben Bernanke based on recent public statements: "Q: What do you mean, inflation levels consistent with your mandate? Doesn't the Fed always try to get inflation lower? A: FOMC participants generally judge the mandate-consistent inflation rate to be about 2 percent or a bit below...Recent readings on underlying inflation have been approximately 1 percent. Thus, in effect, inflation is running rates that are too low relative to the levels that the committee judges to be most consistent with the Federal Reserve's dual mandate in the longer run...A means of providing additional monetary stimulus, if warranted, would be to expand the Federal Reserve's holdings of longer-term securities."

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'90s video interlude: Material Issue's "Diane".

Still to come: Foreclosure processors could be criminally charged; TARP's inspector general says Treasury is lowballing the cost of the AIG bailout; the medical lobby is blocking release of some of the best data on American health care; Obama does not like having his record on immigration reform questioned; and a water buffalo takes a swim.

Recap: The case against giving multinational corporations a tax holiday (and a dissent); the most devastating ad of the season; and White House economists hate the penny.

Elsewhere:

1) America's confused attitudes toward inequality.

2) Brad DeLong vs. Joe Stiglitz.

3) The Koch meeting, by sector (and with bonus financial-sector breakdown).

4) Some smart thoughts on bullying.

5) I'll be talking money and politics with Keith Olbermann tonight.