New Senate confirmation rules changes bureau dynamics

            In class last week, we talked about the interplay between Congress and government bureaus, and looked at competing arguments about who has the power in the relationship. Weingast and Moran concluded that Congress in fact has the upper hand, and that the lack of an evident power just shows that its control is effective. Between the committee system and the confirmation power of the Senate, bureaus are limited in their autonomy. For a new bureau head to take over, they must pass both their oversight committee and the Senate as a whole, and that overlap may be small, disallowing a range of candidates.

            On Thursday, Democrats in the senate led a vote to change voting rules for presidential appointments, and may have tipped some power back in the favor of bureaus – and the president. Previously, presidential appointments to bureaus could be filibustered by any member of the Senate, and any filibuster required 60 votes – or a “supermajority” – to end. Now, though, all non-Supreme Court nominees cannot be filibustered, and will require only a simple majority to pass. This significantly opens up the range of candidates that can be appointed to lead bureaus. The new rules allow for “riskier” or more partisan picks, as the majority can now more easily exert its power.

In class, we discussed Larry Summers, who President Obama’s first choice for Federal Reserve Chairman but ultimately pulled his name from consideration when it became clear that he would not be confirmed by congress, possibly because of a lack of supermajority. Under new rules, it could have been possible for Summers to gather the 51 votes necessary to be confirmed. Instead, the less controversial Janet Yellen was nominated, and will most likely be confirmed.

Economic Man Model of voting?

Taking a look back at the Virginia gubernatorial election, I wanted to delve deeper and see if I could find politicians acting as the 'economic man' model or as a 'consumption man.'

According to Mueller,
In the consumption man model, voters contribute with votes and dollars to the candidate they agree with the most. Their political positions are a good.

In the economic man model, voters contribute with votes and dollars in the hopes that the candidate may move a little bit towards your position. In this model, the candidate is like an investment.

So I came across this article which indicates that one of Robert Sarvis' contributors was actually one of Obama's largest contributors during his presidential campaign, the primary contributor to the Libertarian Booster PAC: Joe Liemandt. Critics were quick to claim that this was a ploy by the PAC to get Sarvis on the ballot to steal votes from Cuccinelli to aid McAuliffe. I question this motive. Perhaps it is so that Liemandt is coercing the PAC to donate money to Sarvis in the hopes that Sarvis will shift his political stances to those more similar to Liemandt's.

This is one example of the 'economic man' model of voting occurring in the everyday world.

MVP of ECON 333?

I don't know how many of you keep up with Major League Baseball, but Andrew McCutchen of the Pittsburgh Pirates was just elected National League MVP. Miguel Cabrera was elected American League MVP, but that is not important. What is important is how these men earned the MVP title.

Many moons ago, we discussed Mueller’s alternatives to majority rule. One of these alternatives was the Borda count in which the candidates are ranked in a voter’s preference ordering. The candidate with the highest number of points is deemed the winner. Since there are many candidates/players for the MVP award (over 10), Mueller would agree that the Borda count (or Hare/Coombs systems) is the most Condorcet efficient voting system. The Borda count is efficient because it satisfies neutrality, cancellation, faithfulness, and consistency in choosing the Condorcet winner.

Here is the voting breakdown of the NL MVP candidates. Andrew McCutchen is the clear winner with 409 points, followed by Goldschmidt (242 points), then Molina* (219 points). First place votes earn 14 points (4 point bonus from the traditional Borda Count), second place votes earn 9 points, and it declines one point from there. According to the breakdown, McCutchen would have still won in majority rule (28 first place votes out of 30), plurality rule, Condorcet criterion (behind Molina twice and Carpenter once), Hare system, and Coombs system; however, some years the majority rule winner isn't necessarily the Borda count winner (See: 2011 AL MVP voting). 

*Side note: in a Hare system, Molina would’ve gotten second place since he had two more 1^st place votes than Goldschmidt.

The Origin of Persuasive TV Campaign Ads

When did television advertisements for campaigns really become important or influential? Many would agree that it all started with the "Daisy Girl" ad that aired only ONCE on behalf of incumbent Lyndon B. Johnson in 1964. In it, a young girl is standing in a field picking the petals off of a flower. She is counting the number of petals as she goes. When she reaches nine, there is a loud noise and the camera zooms into the blackness of her pupil where there is the image of a nuclear bomb and the Johnson shouts, “These are the stakes! To make a world in which all of God's children can live, or to go into the dark. We must either love each other, or we must die.” This shocked audiences like no ad before it had ever done. The most interesting element of this ad is how it fits in to the Downsian models of persuasive and informative campaigning. To read a little more about the history behind the ad, click here!

As the Downsian model explains, a persuasive advertisement increases the probability that every voter will vote for the candidate. It tells you that there’s something you might like about this candidate or something that you won’t like about the other. The distinction between informative and persuasive campaigning is how it affects the probabilities that groups of voters will vote for the candidate. An increase in persuasive campaign expenditures for Johnson would increase the probability of democratic voters for him without decreasing the probability that republican voters will not vote for him. In this case, Goldwater was painted to be a dangerous extremist who wanted to use nuclear bombs in Vietnam therefore. Johnson won with 68.1% of the popular vote and 44 states. The subject matter of the ad and the voting numbers show that this ad would be classified as a persuasive campaign expenditure using the Downsian model and likely one of the most successful ads in campaign history.

Using Emotion to Influence Regulation?

As we discussed in class, lobbying efforts by small, politically unconnected groups are nearly always unsuccessful as the costs of lobbying by such groups are high while expected benefits are low. As a result, it is typically large firms that succeed in their lobbying efforts: They have the money to spend on lobbying, and they often have much to gain from the passing of certain industry regulations. This article, however, gives an example of successful lobbying by a small group of extremely committed individuals with limited political and financial resources. Family members of victims of the 2009 crash of Continental Airlines Flight 3407 managed to out-lobby highly influential airline industry opponents to influence legislation on pilot training and flight schedules that will cost airlines $7 billion over the next 10 years. Amazingly, the families out-lobbied their airline opponents not with money, but by using emotional stories, the media, and dogged persistence to win the support, one by one, of key politicians. The airlines fought back, with several large airlines spending more than $50 million in total on lobbying during 2010, but ultimately it was the families that were successful in having legislation passed.

As these new safety regulations are clearly not beneficial to the airline industry, this story seems to run counter to Stigler’s theory that “regulation is acquired by the industry and is designed and operated primarily for its benefit.” How, then, did the Families of Continental Flight 3407 succeed in having their safety regulations passed when confronted with the substantial funding and lobbying power of major airlines? First, all members of the small group had homogeneous interests and thus were able to lobby as a cohesive unit. Second, they used emotional persuasion effectively, narrating tearful stories of family members lost in the crash in order to gain the support of influential politicians. What does their success mean? Perhaps it points to the fact that, at the margin, the expected benefits of lobbying exceeded the expected costs for families but not for airlines. It could also just mean that the airline industry opposition was too fragmented to effectively lobby on its behalf.  Whatever the answer, this example proves that money is not everything when it comes to influencing regulation - cohesion and unrelenting pressure can get you places too.

Young People Say No to Obamacare

As the initial technical issues with Healthcare.gov are resolved, another concern about the policy itself is becoming apparent: healthy young people don't want to pay for healthcare. According to an article from CNN, only around 3% of the target 7 million people have signed up for healthcare under Obamacare. Of these, only around 21% are in the 18-35 age bracket, with the target being 38%. The penalty for failing to sign up under an approved plan by 2014 is $95 or 1% of gross income that exceeds $10,150, whichever is larger. This penalty will sharply increase in subsequent years. If this cost grows large enough, even young citizens will eventually find it worthwhile to sign up.

In effect, the insurance companies have the national government incentivizing everyone to buy their services. If we accept the theory of regulation posed by Stigler, this is not a coincidence. Indeed, this video created by PBS states that the chief lobbyist for the insurance industry said that she would support a healthcare bill only if it included an individual mandate. The healthcare industry knew what it was getting when it agreed to participate in the healthcare "marketplaces" established under Obamacare. They were aligning the desires of the controlling political party to see the policy succeed, with their desire to expand the number of people buying healthcare. Now they get young, healthy people with low expected costs for healthcare who would have otherwise been out of reach.

It will be interesting to see how the profits of insurance companies change over the next few years as the penalties for being uninsured go up. My guess is, they grow.

TransCana-Don’t

The Keystone Pipeline debate hinges on two key arguments — reason and opinion. Reason says, as argued in this article and elsewhere, that the project would create jobs, energy independence and would lower consumer prices. On top of that many studies have found that the project will not cause harm to the environment and is widely considered safer and more environmentally-friendly than alternatives, namely railway transportation of gas and oil. The opinion argument — of the opinion that approving the pipeline would be a environmental apocalypse and which comes from only 23% of Americans — is essentially winning the debate with social media, sharing posts and tweeting themselves to the center of public opinion. Policy makers see the incredible mobilization ability of this minority and are left with “a false sense of where public sentiments really lie.” This influence of social media seems to be outweighing the traditional lobbying efforts of groups like the American Petroleum Institute, who has spent $22 million in lobbying efforts supporting the pipeline alone.

The author of this article attributes the victory of the opinionated activists to a public policy paradigm shift saying, “Gone are the days when television and newspaper advertising, campaign contributions, and heavy lobbying fees all but guaranteed a successful corporate outcome.” Group theory might suggest that the cost of contributing to a group for an individual against the pipeline is significantly decreased by social media, exponentially increasing the amount of pressure this small group can apply. The regulator is in this case officially the State Department, in charge of international issues (the pipeline crosses the Canadian-US border). State sees this pressure and Kerry doesn’t approve the pipeline (some might say this decision may really be a White House decisions as the president could use executive order to grant permission to TransCanada). Weingast and Moran might disagree. Secretary of State is appointed by the White House but affirmed by Congress, and Congress controls State Dept. appropriations. They might suggest that the Keystone Pipeline is awaiting some kind of rent-transfer to the committee or committee chair who is the real decision maker. This could be Harold Rogers, KT, chair of Appropriations, or Fred Upton, MI, chair of Energy & Commerce or Doc Hastings, WA, chair of Natural Resources, or any number of subcommittee chairs. At this point it is only conjecture, but it is very curious why such a positive enterprise, which “By any measure…should have been approved by now,” is at a halt.