Alan Blinder

I had been assuming that somehow we'd figure out a way to muddle through the debt ceiling without imposing much harm on the economy, in part because the markets haven't yet assigned any weight to the risk of default. But I'm starting to think about the problem differently. Here is how Alan Blinder puts it: [M]arkets now assign essentially zero probability to the U.S. losing its fiscal mind. They'd be caught flat-footed if the threat of default suddenly started to look real, possibly triggering a world-wide financial panic. Remember how markets reacted to the Lehman Brothers surprise? As Mr.

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This month, various contributors to TNR have argued about economic stimulus: It works, it doesn’t work, or we don’t know if it works or not. On August 17, Josef Joffe asserted (with caveats) on Entanglements that we know stimulus doesn’t work because (1) economic trendlines in the United States have not improved dramatically since it was instituted here, and (2) those countries that have spent a lot on stimulus don’t seem to be doing as well as some countries that have not.

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In January of 2009, the Council of Economic Advisers released an economic projection predicting unemployment with or without the stimulus: Of course, unemployment has risen even higher than the chart's worst case scenario. This fact has been cited by, well, pretty much every single Republican and/or member of the conservative movement as proof that the stimulus failed. What it actually shows is that the economy was in much worse shape than the government realized in January of 2009, though some economists predicted that the administration's forecast was too optimistic.

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&c

-- Richard Posner is not a fan of the Post's "Top Secret America" series. -- A thorough debunking of Stanley Kurtz's case that Barack Obama is a socialist. -- Ezra Klein interviews Paul Ryan, Alan Blinder, and Mark Zandi. -- For Rick Perry, "worst uninsured rate" equals "best healthcare in the country."

In his TRB column this week, Jon Chait argues that EPA regulation is the best option left for tackling global warming, given the deadlock in the Senate. True, relying on the EPA's regulatory tools won't be the most elegant or efficient way of reducing greenhouse gases—a market-based cap-and-trade system would be far more flexible. But Senate conservatives are dead-set on blocking the elegant and efficient solution.

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E.P. Yay

Five years ago, South Carolina Republican Senator Lindsey Graham joined a handful of senators traveling to the Yukon territory to view firsthand the effects of climate change. Witnessing melting ice caps and permafrost, and Inuit communities struggling to cope with a transforming environment, Graham was “moved.” “Climate change is different when you come here, because you see the faces of people experiencing it,” he said. In the following years, he asserted that “climate change is real” and promoted a cap-and-trade bill in the Senate. Today, Graham is sprinting in the other direction.

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Worth Reading

Alan Blinder: 25% of jobs are offshore-able. So maybe it's not all bad that job openings are down 50% since 2007 peak. MIT or U. of Chicago: Which developed the better economic dream-team. How New Democrats are helping ease proposed derivatives rules. Why there's nothing morally wrong with walking away from a mortgage. Do mustached men earn more than their clean-shaven counterparts?

Barack Obama's new theory of the state.

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Free Traitors

Jagdish Bhagwati is a humble man. He will tell you so himself. Describing the effect of his book In Defense of Globalization during a speech at the John Hopkins School of Advanced International Studies (SAIS) last fall, the Columbia economist politely refused credit for single-handedly dampening growing concerns about the fallout from free trade. Fears of trade are "low-key," he said. "I won't say it's because of my book. I have colleagues who would say that. ...

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