nolanmccarty.com

Death March of the Moderates

2012-02-29T20:11:45Z

My First Monkey Cage Post

2012-01-07T00:51:05Z

and my latest rant on the confirmation process.

Procedure and Polarization

2011-12-23T23:09:43Z

Josh Hudder at Rule 22 claims that polarization in Congress is mostly a measurement phenomenon caused by the mid-1970s rule changes that led to more recorded procedural votes in the House and Senate. The argument goes that procedural votes are more partisan so if we observe more of them, measured partisan polarization would go up.

I have several reasons for being skeptical of this claim, but let me just share one. In the technical language of ideal point estimation, Hudder's procedural argument is that the frequency of "cutpoints" that divide the parties went up increasing the measured polarization. The problem with Hudder's argument is that scaling procedures like NOMINATE and Bayesian IRT are fairly insensitive the the distribution of cutpoints. What really matters is that there are at least some cutpoints that separate each pair of adjacent legislators. In other words, suppose we estimated ideal points from a set of roll calls that have cutpoints between each pair of members. If we then added a zillion party line votes, estimated polarization would not change that much (it might reduce some overlap but it would not necessarily move the party means or medians apart).

The right experiment would be estimate polarization holding the distribution of cutpoints constant or vote margins. This experiment is conducted in chapter 2 of my book with Poole and Rosenthal. We found that the counterfactual polarization measures (those holding the margins distribution constant) correlated with the observed measures at greater than .95.

I also refer readers to Alex Hirsch's recent paper in Political Analysis which also shows the robustness of ideal point estimates to changes in the distribution of cutpoints.

Observations about NJ Redistricting

2011-12-23T19:00:00Z

The New Jersey Redistricting Commission announced its congressional district maps this morning. Much of the focus will be on the fact that the independent commissioner John Farmer accepted the GOP proposal which included a match up of Republican Scott Garrett and Democrat Steve Rothman in what is essentially Garrett's old district. So barring the unthinkable, like Ron Paul being the GOP nominee, the Democrats will lose a seat.

But I am more interested in the other features of the outcome. Despite Commissioner Farmer's earlier stated aspirations to use redistricting as a platform to increase competition and reduce polarization, this appears not to have happened. In fact, none of the other New Jersey representatives are in danger of losing, and Farmer himself lauded the plan for creating "continuity in representation." Moreover, two freshman members Leonard Lance and Jon Runyan were given better districts, potentially eliminating two tough reelection bids.

But that is just fine by me. As I have written here previously, the notion that polarization can be addressed by districting has almost zero support among political scientists. Moreover, the creation of artificially competitive districts violates important norms of representation and may even backfire as I argue here.

Lies about the Payroll Tax

2011-12-22T18:22:40Z

For me at least, one of the frustrations about the debate over extending the cut in the payroll tax is extent to which politicians have tried to exploit the public's lack of understanding about how the Social Security system works.

The first lie is the Republican claim that extending the payroll tax will somehow deprive the Social Security system of funds and jeopardize the retirement security of seniors.

Democrats have responded not with the truth but with the claim that the revenue losses from the extension will be offset by "general revenue."

Understanding why both of these claims are untrue requires some background knowledge of how Social Security works.

Social Security is a pay-as-you-go system where current retirees are supported by the payroll tax payments of current workers. When I pay payroll taxes, they do not go into some account with my name on it, they go to my mother-in-law. Every year since 1984, the payroll tax revenues plus interest on the SS Trust Fund's holding of treasury notes has exceeded the benefits paid out. The Trust Fund then exchanges this surplus for more treasury bills and the federal government spends it.

In 2010, the Trust Fund surplus was $94 billion or about 16% of the benefits paid. That is about the same size as the revenue short fall from the 2 point reduction in the payroll tax rate (the SS Trustees estimate a loss of about $90b for 2011). So even with this loss, payroll taxes and interest will cover the benefits paid. So one of two things will happen. The Treasury will actually give $90b to the Trust Fund. But because it is surplus, the Trust Fund will give it right back to Treasury in exchange for government debt. Or it could be handled the easy way: Treasury would just give the Trust Fund $90 billion in Treasury notes.

The important point is that the effect of the payroll tax cut on the balance sheet of the Social Security Trust Fund is exactly zero. With or without the cut in 2011, the Fund would increase its holding of U.S. government debt by over $90 billion. Even if the government did not give the Trust Fund the $90 billion worth of debt, the effects would not be felt until around 2035 when the Trust Fund is expected to be exhausted.

Thus the Republican claims have no merit.

I'll admit the Democratic shading of the truth is less egregious. It is easier to say that general revenue will cover lost payroll tax revenue than it is to explain that the government will only promise to pay it back later by issuing more debt. But I do think, the Democratic rejoinder is problematic on two accounts.

First, it seems to suggest that the current funding of Social Security is more perilous than it really is. It would have been more comforting to point out that the system takes in so much money that it could pay out all promised benefits even with the lost revenue.

Second, the Democrats missed an opportunity to raise the public's understanding of the longer-term problems with Social Security. The years of surplus will come to an end at some point. Already (and independent of any payroll tax cuts), benefit payments exceed payroll tax revenues so that the surplus is being generated by interest on government debt. At some point in the next decade, tax revenues plus interest will no longer be enough and the system will have to start redeeming its $2.5 trillion stash of Treasury notes. At this point, general revenues will indeed start flowing out to Social Security recipients, placing increasing strain on the federal budget that will also be coping with escalating Medicare costs.

Polarization in the States

2011-12-21T15:25:35Z

Peter Orzsag on State Legislative Polarization. A very good summary of the research, but it emphasizes the role of residential and geographic sorting a bit much for my taste.

Some of my recent (and very tentative) work with Boris Shor, Chris Warshaw, Chris Tausanovitch, and Jonathan Rodden sheds some light on the question of the role of residential sorting (beyond my general skepticism borne of the null findings for Gerrymandering).

In our presentation at the American Political Science Association (unfortunately there is not yet a manuscript), we used Tausanovitch and Warshaw's estimates of 245,000 voter ideal points to construct measures of the distribution of voter preferences in every Senate. We then combined this data with my and Boris's data on state senator ideal points to estimate the relationship between within-district voter heterogeneity and polarization. A taste of our findings is available after thr jump.

]]> First, we looked for an aggregate relationship between polarization within the states and the number of heterogeneous districts (those with greater than average standard deviations of voter preferences). As the figure below shows, there is a strong aggregate relationship between district heterogeneity and polarization.

Of course, an aggregate relationship could possibly emerge if there is a relationship between state-level heterogeneity and polarization (which there appears to be). So we then focused on individual districts. Here we estimate the "intra-district divergence" -- the predicted difference between Democratic and Republican state senators in otherwise similar districts. We allow this gap to vary with a number of factors including district heterogeneity (again measured as the standard deviation of voter ideal points). The next figure plots the predicted divergence as a function of heterogeneity.

Note that there is a strong and precisely estimated relationship between heterogeneity and divergence. The effect is large enough to explain substantial amount of the variance in party divergence across states.

So what does this mean for the debate on residential and geographic sorting? Of course, these finding do not rule out that such sorting may matter. But they do suggest that how voters are polarized within districts may matter far more than how they are polarized across districts. Our results also suggest that attempts to offset geographic sorting by creating heterogeneous "strange bedfellows" districts will likely backfire.

OK, I Finally Saw It

2011-11-27T01:51:40Z

Because I somehow systemically undervalue my time, I finally sat through CNN's documentary on Gerrymandering Gerry-Rigged. In an earlier post, I reported my reading of the reviews placed it par for the course in advocacy journalism in favor districting reform.

Boy, was I wrong. It was far worse. It is completely uninformed by social science. The only "expert" is a youngish researcher for Cook Political Reports who seems to mean well but provides almost no broader perspective. Advocates for reform are never challenged an on their points of view the only opponents of reform who appear on camera are incumbent politicians whose conflicts of interest are obvious.

I was also annoyed by the piece's slick snarkiness. Of course, I do understand that you can't build a TV piece based on the swing ratios, bias measures, and counterfactual polarization estimates. But I would like better analysis than "gerrymandering creates a merry-go-round where politicians get on and never get off."

A Transparent Failure

2011-11-26T20:22:52Z

In the week since it officially folded, there has been a lot of discussion of why the super committee (hereafter SC) failed, whether it was ever intended to "succeed", and what the future ramifications are. So in the spirit of better-late-than-never, I will share a few of my thoughts on these topics.

Let me begin first as to whether the SC process was designed to succeed. From the perspective of a student of legislative bargaining, I can think of at least three mechanisms that the SC could exploit to succeed under circumstances where the normal legislative process would fail.

The Agenda Control Mechanism: The SC would have the privilege of bringing a package of spending reductions and tax increases to the floor of each chamber that would be subject to up-or-down votes. Consequently, any agreed upon bargains could not be undone by floor amendments.
The Composition Mechanism: The SC might have a composition that is more conducive to reaching an agreement than Congress as a whole.
The Procedural Mechanism: The SC might adopt internal procedures that were more conducive to reaching an agreement than the procedures used in standing committees.

]]> I think the agenda control mechanism is a very powerful one, and its merit was shown in the military base closing process in the 1990s and in the fast-track approval of many trade agreements. Of course, we never got to find out if it would have worked in this case because the composition and procedural mechanisms were not used very effectively.

Given the degree of polarization in Congress, the most obvious way to manipulate the composition to improve the likelihood of success would be to appoint a SC with more moderates and fewer ideologues than the Congress itself. Of course, given the appointment structure (with party leaders making unilateral appointments), this was not likely to happen. And it didn't happen. Using Keith Poole's "common space" estimates, I find that the standard deviation of the SC's ideal points were .507 compared to the standard deviation in the combined House and Senate of .437. So the appointments mechanism actually increased polarization. Just to underscore that the inflated polarization was no accident or statistical fluke, I randomly drew 1000 twelve-member SCs from the membership of the House and Senate. Only 90 of these had standard deviations larger than the one our leaders actually gave us.

So how might have the SC used the procedural mechanism better. I would make the case that they should have made the process less transparent and more secretive. Not without justification, Americans prefer transparent procedures both to hold elected leaders accountable and because the decisions from transparent procedures are seen as more legitimate. But transparency can also get in the way of good policy making. This is a point that Tim Groseclose and I made some time ago. The main argument is that sometimes transparency leads to strategic disagreements when politicians electoral position taking relatively more than the rewards of successful policy compromise. Under such circumstances, bargaining failure occurs as agreements that would have been reached under less transparent procedures (where position taking less valuable) fail to materialize. Similar arguments have been made by John Gilmour and David Stasavage.

Of course to some such as the Sunlight Foundation, there will never be enough transparency. But when I heard members of the SC start to negotiate in public and through the media, I pretty much expected that failure was near. Instead of hammering out a package with bitter medicine for all, members started floating proposals that they knew the other side could not publicly accept and then campaigning against them for not doing accepting them. I wouldn't go so far as to say tighter lips would have saved this ship. But when the daily updates of the SC's progress (or lack thereof) began to surface, she was clearly going down.

So this brings me back to the question as to whether it was ever intended to succeed. After all, couldn't our leaders see that allowing a sub-committee more polarized than the Congress itself to debate each other in public would not lead to a good policy outcome? I would hope not. But then how is it that both sides thought they could win politically?

As for how this plays out in the long run, I have no original thoughts. But I thought Ezra Klein's analysis was pretty astute. With the looming sequestration and the expiration of the Bush tax cuts in 2013, the Democrats can pretty much obtain all their policy goals without lifting a finger (as long as they hold on to either the presidency or the Senate). Ironic since I have generally argued that gridlock supports conservative policy goals (see chapter 9).

So if I were scoring this round, I would have to give it to the Democrats.

Orszag on Polarization and Inequality

2011-11-23T15:53:01Z

From Peter Orszag on Bloomberg. Could not have said it better myself:

It is striking that both income inequality and political polarization began to rise sharply in the U.S. in the mid- to late 1970s. Yet many pundits airily dismiss this connection, arguing that because blue states are, on average, higher-income than red states, the link between income and partisanship must be weak. Instead, they attribute increasing political polarization to the gerrymandering of legislative districts. Both of these assertions are empirically false.

CNN on Gerrymandering

2011-11-21T15:03:55Z

I did not get a chance to see the CNN Special Report on gerrymandering over the wekend. Maybe it is all for the best as Jamelle Bouie at American Prospect suggests that it was entirely typical of journalistic treatments on the topic. When it comes to the effects of gerrymandering on polarization, with few exceptions, journalists have focused on the talking points of reform activists without really engaging the now substantial social science literature on the topic.

Congressional Insider Trading

2011-11-15T18:54:22Z

A recent 60 Minutes segment and a new book claim that members of Congress from both parties have benefited financially from inside information obtained in the course of their legislative duties. Not surprisingly, the specific targets of these charges (Nancy Pelosi, John Boehner, and Spencer Bacchus) have denied doing anything illegal or unethical.

Of course, a major part of the story is that these legislators could not have done anything illegal, because there are no laws against insider trading by members of Congress. There are vague House ethics rules against profiting financially from their official positions, but the best I can tell the House ethics process has rarely if ever been used for allegations against congressional insider trading.

Obviously, I am in no position to evaluate the specific charges highlighted on 60 Minutes or the defenses offered by the individual legislators, but there is an excellent study by Jens Hainmeuller and Andy Eggers evaluating whether or not members of Congress earn excess returns on their stock portfolios. If insider trading were pervasive, one would expect congressional portfolios to outperform the broader market. But this is the exact opposite of what Hainmueller and Eggers find. In fact, legislators are generally bad investors. Their portfolios consistently underperform. My personal hunch is that members are often forced into weak investments for political reasons and that this works against maximizing the value of their portfolio. Hainmueller and Eggers find one important exception to congressional underperformance. Legislators do well with their investments in firms located in their districts. They find, counter to the presumed effects of insider trading, that these excess returns are not due to the timing of transactions, but to the superior selection of which local firms to invest.

The Perry Brain Freeze

2011-11-11T11:13:33Z

I am not a fan of Rick Perry, but it strikes me that there is something fundamentally unserious about the way Rick Perry's mental lock during the last debate has been covered. All most all of the coverage has focused on whether his campaign can recover after forgetting that he has proposed abolishing the Department of Energy. It is as if debate performance were the sole qualification of the presidency. Does anyone really think that if he were elected he would not eliminate the department because he forgot to?

The main issue of course is whether eliminating the Department of Energy (as well as the Education and Commerce departments) is good policy or not. How much money would it save? How well would any of the critical functions be performed in other departments? Etc? But journalists seem to ne dispositionally and perhaps intellectually incapable of focusing on such things. It much easier and more fun to repeatedly show clips of a candidate saying "oops."

Turnout and Polarization

2011-11-09T16:26:38Z

The Monkey Cage has an interesting discussion about whether boosting turnout would reduce levels of polarization and partisanship among our elected officials. While none of my work directly addresses the question of the effect of general election turnout on polarization, several of its strands would place me clearly in John Side's camp of skeptics.

Chapter 4 of Polarized America analyzes trends in turnout among different income groups during the period of expanding polarization (1972-2004). There were several important take aways. The first is that our evidence is consistent with earlier findings of McDonald and Popkin that there is no trend in turnout among the voting eligible population (VEP) (roughly citizens over 18 who are not disqualified due to felony convictions). The downward trend in participation by the voting age population (VAP) (all residents over 18) is caused by increased numbers of non-citizen residents and (to a lesser extent) disenfranchised felons. Moreover we find that the relative incomes of voters and non-voters are roughly constant over the time period. So it would seem that trends in turnout could hardly explain the increase in polarization. Indeed, reversing the trends in VEP would mean reversing disenfranchisement laws and allowing non-citizens to vote. It would be reasonable to expect that those reforms would shift the spectrum to the left but not de-polarize it.

My other relevant work concerns the effects of participation in primary elections. In this rejoinder to Richard Pildes, I report some estimates of the effect of primary election turnout on the extremity of a House member's NOMINATE score. A key problem for such analysis is that turnout may itself be influenced by a candidate's position. So I use the coincidence of competitive presidential, gubernatorial, and Senate primaries as exogenous variation in turnout. The resulting IV estimates show no relationship between turnout and the winner's NOMINATE score. I concede, however, that the effect of the instruments (the competitive primaries for higher office) is small. The second piece of evidence is reported in my working paper with Eric McGhee, Seth Masket, Boris Shor, and Steve Rogers. Here we find little evidence that the institution form of primary election effects polarization of state legislators. This undercuts the common argument that open primaries reduce polarization by boosting participation.

But perhaps the most relevant piece of information about Bill Galston's original contention that mandatory voting would reduce polarization is a new paper by Anthony Fowler at Harvard. In a careful study, he looks at the effects of the adoption of compulsory voting in Australia. He estimates that the causal effect of compulsory voting was a significant boost the left-wing Labour Party. So the effect of compulsory voting appears to have shifted Australian politics to the left rather than shore up the center.

New Working Paper

2011-11-07T23:09:54Z

Keith Poole, Howard Rosenthal and I have spent the last couple of years working on a manuscript on the political economy of the financial crisis. That joint work has inspired my to write this paper modeling the effects of policy complexity on regulatory policymaking. Although the argument is formalized, it is a simple one. Policy will tend to be biased towards the interests of the regulated industry in areas where policymaking is complex. I hope the paper contributes some useful insights to financial market regulation.

How My Testimony Was Covered

2011-11-02T14:21:26Z

Apparently, I am an enemy of democracy and interesting elections.

Update: The WSJ Blog was a little more even handed.