Wednesday, July 5, 2017

Why 10-Year Budget Projections Are Worse Than Useless

In recent months, we have seen a string of shocking headline figures based on 10-year budget projections.

For example, when the House’s American Health Care Act (AHCA) bill got scored by the Congressional Budget Office (CBO), we learned that 23 million fewer people would be insured, but that it would reduce the deficit by $119 billion. When Trump proposed his initial budget, Bloomberg said the plan included $3.6 trillion in budget cuts.

These numbers sound enormous. It’s estimated that there are 325 million total in the US, so the 23 million people would represent 7% of the entire current population. Likewise, total expenditures of the US government in FY 2016 came to $3.9 trillion. In the normal meaning of language, a $3.6 trillion budget cut would suggest that Trump was planning to eliminate nearly the entire federal government.

But of course, that’s not what he actually proposed–in fact, on net, Trump didn’t propose cutting the budget at all. His plan called for a 16 percent increase in the budget through 2020.

And the CBO analysis didn’t say the AHCA would cut the deficit or health insurance immediately. Rather, their analysis found that 10 years from now, the plan would result in 23 million fewer people having insurance and the cumulative deficit over 10 years, would be reduced by $119 billion relative to current law. That is, on average, the annual decrease to the deficit would be a mere $12 billion due to the AHCA.

This type of long-term analysis and language is commonplace in US national politics, but it achieves no useful outcome. It confuses far more than it clarifies. It does not provide accurate estimates of long-term results. It does not improve the average voter’s understanding of policy effects. And it gives politicians a means to claim they are being fiscally responsible without actually exercising any prudence whatsoever.

Missing the Mark

When the president prepares a budget plan, there should be little pretense about accuracy. It is fundamentally a political document prepared by the Executive Branch, and we should not be surprised if reality turns out somewhat less rosy than the future foreseen by the president’s sales pitch.

But when long-term projections are provided by the CBO, the figures are supposed to be much more credible. Indeed, in the media, the Congressional Budget Office is almost always described as the nonpartisan Congressional Budget Office, giving it an air of authority.

The problem is that the CBO estimates have proven to be consistently wrong as well. And in general, the CBO has been wrong in the same direction–it overstates economic growth, underestimates government outlays, and underestimates the effects of economic incentives. The net result is that the CBO projects lower debt and lower deficits than actually end up occurring.

Meanwhile, when it comes to healthcare, the Congressional Budget Office underestimated the job declines that would be produced by changing economic incentives, and it substantially overestimated how many people would gain healthcare coverage by about 11 million. Again, the bias points in the same unhelpful direction–the CBO underestimates the costs of government intervention and overestimates the benefits.

This bias is concerning, but it’s not really the main problem. The problem is that the CBO has been given an impossible task of projecting the performance of a massively complex economy over a very long time period. Even with the very best economists, that would not turn out well.

A Logical Contradiction
The CBO’s already herculean undertaking is made more difficult by the fact that they must make their projections as if current law will not change.

This is the logical and only conceivable assumption for them to make. (Clearly, they can’t conjure into existence entirely new policies for the purpose of their analysis.)

Yet, at the same time, this assumption is plainly absurd. In virtually every election cycle, politicians campaign on bringing new changes to Washington. Even incumbents run on making change, and national elections of some magnitude occur every two years.

So the CBO has to assume the law won’t change for ten years, even as most of the politicians that make the laws risk changing in two years–and all of them advocate for changes of one stripe or another while in office.

This combination is not going to produce an informative result.

Instead, the time horizon for analysis should take the US political cycle into account. Looking beyond one or two years is a fool’s errand.

Budget Cuts “Tomorrow”

Some bars have a sign in them that says “Free beer tomorrow”. The sign is always up and never changes. There will always be free beer tomorrow, but alas, tomorrow never comes.

Something similar happens with these 10-year budget projections. Congress has a knack for starting any proposed cuts in the later years, while letting spending run wild in the immediate future.

Since the headlines are often based on the full 10-year run, it doesn’t superficially matter when the cuts occur. A $200 billion cut in year 7 would look the same as a $200 billion cut in year 1 in much of the reporting. However, a $200 billion cut in year 1 has real world consequences that a $200 billion cut in year 7 does not–maybe taking away the money from a powerful special interests, maybe eliminating programs, etc. Even if these cuts are good policy, they will encounter resistance, and the resistance will be much stronger if the cut happens in the near term rather than in the hypothetical future.

The focus on 10-year projections thus gives politicians a way to have their cake and eat it too. In any given bill or budget, they can continue spending at current levels and rates of increase for next couple years–thereby avoiding hard decisions and difficult political fights. And then they can put the “draconian” cuts in the out years. Over the full 10-year cycle, they can claim to balance the budget or reduce the deficit and pretend to be fiscally responsible.

But in reality, they’ve done nothing at all. And when it comes time to implement the hard cuts needed, well, it will be time for a new bill and a new 10-year analysis. Rinse. Repeat.

In fact, this is the tack taken in the ostensibly fiscally conservative AHCA bill passed by the House. Above we noted that the bill will cut (merely) $119 billion from the cumulative deficit over 10 years. However, the deficit reduction doesn’t even start until 2021–or year 4 (see page 35). Before that time, the bill would actually increase the deficit over baseline estimates.

This approach should not come as a surprise. The focus on 10-year projections helps Congress avoid making hard choices. Instead of encouraging long-term fiscal discipline, it just distracts us from the reckless decisions being made in the here and now.

If Congress had a sign like the neighborhood bar, it might say “Balanced budget in Year 7”. But alas, Year 7 never comes.

Friday, June 30, 2017

With Bank Bailouts, Italy Secures Moral Hazard

Over the past weekend, two more Italian banks were forced to close due to insolvency.

As is often the case, bad loans were the cause of the downfall for both banks. They made too many risky bets on borrowers that didn’t pay off.

Banca Populare di Vicenza SpA and Veneto Banca SpA are the two banks that failed in this case. Their loans and deposits will be taken over by another bank, Intesa Sanpaolo SpA, for the grand total of 1 Euro. More specifically, Intesa is only acquiring the good assets. Meanwhile, the excessive losses on the bad loans will be absorbed by the Italian government, which is putting up $19 billion in support for the deal.

The end result is a good deal for Intesa, which acquires income-generating assets without meaningful risk. It’s also a great deal for the investors and creditors of the failed banks. In a true bankruptcy, they would have lost much or all of their money. But under the state-assisted sale to Intesa, these creditors and investors–who willingly took a risk–will be protected from loss.

The unequivocal loser is the Italian taxpayer, who will be forced to bail out two banks, even though the taxpayers themselves bear no responsibility for the failure and never volunteered to put their money at risk.

On its face, this is a perverse outcome. And even if we could ignore the plain immorality of taxing a random third-party (the taxpayer) to protect the interests of a few, there’s still another problem–the problem of moral hazard.

In economics, moral hazard refers to the idea that people tend to take more risks when they do not bear the full potential negative consequences.

So, when football helmets were adopted, players felt emboldened to use their head as a weapon–concussions became commonplace and the rules had to be changed. When seat belts were implemented, car drivers apparently felt safer, drove faster, and caused pedestrian fatalities to go up.

And when banks get bailed out, other bankers are encouraged to behave recklessly. After all, they aren’t on the hook if a risky loan doesn’t pay off; the taxpayer is.

It doesn’t have to work this way.

In fact, Europe implemented banking rules that were supposed to limit this problem. The new rules require a “bail-in”, in which investors and creditors would lose some of their own money before any government entity stepped in with additional funds. The rules have even been applied successfully once, in the recent failure of a Spanish bank name Banco Popular.

However, in this case, the authorities chose to ignore their rules and allow Italy to conduct a normal bailout.

The reason given for the exception was that the banks were sufficiently small and unimportant. But if anything, this should be an extra argument against bailouts. It’s strange to argue simultaneously that 1) a bank is too small to threaten the overall financial system and 2) it is vitally necessary for the government to rescue it and shield investors. One of those doesn’t fit.

Perhaps a more compelling explanation is that governments are scared of what might happen if bank investors and creditors really believe their assets are in jeopardy in a bank failure. Most likely, those investors would start asking more questions about the bank’s practices to evaluate the risk. The creditors might also demand higher interest rates to compensate for the risk or demand safer lending practices to protect themselves from a default.

These would be great outcomes. They’re the opposite of moral hazard behavior, and they promote more prudent choices in banking. But such a change in perception also risks a panic at the outset as investors adjust to the new reality. This is what politicians want to avoid–even if it means bigger problems later. And in the most recent case, the politicians prevailed. The taxpayers will suffer now, and likely, everyone will suffer more in the long run as a result.

When the Italian government opted to bail out the two latest banks, it didn’t just secure depositors. It also ensured the moral hazard problem remains alive and well in the financial system.

Monday, June 19, 2017

Teen Convicted of Manslaughter for Text Message

In Massachusetts, a teenager was found guilty of involuntary manslaughter for sending a malicious text message to her ex-boyfriend. Over at Reason.com, Sarah Rose Siskind has the story.
The victim in the case was Conrad Roy III, 18, who killed himself by locking himself in a running car and inhaling carbon monoxide fumes. His ex-girlfriend, Michelle Carter, 17, had sent him a series of goading text messages leading up to the suicide, telling him he just needed to do it.
This is not what Carter was ultimately prosecuted for, however. During Roy’s suicide attempt, he apparently got out of the car and contemplated calling it off. At this time, Carter sent him another text message to “get back in”. According to the judge, the fact that Carter encouraged the suicide created a duty for her to either call someone to help Roy or attempt to dissuade him from going through with it. She did not do either.
It’s not in dispute whether Carter sent the messages in the case. It’s also relatively clear she knew the car was filled with toxic fumes when she told Roy to “get back in”.
The question is whether any of that qualifies as a crime. As it was a bench trial, the judge made the decision. And he decided that it constituted involuntary manslaughter, which can carry a sentence of up to 20 years.
The implications of this decision are extraordinary and terrifying. It’s the latest development in the public debate over whether speech can be violence. But in a way, this ruling goes even further than most radical anti-speech positions.
Ordinarily, the push for regulating speech aims to crack down on particular unsavory types of speech, described as “hate speech”*. This would be achieved by creating new laws that outlaw said hate speech. Indeed, several European countries already have laws like this that make certain types of speech illegal.
Since the case above took place in the US, no such laws exist. The defendant wasn’t convicted for violating a law regarding hate speech or bullying or anything of the sort. Instead, the judge effectively decided that mean text messages literally killed Roy. The text messages were regarded as a deadly weapon like any other.
In turn, this means that the victim was found to have no independent agency at all. Roy didn’t decide to kill himself. Rather, he was forced to do it by text messages and, implicitly, had no say in the matter. This is the theory in spite of the fact that he faced no physical threat at all. His ex-girlfriend was not present, and no harm would have come to him for disregarding her horrible instructions.
If it holds, this ruling could be extrapolated in a number of harmful ways. Note that, in this case, Carter was found guilty for inducing the victim to commit suicide. Thus, she became responsible for actions he committed. But why should this principle be limited to suicide?
What if I insult someone and they get so infuriated that they attack me? Are they responsible for committing the crime of assault against me? Or, since my words led them to attack me, perhaps I should be guilty of committing assault against myself? These are the absurd considerations that this ruling makes possible.
*I put hate speech in quotes above because it’s a term that has no set definition. If one wishes to make laws against hate speech, a prerequisite is to have the law define precisely what counts as hate speech. Thus, the decision will ultimately be made by politicians, and it’s entirely likely that unpopular political opinions will somehow get placed on the prohibited list as well. Indeed, this is already happening.
UPDATE: A reader pointed out the judge’s exact reasoning for the verdict was somewhat more complicated than the way I summarized. CNN reported an exact quote from the judge, noting that he didn’t convict solely for the text messages. Rather, the judge claimed the text messages created a duty for Carter to seek help or dissuade the victim. However, in general, there is not a legal obligation to help someone in need, even if there may be a moral one. Thus, the judge was still treating the text messages as if they caused literal harm to victim that the defendant had an obligation to mitigate.
As such, the rest of the analysis above still stands, and this is an unprecedented and dangerous ruling criminalizing speech as violence. The details of the article above have been updated to reflect the judge’s reasoning more precisely.

Thursday, June 15, 2017

On Congressional Baseball Shooting, Don’t Blame Political Opponents for the Crimes of an Individual

On Wednesday morning, in the suburbs of Washington, DC, a gunman opened fire on a group of Republican Members of Congress.
The Republicans were reportedly holding baseball practice for the annual charity game, and the shooter opened fire while they were on the field. The incident ended after the gunman was shot by Capitol Police, and the shooter later died of his injuries. Multiple people were wounded in the attack, including Majority Whip Steve Scalise (R-LA), but fortunately none of the victims had died as of this writing.
Of course, it is still early in the investigation, so the details may change. But as it stands, the shooter has been identified as James Hodgkinson of Illinois.
Attack Was Politically-Motivated
There’s no indication that Hodgkinson is Muslim, so naturally, the US media is not describing the event as terrorism. That said, the motivation for the attack does appear to be political in nature–given both the choice of target and the strong political statements expressed by the alleged shooter.
As Zero Hedge and The Hill have reported, Hodgkinson had an active political presence on social media. His views seem to line up with standard progressive positions, and he was a supporter of Senator Bernie Sanders in the last election cycle. His Facebook posts suggest that he fully bought into the Trump traitor narrative offered by Democrats. Consequently, he had also called for Trump’s impeachment on social media.
At least from what I’ve read, the views he expressed publicly do not appear to have been uniquely radical or violent.
However, further evidence of a political motive can be found in the fact that, according to at least two sources, the shooter asked bystanders whether the people practicing were Republicans or Democrats before opening fire.
Even if this last report didn’t exist, it would be an extraordinary coincidence if the shooter decided to commit a random act of violence, in a city he didn’t live in, at a baseball field that happened to be hosting a Congressional baseball practice for an event that happens once a year. It’s technically possible, but not very likely.
Assigning Collective Blame
So it’s safe to say the attack was political. And for conservatives, a useful narrative almost writes itself: a self-identified leftist accepted the Democratic talking point that Trump and the Republicans are traitors and decided to take matters into his own hands.
It’s understandable how Republicans could gain from this tactic, and it should come as no surprise that some of them are already trying it out. For example, Rep. Rodney Davis (R-IL) blamed the attack in part on the Democrats’ “hateful rhetoric”, describing their post-election conduct as “political rhetorical terrorism”.
This narrative serves as a convenient rebuttal to the numerous reports that emphasize the threat Americans face from right-wing terrorism. In such reports, it’s all but inevitable that President Trump’s behavior will be deemed responsible for extremist violence perpetrated by individuals. Similarly, in Davis’s version, the Democrats’ vitriolic speech against Trump is to blame for a random individual shooting at Republicans during baseball practice.
The arguments are mirror images of each other. And they rely on the same basic fallacy of collectivism.
To be clear, the only person responsible for Capitol Baseball shooting is the shooter himself.
All Democrats are not to blame. Neither are Bernie Sanders supporters nor progressives. The shooter himself may have identified with one or more of these labels, but that doesn’t make other members of those groups guilty by association.
It’s true that Hodgkinson demanded raising taxes on the rich. But from this, it does not follow that everyone who supports tax increases is just steps away from going homicidal.
The same observations hold for attackers with some type of right-wing ideology. For example, the only person responsible for the racially-motivated stabbing on the University of Maryland campus is the attacker himself. Trump supporters and conservatives are not at fault for senseless acts of violence committed by an individual.
This extends to the leaders of these groups as well. We might learn later that the latest Russia segment by Rachel Maddow or John Oliver was the last straw that finally convinced Hodgkinson to take violent measures. But even if that’s the case, Maddow and Oliver still would not be responsible for the shooter’s actions. No doubt hundreds of thousands of other people would have consumed the same segment without deciding to shoot up a baseball field.
Threat to Free Speech
Outright blaming opinion-makers and politicians for inspiring violent acts is incorrect because it ignores the agency of the actual attacker to make independent decisions. It’s also extremely dangerous from a free speech perspective.
The free speech protections in the First Amendment have proven to be remarkably resilient. That said, judging from the illiberal state of many college campuses, many Democrats and progressives are now open to the idea of regulating “hate speech”. Fortunately, most Republicans are unlikely to go along with that. This might be a matter of principle for some, but it’s also likely driven by disinterest in the latest social justice priorities. Either way, the Republicans currently serve as a decent bulwark against legislative efforts to circumvent the First Amendment.
However, if the Republicans adopt the narrative that the Democrats’ hateful rhetoric is causing violence, then the dynamic described above could change. For Republicans, restricting free speech would no longer be just about appeasing illiberal college progressives. Why, it would be a matter of national security instead.
In turn, this creates a dangerous pathway for a bipartisan consensus to emerge around restricting free speech–with Democrats doing it for social justice and Republicans doing it in the name of terrorism and national security. This would not be a positive development.
Conclusion
In the wake of an attack like this, assigning collective guilt is the default reaction for many American politicians and journalists. Most commonly, this blame is placed on Muslims, but it happens in other cases as well.
The problem is that it’s not actually true. Arbitrary groups don’t commit crimes; individuals do. And they are the only ones that should be blamed.

Tuesday, June 13, 2017

Good News on North Korea; Rodman is Returning

Former NBA basketball star Dennis Rodman is on his way to North Korea to meet with Kim Jong Un. That’s good news for Kim, since he’s a fan. It’s also good news for fans of peace.
According to Bloomberg, the trip is going to be Rodman’s fifth to the country, and he has met Kim previously. Rodman is also personal friends with President Donald Trump, which could put him in a unique position to be a liaison.
Officially, Rodman is going as just a private citizen rather than as part of some formal diplomatic mission. And the experts consulted in the Bloomberg piece expressed doubt that Rodman is being used to establish a backchannel between Trump and Kim.
Even so, the development marks a rare spot of good news in a tense conflict that Trump has escalated considerably since taking office. While other issues have been dominating headlines lately, the relationship between Trump and Kim very nearly reached a boiling point earlier this year.
Rodman’s visit offers at least some chance at improving relations and moving the conflict further away from the oft-discussed military “solution”–which is almost certain to have disastrous consequences for all concerned, including civilians in North Korea and South Korea, and the roughly 30,000 US troops stationed on the peninsula.
As Sheldon Richman has persuasively argued, diplomacy is the only option in North Korea. Richman’s essay also shows that previous diplomatic efforts with North Korea actually produced useful results–until the US unilaterally sabotaged each one.
Now, it may be up to the eclectic Rodman–who was notoriously antagonistic and short-tempered in the NBA–to play the role of peacemaker and mark the first step back toward diplomacy.
But improbable as it sounds, it’s a positive development that any American will be meeting on friendly terms with the North Korean leader. Also positive, Rodman’s idea of a “bank shot”doesn’t involve regime change.

Monday, June 12, 2017

More Foreign Policy Continuity as Trump Affirms NATO Mutual Defense

Last Friday, President Trump reaffirmed the US commitment to Article 5 of NATO, which commits the US to come to the defense of any other NATO member.
Trump’s decision is in keeping with the US’s traditional position on the topic. However, it is somewhat at odds with the position advanced by Trump when he was a candidate.
On the campaign trail, Trump often criticized NATO and suggested it was obsolete. However, his criticism was not grounded in principle; instead it often centered around the idea that other countries weren’t paying their fair share.
At one point in the campaign, Trump implied that the US would only honor the mutual defense part of the agreement for countries that were spending the required 2% of GDP on their own military forces. Given that most members of NATO do not meet this threshold, such a stance would have had the effect of largely nullifying the US’s mutual defense commitment.
With last Friday’s announcement, however, Trump has abandoned his controversial position from his campaign and fallen back in line with US foreign policy orthodoxy. Unfortunately, this pattern has proven to be a common one for Trump.
On Syria, Candidate Trump was often critical of the idea of regime change, expressing a preference for focusing on ISIS. By contrast, President Trump has already launched direct cruise missile against the Syrian government, and US-backed forces have clashed with Syria-backed forces as well.
Similarly, on the campaign trail, Trump blamed Saudi Arabia for the 9/11 Attacks and called for the release of the “28 Pages” that reported on links between Saudi government and the 9/11 hijackers. As president, Trump has showered praise on the Saudis as a vital partner in countering extremism.
Candidate Trump also often suggested it would be nice if US-Russia relations improved. President Trump has taken no concrete steps toward this goal–and the aforementioned bombing of the Russia-backed Syrian government was a significant setback.
Far from bringing a radical and necessary change to US foreign policy, Donald Trump has shown remarkable continuity with past administrations. If anything, he has managed to exacerbate the worst effects of US foreign policy by giving the military a freer hand and producing more casualties. But the few useful changes he suggested during the campaign trail are difficult to spot.
Indeed, in most respects, Trump’s foreign policy has been the same as Obama’s, just with worse rhetoric and even more bombs.

Friday, June 9, 2017

Key Takeaways from the Comey Senate Testimony

The Comey Senate hearing has finally come and gone. And from a quick look at the media headlines covering the story, it appears just about everyone got what they were hoping for–namely more support for whatever conclusion they previously held.
Here’s a quick round-up of the leading stories from last night:
So in other words, it’s about what you’d expect. The major media outlets that have generally criticized Trump emphasized the most inflammatory aspects of Comey’s testimony. And, Fox, which tends to be sympathetic to the Republicans, emphasized the aspects of the hearing that were favorable to Trump.
Reading those headlines, one might almost think these reporters are just cherry-picking quotes to support their position. And indeed, that’s largely what happened.
But having said that, we actually did get a surprising amount of useful information and direct answers from the Comey hearing. And since we have the transcript, we don’t need to rely on the objective summaries of WaPo or Fox. I’ve summarized some of the most important takeaways below:
Comey did say Trump lied, but it wasn’t about anything important
As we saw above, many news outlets ran with the quote where Comey described Trump’s statements as “lies”. He really does say this, and it happens in his opening remarks.
But context matters. Comey said Trump was lying about his reasons for firing Comey–specifically saying that the FBI was in disarray, poorly led, etc. In other words, Comey said that Trump’s disparaging remarks about Comey himself were lies. Fair enough, but clearly, this isn’t a very big piece of the story–basically, Comey disagrees with Trump about Comey being a terrible leader. Not surprising and not important. But nice for writing headlines.
Outside of that section, Comey contradicts smaller details about things Trump has said. For instance, Trump at one point said Comey asked to have dinner, but Comey claims that Trump initiated the dinner. But the point where Comey directly describes Trump’s statements as lies, is the context noted above.
Trump was not personally under investigation by the FBI
This was clarified at several points in the testimony. As Trump claimed, Comey explicitly told the president on three separate occasions, that he was not being personally investigated. Trump apparently thought this should be said publicly for strategic reasons. However, Comey and the FBI leadership disliked this idea because it would then create a “duty to correct” if Trump subsequently became under investigation. Thus, this is the first time we’ve gotten explicit confirmation Trump himself was not being investigated, at least through the date of Comey’s firing.
Comey took Trump’s Flynn comments as a “direction”
In his testimony, Comey released the exact phrase, as he recalls it, that Trump used in the controversial comment surrounding Mike Flynn’s investigation. That quote from Trump went as follows:
I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy. I hope you can let this go.
This came a day after Flynn’s firing, and Comey said he interpreted it as a “direction” by Trump to intervene in that investigation on Flynn’s behalf. However, in the testimony, Senator Risch emphasized the exact phrasing and suggested to Come that no one has ever been prosecuted for hoping an outcome occurs. Comey agreed that he was unaware of a prosecution for hoping, but the conversation was a bit theoretical.
In some ways, this exchange proved inconclusive. The phrasing is in line with what had been released previously, but it’s not obvious the courts would stick to a purely literal reading. Still, this is the exchange that Republicans would most likely cite if they claim that Trump is free and clear based on the proceedings.
My own view is that nothing really changed here. It was never likely that Trump was going to be actually prosecuted for obstruction of justice, so this aspect seems to get more attention than it deserves. No matter how disliked he is, he’s still a very powerful politician and this is America. Prosecuting powerful politicians isn’t something we typically do here.
Moreover, impeachment is more about politics than criminality in any case.
Per Comey, the Flynn request was only about Flynn, not about the overall investigation
This is an important detail because it is often claimed that Trump’s comment about Flynn may have been motivated by a desire to shield Trump himself from the Russia investigation. But in Comey’s prepared opening statement, he explicitly says this was not his understanding. The relevant segment is below:
I immediately prepared an unclassified memo of the conversation about Flynn and discussed the matter with FBI senior leadership. I had understood the President to be requesting that we drop any investigation of Flynn in connection with false statements about his conversations with the Russian ambassador in December. I did not understand the President to be talking about the broader investigation into Russia or possible links to his campaign. I could be wrong, but I took him to be focusing on what had just happened with Flynn’s departure and the controversy around his account of his phone calls.
This is relevant to the question of whether Trump was trying to obstruct justice and possible impeachment charges. For better or worse, the president does have the authority to intervene in random federal cases. A presidential pardon is one method, but technically, they can directly order an investigation canceled as well. The latter is considered improper for good reason, but it probably wouldn’t be illegal.
By contrast, if Trump was intervening in an investigation about himself (not a third-party), that’s a much bigger issue. That makes Comey’s parsing here important.
Former Attorney General Loretta Lynch intervened in Clinton email case messaging
One unexpected bombshell from the day’s proceedings concerns former Attorney General Lynch. Here’s the relevant section (emphasis mine):
The Clinton campaign at the time was using all kinds of euphemisms, security matters, things like that for what was going on. We were getting to a place where the attorney general and I were both going to testify and talk publicly about it I wanted to know was she going to authorize us to confirm we have an investigation. She said yes, don’t call it that, call it a matter. I said why would I do that? She said, just call it a matter. You look back in hindsight, if I looked back and said this isn’t worth dying on so I just said the press is going to completely ignore it. That’s what happened when I said we opened a matter.
So AG Lynch told Comey to use language about an active investigation that was clearly intended to downplay its significance. Comey later said the episode gave him “a queasy feeling”.
Trump wanted Russia investigation to be swift, but also wanted aides properly investigated
One source of confusion in the testimony is Trump’s sentiments on the Russia investigation. On the one hand, Trump clearly implies he wants it to be wrapped up for PR reasons; he describes the investigation as “a cloud”. However, Trump also doesn’t seem terribly concerned about it finding​ anything incriminating about him personally. At one point, according to Comey, Trump was even considering ordering the FBI to investigate him directly, effectively to clear his name. Comey apparently advised against this because  “it was very difficult to prove a negative”.
Another interesting revelation is that Trump was apparently fine with his associates being investigated. This is how Comey described it in his prepared remarks:
The President went on to say that if there were some “satellite” associates of his who did something wrong, it would be good to find that out, but that he hadn’t done anything wrong…
The way this reads, Trump seemed to be perfectly fine to have an investigation of his orbit. The only possible ambiguity here is that he doesn’t say exactly what he’d want to see happen to his “satellites” if they did in fact do something wrong. It sounds like he would be content if all of the relevant information came out, and, implicitly, any wrongdoing gets prosecuted. But a more narrow reading is also possible.
What’s important here is that these sentiments do not appear to fit well with the theory that Trump was trying to shut down the investigation entirely.
Comey has no doubt Russia hacked the election, but there’s a catch
Several times in his testimony, Comey made it clear that he believed the Russians did deliberately interfere in the election. He was certain both that the alleged hacking occurred and that the Russians were responsible.
However, he also confirmed that the FBI never got access to the Democratic National Committee servers that were hacked. Instead, they got all of their information secondhand from the “high class” cybersecurity firm, Crowdstrike, the DNC hired to look into it.
This would be a bit weird in any case. However, it’s especially troubling here given that the same cybersecurity recently published a false / exaggerated report on, wait for it, Russian hacking. The firm ultimately had to issue a  correction when their error was discovered.
Regardless, Comey asserted he has no doubts about the overall Russian hacking story being true.
Comey gave a delightfully frank explanation of why anonymously sourced stories are often wrong
This is a minor detail in the scheme of things, but was a great quote from Comey. At one point, Senator Risch mentions a New York Times story alleging the Trump campaign colluded with Russia. Comey had apparently previously suggested this story was incorrect, and he reiterated that in his testimony. But he went farther, and explained why anonymously sourced like that can often be wrong (emphasis added):
In the main, it was not true. And again, all of you know this. Maybe the American people don’t. The challenge, and I’m not picking on reporters about writing stories about classified information, is the people talking about it often don’t really know what’s going on, and [the people that know what’s] going on are not talking about it. We don’t call the press to say, hey, you [got] that thing wrong about the sensitive topic. We have to leave it there.
Needless to say, this is a very interesting explanation. In essence, he’s saying that usually it’s the people on the periphery that leak to the press, not the high-level people. It’s tough to say whether he’s right about that, but it has some appeal to it. This could explain why so many of these stories end up being wrong, without assuming bad faith on the original sources. (And it tends to be a good idea not to rest your arguments on bad faith, in my opinion.)
This was something of an aside from the overall testimony, but it was an interesting one. Also, notably, Comey did not deny the general idea that the Trump campaign might have colluded with the Russians; he took no position on that question. Above, he’s just saying this particular story was not correct.
Where does that leave us?
Ultimately, after hearing Comey’s testimony, we’re pretty much in the same place we started. There’s still no smoking gun showing wrongdoing by Trump. And it’s not at all clear how Democrats could move forward from here without new information coming to light.
On balance, the testimony was probably favorable for Trump. But the issue still isn’t settled, and no doubt, it will continue to dominate the news.