Friday, August 9, 2013

Snowden in Russia

I see the administration is upset that Russia granted Snowden asylum for a year.

Let's imagine a Russian who blew the whistle on Russian domestic intelligence gathering landed in New York requesting asylum, and Russia demanded his return.

Would we send him back?

Sauce for the gander and all that...

Thursday, August 8, 2013

Irresponsible Journalism

Imagine if during WWll a newspaper had published a story revealing how our knowledge of German codes had enabled us to avoid a submarine attack.  Would that be considered responsible journalism?  Because of course, the Germans would have changed their codes, meaning that we would not have had warning of another attack.

This week we read that our ability to tap a conference call among Al Qaida leaders alerted us to a new terrorist threat.  Was it responsible journalism to report that fact?  Can't we now anticipate that Al Qaida will find another way to communicate with each other, closing off what could ave been a valuable source of intelligence about future planned attacks?

The Guantanamo Conundrum

As we know (or should know), many of the prisoners held by the US at Guantanamo Bay are completely innocent.

Some of the innocent have been released, but many are still there, and the conditions under which they have been held have (understandably) radicalized them.

So here's the conundrum:  what is the morally right thing to do with people who would never have posed any threat to us if we had left them alone, but now that we have imprisoned and tortured them could be a threat to us if we released them?

Obama Still Weak on Jobs

In his July 24 address at Knox College, President Obama once again put out exactly the wrong message when he took credit for " cut(ting) the deficit by nearly half as a share of the economy since I took office."  As economists have pointed out, we should  be increasing government spending rather than cutting it (see below), even if in the short run we increase the federal deficit, as our present policies are slowing our economic recovery, and prolonging the high rate of prolonged unemployment that is ruining so many lives.  

What should the president be saying?  Well, things haven't changed enough  to make my posts of March 2011 and May this year outdated.

Agreeing With Boehner

It's not often I agree with John Boehner, but when he said, "We ought to be judged on how many laws we repeal", I was in complete accord.

There are thousands of laws in existence, and I've often wondered how many of those laws are still useful.  I would think one function of Congress would be to examine past laws, and repeal or amend those that have become outdated, and certainly to repeal those laws that do actual harm.

As candidates for repeal, I would first nominate the stupid, painful and damaging sequester, and second the federal drug laws that criminalize private recreational behavior,  are the drivers of much of the nation's criminal  activity, and have resulted in the US having the world's highest proportion of its citizens imprisoned.

Wednesday, May 1, 2013


I've bee thinking how the case for adequate federal stimulus spending could have been made back in 2011, when the Democrats' made their wrongheaded pivot to austerity.

Here's how I think the case could have been presented in terms everyone can understand:

If you have a total sum made up of three parts,and two of the parts drop, the way you keep the total the same is to raise the other part.  That's simple arithmetic.
Our economy has three parts:  consumers, business, government.  We're in a situation now where consumers are spending less because so many are out of work, businesses aren't investing and hiring because folks aren't buying, so two parts of our total economy are down.  So simple arithmetic tells us that the third part of the economy, government, needs to step in to raise the total to where it was before the downturn.
Now there are some who say that by reducing government, we will magically increase the other two parts.  Sorry, I don't believe in magic, I believe in arithmetic.  If we start cutting government - laying off people, buying less from businesses so they get smaller and lay off people, then the situation gets worse.  all three parts of our economy shrink even further. That's also simple arithmetic.
So let's apply that simple arithmetic and bring our economy back up to its potential.  Some more government spending now, and cutting it back when we're at full employment and businesses are once again thriving.

Tuesday, March 19, 2013

Seize the Moment!

Now that the consequences of sequestration are hitting home, this is the time for President Obama to point out forcefully that the Republicans' insistence on cutting spending in a depressed economy is a really bad idea, and that people can see for  themselves what cutting spending means for jobs and economic growth.  He should be calling loudly and often for outright repeal of the sequestration legislation - not going along with the Republicans' call for a "deal" that involves spending cuts.

Regrettably, we're seeing no inclination on the president's part to seize the moment to turn the national dialogue away from deficit cutting to job creation - and to point out that just as cutting spending means job losses, increasing spending (temporarily) means job creation.

Wednesday, March 6, 2013

David Frum: Why Romney Lost

Yes, there are sane Republicans.

The Supremes

I'm always puzzled when the post of Chief Justice of the Supreme Court falls vacant, and a judge new to the court is nominated as replacement Chief Justice.

Wouldn't it make more sense when a Chief Justice retires for whichever of the remaining eight judges has served the longest to step up to become Chief Justice, and for the newly confirmed member of the Court to be the new low person on the totem pole?

Friday, February 22, 2013

We don't have a spending problem!

Contrary to what you will hear from the Villagers in D.C., we don't have a spending problem:  we have a revenue problem - one that began with the Reagan tax cuts.  Those tax cuts, along with foolish spending on  boondoggles like "Star Wars", began the large annual deficits and increase in debt that we've seen since the beginning of Reagan's term, and which were exacerbated by the Bush tax cuts and needless wars he began.

You may think that the slight increase in tax rates in the Clinton years was adequate because we began running surpluses at the end of his term, but the growth of the economy in the late 1990s and concomitant government revenue was a result of the tech bubble, and not an indicator of what tax rates would be appropriate in a healthy economy.

The argument is made that higher tax rates choke off enterprise, and drag the economy down.  I call BS on that claim.  If someone has an idea for a business and thinks s/he can make a bundle on it, the tax rate may be an irritation, but not a deal-breaker.  For instance, in 1957 the top marginal tax rate of 91% did not dissuade Ken Olson and Harlan Anderson from starting the very successful Digital Equipment Company (DEC).  And a top marginal rate of 70% did not dissuade the young Bill Gates and Paul Allen from founding Microsoft in 1975.  So the claims that raising top marginal rates to a modest 40% will destroy incentives and depress the economy are - well - BS.

Diamond and Saez have shown that a top marginal rate of  50-70% will maximise revenue while not depressing growth.  Indeed, if one looks back to see how growth correlates with tax rates, then period of higher growth came in times when tax rates were higher.  So - do lower tax rates on high incomes stimulate the economy? No!

I've been looking back at growth rates in the sixties:

In 1965 and 1966 the top marginal rate on a couple filing jointly was 70% on income over $1,500,000 in today's dollars, yet growth was a healthy 8%+ in 1966.  Clearly a 70% top marginal rate is not an impediment to growth.

We do have a worryingly large deficit and accumulated debt, but it's not the result of spending:  it's the result of the rash lowering of tax rates in the Reagan and Bush years, along with the foolish wars started by George W. Bush, and the economic crash resulting from poor oversight of the banking industry.

Attacking the deficit by reducing spending is self-defeating:  more people are put out of work, reducing tax revenue and increasing outlays on safety net support, as the British are finding out.  Attacking the deficit by raising taxes on lower income earners who live from pay check to paycheck is similarly self-defeating: these individuals will have to cut spending, so depressing the economy, with jobs lost and the same lost revenue and increased safety net outlays.

But raising rates on those whose income allows them to comfortably meet their material needs and then some would not have the same depressing effect on the economy, as their spending needs are satisfied.  And the present tax increase recently passed of top rate of 39.6% on income over $400,000 is woefully inadequate to meet our revenue needs.  Here are the kind of marginal tax rates I believe we should be working towards, simultaneously lowering rates on lower incomes and raising rates on higher incomes, so we may ultimately meet current revenue needs as well as start paying down our accumulated debt:

(Suggested marginal rates for married filing jointly - halve the income ranges for singles. The top marginal rate - constant dollars - is the same as in 1965-66.)

10%            $0 - 25,000
15%            $25,000 - 75,000
25%            $75,000 - 150,000
35%            $150,000 - 325,000
50%            $325,000 - 650,000
60%            $650,000 - 1,500,000
70%            Over $1,500,000

Compare these rates to our present (2013) tax rates for married filing jointly:

10%             $0 - 17,850
15%             $17,850 - 72,500
25%             $72,500 - 146,400
28%             $146,400 - 223,050
33%             $223,050 - 398,350
35%             $398,350 - 450,000
39.6%          Over $450,000

As you can see, I'm proposing more progressive rates,  with considerably higher revenue producing rates on those most able to afford to support their country, and lower taxes on those making $150,000 or less.

Ah, if only they'd asked me....

Update 5/29/2013:  See this paper on the association between low tax rates and inequality.

Update  3/1/2014   Paul Krugman shows (once again) that we don't have a spending problem

Update 4/22/2014  Andrew Sullivan has a thread supporting high taxes

Update 7/20/2014  David Kay Johnstone tells us California's hiring increased after taxes were raised.
And adds:
The empirical evidence ... shows that the best-paying jobs tend to be clustered in states (and countries) with high taxes. The same tends to be true of wealth creators, including the most money-motivated among scientists, and existing wealth holders not actively engaged in business.
Manhattan, home to the highest taxes in America, is also home to many centimillionaires and billionaires drawn by the proximity of other dealmakers, as well as taxpayer-supported amenities such as museums and performing arts halls.

Update 10/19/2014.  It's clear that the claim that raising taxes will strangle the economy is a prime example of derp.

Update 12/21/2015

My attention has just been brought to this paper by two "resident scholars" and a "research fellow" at the AEI propaganda mill, in which they argue against the proposed top marginal tax rates proposed by Diamond and Saez.

Hers's the meat of their argument:

"Imagine a high school student who graduates in a world where the top marginal income tax rate is more than 70 percent. He may decide not to pursue his dream of becoming a college-educated engineer because the government will take a large share of the returns to his college investment — that is, much of the extra money he will earn because he is a college-educated engineer will be seized by the government, so he may conclude that going to college isn’t worth it. He is worse off because of the high top income tax rate. And so is society, because we now have one less engineer. Or imagine a medical school student. She may decide to become a pediatrician instead of a heart surgeon because a large share of the extra money she would earn being a surgeon would be taken by the government. There is nothing wrong with pediatricians, but the problem is that the government is distorting this medical student’s decision — that is, she isn’t making the choice based on her preferences and market prices alone. If enough people made that choice, there wouldn’t be enough surgeons (an economist would say there is an inefficient allocation of human resources). Or imagine a small business owner. His business is growing and he has the opportunity to expand it over the next decade. But because expanding it will require a lot of work — not to mention that the payoff is risky — he chooses not to. He decides that it’s just not worth it given that the potential rewards from his hard work will largely go to the government."

Let's take a realistic look at their argument here.
" (A high school student) may decide not to pursue his dream of becoming a college-educated engineer because the government will take a large share ....of the extra money he will earn because he is a college-educated engineer.."
What would be his income tax rate as a high school graduate?  The NCES data show high school graduates earning a median annual income of $30,000, and if the tax rates I propose were in place, his income tax (single person) would be $3,875, leaving an after tax income of $26,125
If he were to be an engineer, he could expect to be making $62.950 a year (taking the average of median entry level incomes for different engineering fields). My proposed tax rates (single person) would mean an annual income tax bill of $11,273, leaving an after tax income of $51,677 (i.e. more than the pretax income of a high school only graduate).
The difference in income after taxes: $25,552.
This difference in income would pay off a college debt of $100,000 in four years, leaving the engineer in a far better financial position than the high school graduate for the rest of their careers.
Similar calculations could be made for the other examples suggested by the AEI, but consider: these are financial calculations only.  They do not take into account the satisfaction coming from the realizations of dreams, which I suggest would outweigh the mundane financial considerations that the AEI "scholars" seem to think are so important.

Read more here:

Wednesday, February 6, 2013

The Sequester

Just repeal the damn law that established the sequester!

What's so hard about that?

Thursday, January 31, 2013

Worth Reading

Smart young Ezra Klein.

Money quote:

And there is a quite real risk that efforts to cut the deficit could be counterproductive in bringing down the debt burden. Britain has been implementing deficit-reduction measures for the past three years, and while it has succeeded in cutting deficits, its economy has been stagnant as austerity sucks the wind out of growth. As a result, its debt to GDP ratio has been rising! (By the IMF’s numbers, Britain’s deficit has fallen from almost 9 percent of GDP in 2008 to 5.6 percent in 2012—yet in that span its debt level has risen from 61 percent to 84 percent).

Worth Listening To

Paul Krugman on Bloomberg Television’s “Street Smart.”.

Wednesday, January 30, 2013

Anticipating the Sequester

The childishly enacted sequester is due to kick in a month or so from now, requiring large cuts in federal spending with the attendant loss of jobs and slowing of economic growth. Of course, the adult thing to do would be to simply repeal the requester legislation, but we are sadly short of adults in today's DC.

The Democrats should be preparing the public to see who will be responsible for the economic consequences to come by pointing out that, although they would be happy to repeal the sequester, the Republicans refuse to do so. The Democrats need to be loudly pointing out that cutting federal spending means jobs will be lost, and when it happens the Republicans will be to blame.  It's an opportunity for them to press home the simple fact that cutting spending means lost jobs, as they should have been doing for the past three years.  If the consequences of the sequester means more of the public will come to see the connection between federal spending and employment rates, then the Democrats will be in a better position to stand up against future irresponsible calls from the Republicans to cut spending, and they may even be able to push for more spending to boost employment, as our Nobel prize winning economists have been pleading.

But the Democrats meed to be laying the groundwork now - we know the Republicans will be blaming the administration for the coming downturn, and they may persuade an unprepared and gullible public.

Tuesday, January 15, 2013

No Ransom!

When Major Garrett asked the president
"What Chuck and I and I think many people are curious about is this new adamant desire on your part not to negotiate when that seems to conflict with the entire history in the modern era of American presidents in the debt ceiling and your own history on the debt ceiling,"
I wish the president had been more forceful in his answer, something along the lines of: "Look, the Republicans are attempting to hold the national and world economy hostage to exact a ransom. When you talk about 'negotiate', you mean accepting that a ransom will be paid:  'negotiations' just mean dickering over the amount of the ransom. It's my belief that the United States should not pay ransom to hostage takers, but should instead demand the immediate release of the hostage - in this case, by increasing the debt ceiling.  You should not make the mistake of seeing this as a Republicans vs. Democrats issue. It's a Republicans vs the United States issue."

Monday, January 14, 2013

Pithily Stated

Duncan Black puts in a nutshell our frustration with the deficit reduction policies being pushed by the Obama administration, and even more destructively by the GOP:
The additional maddening thing is that if you fix the jobs problem you largely fix the deficit problem. The reverse is not true. If you "fix" the deficit you kill the jobs.
( And as one of the commenters on the post noted:
"And you still don't fix the deficit."  )

Saturday, January 12, 2013

Realism about Afghanistan

Emile Simpson has a column laying out the strategic narrative the administration should be employing about how things are going to go in Afghanistan.  One of the ways Simpson says the administration needs to frame the narrative:
We should not invest any coalition credibility in holding the peripheral areas: Over the next three years, the Taliban flag may go up in some towns and villages. In our current narrative, that will be seen as a major victory for them. In reality, to control dusty villages on the periphery, and even remote district centres, means little. We need to adjust our narrative so people expect that, and when it happens, people believe us when, legitimately, we point out that this is insignificant. By so adjusting the narrative, we take pressure off the Afghans to hold the peripheral areas, which they do not want to, only being there because they perceive it as a condition for us giving them support. 
 The main point of his column is that this is not a binary conflict where one side loses, the other wins, and both the US and Afghan publics should understand that there will be no clear victory, and nor could there be.

But is the Obama administration explaining this forcefully enough?
I don't think so.

Friday, January 11, 2013

Another Good Use of Time

An excellent use of a spare 48 minutes would be listening to this interview with Paul Krugman.

(Even if you already spent an hour as I recommended earlier.)

Sunday, January 6, 2013

Avoiding the Debt Ceiling Crisis

While the platinum coin idea is ingenious, it does seem a ridiculous solution to the Republicans' taking the economy hostage, and would probably not go over well with the public. ( Ezra Klein provides a sturdy argument against the coin solution.)

Steve Waldman has what sounds like a more acceptable solution:

The Treasury Secretary would announce that he is obliged by law to make certain payments, but that the debt ceiling prevents him from borrowing to meet those obligations. Although current institutional practice makes the Federal Reserve the nation’s primary issuer of currency, Congress in its foresight gave this power to the US Treasury as well. Following a review of the matter, the Secretary would tell us, Treasury lawyers have determined that once the capacity to make expenditures by conventional means has been exhausted, issuing currency will be the only way Treasury can reconcile its legal obligation simultaneously to make payments and respect the debt ceiling. Therefore, Treasury will reluctantly issue currency in large denominations (as it has in the past) in order to pay its bills. In practice, that would mean million-, not trillion-, dollar coins, which would be produced on an “as-needed” basis to meet the government’s expenses until borrowing authority has been restored.

A reasonable workarounnd.  But the priority for President Obama right now should be to frame the issue so the public understands why extraordinary measures are necessary.

Tuesday, January 1, 2013

Start Framing Now!

The Republicans have made it clear that they will demand concessions from the Democrats before raising the debt ceiling.  When the time comes, they will present it as a a partisan issue - the Democrats want to raise the debt limit, the Republicans want to cut spending.  i.e. the Republicans want something, the Democrats want something, so let's compromise.

If it's it put in those terms, Democrats have to lose.  The public favors compromise, and if the Democrats hang tough and refuse to "compromise", then they will get the blame if the failure to reach agreement results in default and the resulting economic fallout.

The Democrats need to frame the issue correctly now.  Raising the debt limit is not a partisan difference in priorities: the Congress has written a check for the budgeted revenues and spending, and raising the debt limit is just making sure the funds are in the bank to honor that check.  For the Republicans to threaten to refuse to honor the country's commitments, and threaten the whole economy, is hostage taking.  And any spending reductions they demand are a ransom to "free" the hostage (i.e. to  preserve the creditworthiness of the USA and our present [fragile] economy).

It's not a question of partisan differences that can be resolved by "compromise".  You don't compromise with hostage takers: you pay the ransom or you don't. (If you do negotiate, it's on the size of the ransom.)

So that's how the issue should be framed starting today: do the American people want to pay ransom to hostage takers, or don't they?

Update 1/4/13  Advice from a hostage negotiator.

Update 1/6/13  And in case you think the hostage/ransom metaphor is overly anti-Republican - note that the Republicans have used it themselves :

“I think some of our members may have thought the default issue was a hostage you might take a chance at shooting,” (Senator Mitchell)  said. “Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming."