Friday, November 19, 2010

I take it back

I've stated many times that the Cat Food Commission has to simply cease to exist as it serves no useful purpose. Actually, now that the person who's apparently the sole liberal on the Commission has spoken up, there might be a purpose to allowing it to continue to exist after all. Representative Jan Schakowsky (D-IL) has come up with a plan that's considerably better than the Bowles-Simpson plan ($427 billion in savings by 2015, vs. $250 billion) and it doesn't touch Social Security at all.
She takes over $120 billion in expenditures out of the war-making budget by following the recommendations of Representative Barney Frank's (D-MA) bipartisan Strategic Defense Task Force. In a recommendation that I refer to as "red meat for progressives," She proposes to "Raise $132.2 billion by closing tax subsidies for companies that ship American jobs overseas." She plans to increase collections through "progressive reforms to the estate tax, treating capital gains and dividends as regular income, and enacting a cap and trade proposal that includes protections for lower-income people." Oh, and she also proposes spending $200 billion on another stimulus. As of the one-year anniversary of the stimulus passing through Congress, it was pronounced a qualified success. Essentially, it was good, but it would have been better if it had been larger.
Will the other commissioners take Schakowsky's proposal seriously? I kinda doubt that as I think they're just looking for an excuse to cut down the standard of living of the non-rich, but hey, for purely political "optics," it's far better to support a long shot than to appear to be a completely stubborn rejectionist.

Tuesday, November 16, 2010

The limits if limited government

Excellent piece looks at Louisiana and its attempt to live within tight limits on government expenditures.
 Going beyond the numbers, what was the actual impact of DHH's plan for "doing more with less"? DHH would close eight parish Medicaid offices, reducing by 61 people the number of DHH employees serving Medicaid clients. And it would reduce the number of prescription drugs allowed Medicaid patients. Medicaid currently pays for up to five prescription medications. DHH's proposal, if approved, would reduce that to four. Thus, Louisianians in need of medical services would have to drive farther, wait longer and figure out which drugs they could do without.

Y'see, this is what happens when the philosophy of limited government crashes headlong into the realities of actually governing. Glorious theory gives way to drab reality. Ideas that looked brilliant on paper or that sounded great sitting around a well-furnished conference room table don't look so hot when you're actually trying to govern.

And this poor guy is just absolutely flummoxed when he runs into the very same problem that millions of his fellow citizens are currently facing.  He's very upset that he and his family don't get health care coverage immediately upon his becoming a Congressman. They  have to wait about a month before that kicks in. Of course, he's a far-right wing Congressman who fought against health care for everyone else, so while he has to wait a whole month during which he can get by on his existing coverage, 59 million Americans don't have any coverage at all.

More dishonesty

Again, we have Republicans spreading the lie that to go back to Clinton's income tax rates would adversely affect small businesses. Business income and personal income are accounted for in different ways and we should not consider business income as being the same as personal income. In the piece I've linked to, they explain "pass-through" companies, where yes, business profits are treated as personal income, but not the business income that goes back into the company.

If a pass-through business sells $1 million worth of goods and needs to then turn around and spend $950,000 in order to re-stock, pay employees and pay for things like heat/air conditioning, lights, water, etc., then only $50,000 counts as the owners' personal income. So yes, a dry-cleaning business or a hardware store might make more than $250,000 in a year, but only their profits get taxed and the first $250,000 of profits get taxed at one rate whereas everything over that gets taxed at another. The rest is considered a business expense.

Saturday, November 13, 2010

Deficit reduction - the utter meaninglessness of

Yes, surveys say that people are concerned about reducing the deficit, but a close examination shows that this concern is hugely overstated and very few of those who claim to be concerned about deficits really have much of a clue as to what they're talking about. Where the level of the deficit actually is and how much people express concern about it are not at all correlated. People get concerned about it when politicians make noise about it. Period.

Link to flyer on Cat Food Commission. Two important points made on the flyer: There's really no evidence that the Commission is actually concerned about the deficit and the Commission is really determined to see to it that progressive programs can't be carried out.

Monday, November 8, 2010

Personal taxes versus business taxes

Look, I understand that Bob Shieffer is getting on in years and is now a tired, weak fellow who can no longer think rapidly on his feet, but he got completely rolled by Senate Minority Leader Mitch McConnell here (Note that McConnell is still Minority Leader, the 2010 mid-term election did not result in the Republicans taking over the Senate).

McConnell kept speaking of small businesses and kept indirectly suggesting that small businesses would pay a bigger excise tax, i.e., a tax on things like:

  • Environmental taxes.

  • Communications and air transportation taxes.

  • Fuel taxes.

  • Tax on the first retail sale of heavy trucks, trailers, and tractors.

  • Manufacturers taxes on the sale or use of a variety of different articles

In other words, taxes that have nothing to do with personal income. But the subject of Shieffer's interview was personal income taxes. Shieffer was talking about taxes on the income that people personally make, he was not talking about taxes on the money that a business makes.

Is there an overlap? Are there people who work in a small business who make over $250,000 a year? Yes, but it's a pretty small one. It refers to people like doctors who run small, specialized practices, investment people who don't employ a lot of other people, etc.

A mom-and-pop hardware store that pulls in over $250,000 a year is completely irrelevant to the Shieffer-McConnell discussion as most of that income goes right back into keeping up the inventory. The remainder that goes to the mom & dad team is usually in the $30,000 to $40,000, maybe the $50,000 range. It's only that latter amount that gets counted as personal income because a business takes in all of its money as business income. The owner pays him/herself by taking out a portion of that income and segregating it off as their personal salary. If the business does poorly, the owner doesn't get tot take anything out and hopefully, the owner has it in the business plan that there's enough cash on hand or investments that can be cashed out to keep going until business picks up.


A few months ago, I had a correspondence with a right-winger who earnestly informed me that Republicans were doing a grand job running individual states. Looking at how the governors of Wisconsin and Ohio are against high-speed rail, how the governor of New Jersey is opposed to a second rail tunnel from Manhattan and how Texas is now $25 billion in the hole, I'm not so sure he has a point about that.

Der Spiegel has a piece on the economic decline of America. Especially heartbreaking is the first picture, a large housing complex with only a few houses scattered here and there in it.

Monday, November 1, 2010

David Broder: Insane or Demented?

Nah, it's unfair to blame David Broder as though he were just a lone thinker and was not representative of "The Village" of Washington DC pundits. He should be seen as being a representative of what "The Village" thinks. First, let's look at the rather glaringly obvious solution that Broder so casually rejects:

The nation is suffering simultaneously from high and persistent unemployment, lagging investment, massive public and private debt, and a highly inefficient tax system.

The steps that have been ordered so far in Washington have done nothing more than put the brakes on the runaway decline. They have not spurred new growth.

I'm not so sure that the tax system has anything to do with anything, but if America solves the problem of "high and persistent unemployment," it's likely to be via the solving of the problem of "lagging investments." Debts, of course, will take care of themselves once the other two problems are taken care of.

So what's the problem with more stimulus? That second paragraph sure reads an awful lot to me like there simply wasn't enough of it. To the extent that stimulus was tried, it certainly did indeed work. So why doesn't Broder simply suggest that Republicans are the bad guys here and that Obama needs to step over them in order to fix the economy?  Because that would tramp all over the beloved conventional "wisdom" that all problems stem from a lack of bipartisanship. According to Broder and his "Villager" friends, he simply can't blame one side for any problem and the thought of stepping over an obstructionist political party would promptly cause him to retire to the fainting couch.

Hmm, what to do? What to do? A-ha! That's the answer! War wih Iran! The fact that the US is:

already involved in two wars, have been for close to an entire decade, and during that time have had the lowest economic growth since WWII.

is just one of those...well...annoying problems...that just...tsk...just gets in the way a lot.

What if the US were to start a war with Iran? As the "Baghdad has WMDs" skeptic back before the Iraq War began, Scott Ritter, pointed out back in 2006 that attacking Iran is an absolutely insane idea. It would resemble the Athenian attack on Syracuse in that it would probably result in the annihilation of our army in Iraq.  The Guardian examines Iran's military, anti-US role in Iraq. Relatively little has happened so far, but it's pretty clear that Iran could do a heck of a lot worse to US forces there. So no, Broder has not managed to "square the circle" or to find that edible bowl of porridge that's of course, always in the middle. To suggest attacking Iran demonstrates a mindless bloodlust that would reveal savagery, but is probably more indicative of a very sheltered and privileged life.

In either event, Broder is not the slightest bit concerned about the millions of casualties that would result. Nor, interestingly, does Broder show the slightest concern over his previous, very-strongly-expressed desire for a balanced budget. To suggest a war with Iran as a way to get the economy moving again is to show that Broder thinks Keynes was right. Of course, getting stimulus into the economy via military spending would be an effective strategy, but

If spending on war can provide jobs and lift the economy then so can spending on roads, weatherizing homes, or educating our kids.

Stimulus is stimulus, no matter how it's delivered. Is military spending a good stimulus? Not really. With US military contractors already busy, it's far from clear that opening up yet another front would improve the economy at all. There's also the problem that the US doesn't particularly want to re-start the draft, but counter-recruitment efforts are doing well and there's also no strong desire for regular citizens to sign up for a tour of duty in that area of the world. About the only strong incentive for young people to sign up for the military is the cruddy job market. If that ever improves, there's simply nothing in American culture that suggests an urge to run around the globe improving everybody elses' societies.