Tuesday Late Afternoon Blues

Minxy’s out surfing samsara this afternoon.  I’m trying to muster up some good vibes today for her as she faces all the “it’s a short life” kind’ve stuff that goes on with the early passing of a friend. As for me, I seem to be entering my blue period. Maybe it’s because I just get cannot this friggin’ gravity model specified correctly and maybe it’s just my parameters that are tangled up and BLUE.  Okay, you won’t know what BLUE means for a regression estimator (Best Linear Unbiased Estimator  e.g. BLUE) unless you’re as steeped in econometrics as I am but it’s a good play on words.  REALLY. Chuckle sympathetically because I need it today.  I wish I could like football like normal people.  Instead, I follow the bloodsport of politics and its inherent nastiness these days and I have way too many degrees in the dismal science.  The results are bound to get to you one way or another.

So this little piece is about the U.S. and blue to match my mood.   I’m going to start out with some blue estimators of a different sort.

There was a bit of poll that showed a glimmer of true hope instead of the manufactured sort out today.  Recent entrant into the Massachusetts Senate Race, Elizabeth Warren, is polling ahead of glamor boy Republican Scott Brown who replaced the late Ted Kennedy.

Elizabeth Warren has had an incredibly successful launch to her Senate campaign and actually leads Scott Brown now by a 46-44 margin, erasing what was a 15 point deficit the last time we polled the state in early June.

Warren’s gone from 38% name recognition to 62% over the last three months and she’s made a good first impression on pretty much everyone who’s developed an opinion about her during that period of time.  What was a 21/17 favorability rating in June is now 40/22- in other words she’s increased the voters with a positive opinion of her by 19% while her negatives have risen only 5%.

The surprising movement toward Warren has a lot to do with her but it also has a lot to do with Scott Brown.  We now find a slight plurality of voters in the state disapproving of him- 45%, compared to only 44% approving.  We have seen a steady decline in Brown’s numbers over the last 9 months.  In early December his approval was a +24 spread at 53/29.  By June it had declined to a +12 spread at a 48/36.  And now it’s continued that fall to its current place.

Meanwhile, the mixed up mess of Republican presidential candidates is shaking up to a two white man race.  Gallup reports that Perry has a better chance than Romney of sealing the nomination at this point, but Romney has a better chance than Perry to beat Obama.  No surprises there.

Rick Perry leads Mitt Romney by 31% to 24% in a new USA Today/Gallup poll of Republican presidential nomination preferences. The two are well ahead of the rest of the GOP field, with Ron Paul the only other candidate in double figures.

…

Perry seems to have momentum, but that could be slowed in the coming weeks if Republicans start to perceive that Romney is more electable in the general election. The new poll finds the slight majority of Republicans, 53%, prefer to see their party nominate the person who has the best chance of beating Obama, even if that person does not agree with them on almost all of the issues they care about. Forty-three percent would prefer a candidate who does agree with them on almost all of the issues, even if that person does not have the best chance of winning in November 2012.

Romney currently edges out President Barack Obama by 49% to 47% in national registered-voter preferences for the November election, while Perry trails Obama by 45% to 50%. However, neither Romney nor Obama is ahead by a statistically significant margin.

It’s no wonder Perry wants out of Texas.  This poll should direct Perry into the Even Cowgirls get the Blues line.  Texans do not like Governor Goodhair if you believe PPP’s numbers.

The poll, released Tuesday, showed Perry with a negative approval in Texas: while 45 percent of the state’s voters approve of Perry’s job performance, 48 percent of Texas voters say they don’t approve.

Obama should have The Blues over this poll from Marist.  Will this lead to calls for a primary challenger on calls on him to pull an LBJ?

President Barack Obama faces a litany of bad news.  The president’s job approval rating, his favorability, and his rating on the economy have hit all-time lows.  To compound matters, three in four Americans still believe the nation is in a recession and the proportion who thinks the country is moving in the wrong direction is at its highest point in more than a decade.

According to this McClatchy-Marist Poll, the president’s approval rating is at 39% among registered voters nationally, an all-time low for Mr. Obama.  For the first time a majority — 52% — disapproves of the job he is doing in office, and 9% are unsure.

You’ve always known that Wall Street is only True Blue to profits and not the country right?  Grok this headline at Politico via the WSJ.  It looks like a lot of hedge funds were betting the US to lose its AAA standing with S&P.  The SEC is launching insider trading probes.  Can we please get some perp walks now, please?

Securities and Exchange Commission officials have sent subpoenas to financial firms in a probe of whether there was insider trading — betting on a market crash — before the United States’ long-term credit rating was cut by S&P last month, reports The Wall Street Journal.

At issue are trades that were made by hedge funds and other firms shortly before the rating agency Standard & Poor’s downgraded U.S. debt from triple-A to double-A-plus on Aug. 5 and cited the dysfunctional political climate in Washington as one of the reasons.

The Dow Jones Industrial Average dropped 635 points, or 5.5 percent, on Aug. 8, the first day of trading after the downgrade. This was the sharpest one-day decline since the financial crisis in 2008, but it also made bets against the market very profitable.

Securities regulators are looking for firms that bet the stock market would drop — in particular, bearish trades that seem unusually large or were made by firms that typically do not make them.

An SEC spokesman declined to tell The Wall Street Journal which investment firms have received subpoenas.

My guess is it’s the usual vampire squid suspects and all the rest of the guys whose blue balls we pulled out of the bankruptcy fire with TARP and tax dollars. Bets any one?

So here’s the a nifty chart from Paul Krugman–with blue bars–that will make you scream until you’re blue in the face.  Look whose been winning the class war since 1979.  So the deal is not only is their share of income and assets way up, but their after tax income has gone way up too.

Changes in tax rates have strongly favored the very, very rich.

Now, they’re only a fairly small part of the huge growth in the after-tax inequality of income. But tax policy has very much leaned into that growing inequality, not against it — and anyone who says otherwise should not be trusted on this issue, or any other.

So, of course the moment we get a whiff of anything slightly Democratic coming from the President we experience blue dogs howling at the blue moon and the beltway press.

Centrist Democrats, a dwindling breed on Capitol Hill, were quickly faced with another rough choice once Obama went public with his plans: Reject their president or back what Republicans are already calling the largest tax increase in the nation’s history.

Florida Sen. Bill Nelson, who is up for reelection in 2012, has supported raising taxes on millionaires but was still weighing whether he’d support higher taxes on those who make more than $200,000 a year, said spokesman Dan McLaughlin.

Sen. Ben Nelson (D-Neb.), a key moderate who’s up for reelection next year, didn’t mince words: “There’s too much discussion about raising taxes right now, not enough focus on cutting spending.”

But Sen. Jon Tester (D-Mont.), who likely will face GOP Rep. Denny Rehberg in next year’s reelection bid, hedged a bit, saying he backs provisions in Obama’s plan that call for closing tax loopholes that benefit millionaires and corporations

“This plan isn’t the one I would have written, nor is it the one that will end up passing Congress,” Tester said. “But I welcome all ideas to the table so Congress can work together to create jobs, cut debt and cut spending.”

Blue blooded villager David Brooks admits to being an Obama sap and refers to Beltway Bob as “appreciative”.  I prefer the term deep-throating, but hey, there’s a glint of recognition, right? It’s a two for one villager idiot piece! Look! I’ve managed to use some blue language.

Yes, I’m a sap. I believed Obama when he said he wanted to move beyond the stale ideological debates that have paralyzed this country. I always believe that Obama is on the verge of breaking out of the conventional categories and embracing one of the many bipartisan reform packages that are floating around.

But remember, I’m a sap. The White House has clearly decided that in a town of intransigent Republicans and mean ideologues, it has to be mean and intransigent too. The president was stung by the liberal charge that he was outmaneuvered during the debt-ceiling fight. So the White House has moved away from the Reasonable Man approach or the centrist Clinton approach.

It has gone back, as an appreciative Ezra Klein of The Washington Post conceded, to politics as usual. The president is sounding like the Al Gore for President campaign, but without the earth tones. Tax increases for the rich! Protect entitlements! People versus the powerful! I was hoping the president would give a cynical nation something unconventional, but, as you know, I’m a sap.

Being a sap, I still believe that the president’s soul would like to do something about the country’s structural problems. I keep thinking he’s a few weeks away from proposing serious tax reform and entitlement reform. But each time he gets close, he rips the football away. He whispered about seriously reforming Medicare but then opted for changes that are worthy but small. He talks about fundamental tax reform, but I keep forgetting that he has promised never to raise taxes on people in the bottom 98 percent of the income scale.

I nearly had to stop reading the damned thing since I was about to pass out from putting my palm to my forehead just a few too many times.  Yes, it’s turning black and blue. How are we supposed to get grown up discussions about policy when the two largest newspapers in the country insist posting self serving drivel on a near daily basis.

Okay, here’s my last offering which really does show the best of the Red, White and Blue.  Today is the formal removal of DADT.  0penly Gay and lesbian members of our military no longer have to live double lives or be subject to dismissal.

With Tuesday’s repeal of the military’s “don’t ask, don’t tell” policy, gays and lesbians are now free to serve openly in the U.S. armed services.

The U.S. military has spent months preparing for the repeal, updating regulations and training to reflect the impending change, and the Pentagon has already begun accepting applications from openly gay men and women.

It’s events like this that give you a sense that in some way, it’s still

WE THE PEOPLE of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity

I’m going to get some iced tea and head back to my trade and foreign direct investment research. But, here’s two of my favorites: Dylan’s Tangled up and Blue done by the Indigo Girls for you on this afternoon in New Orleans under a blue sky.

and every one of them words rang true

and glowed like a burning coal

pourin off every page

Like it was written in my soul from me to you

Tangled up and Blue

I lived with them on Montague Street

In a basement down the stairs

There was music in the cafes at night

And revolution in the air …


Apologetic Apologia

I suppose I should be glad that I’m not hearing that stupid 11 dimensional chess explanation any more.  However, Bill Keller-who “stepped down” as Executive Editor of the NYT to return to writing still does a pretty good job of rehashing the same old lame excuses for why things are still so bad around the country. We still have Wars.  We still have unemployment.  We still have a terrible housing market.  Well, you don’t need me to run down the list, do you?

Keller meanders through the usual talking points of Obama apologia before he finally comes to the place where the buck should be stopping. I’m not sure how many times I can hear about inherited problems from Bush before I start shouting enough already!  The missteps since then have been so obvious that it’s hard to take the it could’ve been worse excuse as a justification. Here’s where the disappointed true believer almost comes clean; ALMOST. As he talks about the a President adrift, he still points to the usual White House talking point of poor messaging.  That’s a cop out.

Obama can be faulted for periods of passivity (his silence as Republicans have sought to defund financial reforms), for a naïve deference to Congress (his belated engagement in the details of the health care bill), for a deficit of boldness and passion, for not doing more to stiffen the spines of his caucus on Capitol Hill, for not understanding — at least until his latest barnstorming on the jobs bill — that governing these days is a permanent campaign.

It is partly a failure of presidential communications that Republicans have succeeded in parodying each of his accomplishments, turning “stimulus” into an expletive, portraying “Obamacare” as socialized medicine and attacking the Dodd-Frank financial reform as an assault on capitalism.

It’s not just that he has failed to own his successes. He has in a sense failed to define himself. He is one of our more elusive presidents, not deeply rooted in any place or movement. David Remnick’s biography called Obama a shape-shifter. At the fringes, that makes him vulnerable to conspiratorial slanders: he is a socialist, a foreign imposter, a jihadist, an adherent of black liberation theology. To a less paranoid audience, his affect comes across as aloofness or ambivalence.

Progressives get blamed for having set their expectations too high. Gee, you don’t think the press help boost those just a wee bit, Mr Keller?  Republicans get blamed for their intransigence. We all get blamed for not seeing the “real progress” in bank reform, health care, and his “approval” of the Get Bin Laden Mission.  Oh, and did we mention he stopped a Great Depression from happening with his stimulus?  See.  It’s a line up of the usual suspects, isn’t it?

I didn’t expect celestial choirs from the man but I did expect something more than the passage of the 1990s Republican Dolecare plan response to Clintoncare IF we had to go there.  I did expect a bold response to the unemployment situation right out of the box.  What we got was a half-assed stimulus plan full of republican style tax cuts at a time when the entire country needed, wanted, and voted for something DIFFERENT from the usual Republican la-ti-da. I expected a Democratic President with Democratic policies at the very least.   Frankly, if my expectations get any lower at this point, they’re going to be sitting on top of Mount Everest while my feet will still be planted not so firmly in the Louisiana Swamps.  Yes, Bill, I will not vote for Rick Perry under ANY circumstances. But then, I may not walk down Poland Avenue and pass the old barn for the fire horses into the current fire station to cast a vote.  That act–repeated enough times in the neighborhoods of America–could take down more than a few Democratic Senators and Reps and this President that never seems to rise to any occasion but a speech.


Monday Reads

Good Morning!

Fall is definitely in the air! This has to be the nicest September in New Orleans that I’ve ever experienced.  I’m told that a lot of this has to do with with the absence of both La Nina and El Nino.  I just know I’m seeing weather I usually can expect in October and I like it!

I’m going to start the morning reads off with Paul Krugman and his NYT blog thread  “Hysteresis Begins”.  I continue to see signs of recession and it worries me greatly.  Our economy is certainly not on the mend in any sense of the word. Krugman continues to put into words exactly what I’ve been feeling.

The slump in the United States and other advanced economies is the result of a failure of demand — period, end of story. All attempts to claim that it is somehow structural, or maybe the result of reduced incentives to produce, have collapsed at first contact with the evidence.

But there is a real concern that if the slump goes on long enough, it can turn into a supply-side problem, because investment will be depressed, reducing future capacity, and because workers who have been unemployed for a long time become unemployable. This is the issue of hysteria “hysteresis”.

And if you look at manufacturing capacity, in particular, you can already see that starting to happen.

I have no idea why this meme has taken hold that it’s lack of confidence because of Obama, lottsa obscure regulations, or high taxes that are causing the current slump.  It is definitely none of the above.  Businesses do not have customers. Customers do not have incomes or jobs or job security.  It’s a demand thing!  What on earth do economists have to do to get policy maker’s attention these days?  I suppose I could answer that.  We’d all have to become corporations, hire lobbyists, and donate to some one’s political campaign.

Rep Emmanuel Cleaver gets it.  The black caucus sees the incredible unemployment in the community and understands.  Yet, they feel hamstrung to try to do anything about it.  That’s a damned shame in my book.

Unhappy members of the Congressional Black Caucus “probably would be marching on the White House” if Obama were not president, according to CBC Chairman Rep. Emanuel Cleaver (D-Mo.).

“If [former President] Bill Clinton had been in the White House and had failed to address this problem, we probably would be marching on the White House,” Cleaver told “The Miami Herald” in comments published Sunday. “There is a less-volatile reaction in the CBC because nobody wants to do anything that would empower the people who hate the president.”

CBC members have expressed concern in recent months as the unemployment rate has continued to rise amongst African-Americans, pushing for Obama to do more to address the needs of vulnerable communities.

“We’re supportive of the president, but we getting tired, y’all,” Rep. Maxine Waters (D-Calif.) said in August. “We want to give [Obama] every opportunity, but our people are hurting. The unemployment is unconscionable. We don’t know what the strategy is.”

The biggest problem is that no one but a few advisers seem to be able to get these points across to the White House.  They seem intent on pandering to independents who–as yet–appear unmoved.  They’re losing the base and the center.  Why can’t they just do the right thing?  Just to reinforce the it’s a demand problem idea, here’s the same thought from the chairman of Google who is pushing for more stimulus.

Google Chairman Eric Schmidt called on Washington to think big about solutions for the nation’s struggling economy calling the current emphasis on cutting spending instead of new stimulus “ludicrous.”

The economy would need “not just something like the jobs bill, but also significant government stimulation in terms of buying power and investment,” said Schmidt on ABC”s “This Week” on Sunday.

“Otherwise, we are set up for years of extraordinarily low growth in the economy and no real solution to the jobless problem,” he warned.

“The current strategy is ludicrous. You have a situation where the private sector sees essentially no growth in demand. The classic solution is to have the government step in and, with short-term initiatives, help stimulate that demand. If they do it right, they’ll invest in income and growth producing things like highways and bridges and schools, new opportunities for the private sector to go then build businesses,” proposed Schmidt.

So, I’m getting really disgusted at state of US policy these days; especially the continued attack on women’s rights.   I’m going to focus on some good news about women around the world.  Have you ever heard of breast ironing?  This is a practice in Cameroon and here are some ‘aunties’ that are educating some mothers in the country.  The practice is actually done when mothers are concerned their daughters are maturing sexually too early which could subject them to becoming child brides.

Aside from causing burns and permanent deformity this practice also leaves deep psychological scars.

“After (I) have it done, apart from the pain, I felt very, very ashamed. I was ashamed of myself,” said Forghab. “I thought, if my parents are ironing my breasts at that age it means that I am not supposed to have them.”

Despite a daughters’ tears and pleas to stop, mothers continue to perform this practice on their daughters assuring. “It is for their own good,” many mothers say.

But what good? What could possibly be worth justifying such a harmful intervention? Breast ironing is a traditional practice that currently affects about 25 percent of all girls in Cameroon.

More commonly performed in the rural areas than in cities, “breast ironing has existed as long as Cameroon,” says Dr. Sinou Tchana, a Cameroon gynecologist and vice-president of the Cameroonian Association of Female Doctors.

It can seem shocking that mothers, the same mothers who are supposed to love and care for their children, are also the ones hurting them the most by burning their body. But many mothers who still practice breast ironing are hoping to prevent their daughters from getting pregnant at a ‘too-early’ age. What starts as an attempt to protect often leaves girls injured and confused.

“While the minimum legal age for a woman to marry is 15, many families facilitated the marriage of young girls by the age of 12. Early marriage was prevalent in the northern regions of Adamaoua, North, and particularly the remote
Far North, where many girls as young as nine faced severe health risks from pregnancies,” says the U.S. Department of State in a new report on Cameroon.

The good news is that women are taking it on themselves to go around the country to teach women their are other ways to protect their young girls.  Please read the article it’s very interesting and I think you’ll love the Women’s News site where I found it!  Also,  here’s some information on the Self-Employed Women’s Association in India. SEWA has been registered as a trade union since 1972 and works for the right of poor, self-employed women. It’s doing wonderful things over there and I thought you may want to check it out.

Some of the most exciting recent  initiatives for SEWA have been the promotion of green livelihoods.  SEWA earned an award from the Sierra Club for its work.  Here’s some information on what they have done to promote women and environmental sustainability.

More than 60% of SEWA’s membership comes from the rural areas and are poorest of the poor from the most disaster prone areas. Thses women consume less oil and coal based energy, recycle many many items in their daily life, productively reuse solid waste when possible and are eager to use, produce, and manage green technology such on solar lamps.

The many benefits of combining new, green technologies with traditional farming techniques are evident in the success of SEWA’s campaign. Through green Energy and Green livelihood initiative 139,665 members earn average annual total income of Rs.1,175 million. Further SEWA’s effort in this area has not only lead towards green livelihoods but have also worked towards mitigating the effects of climate change. “While the rest of the world talks and negotiates, we the poor women of India cut down carbon emission,” said Reema. “We have learned this power of small concrete act by many from Gandhiji,” she added.

To this end, SEWA has trained 3685 barefoot technician women in water conservation, construction, repairs and deepening of water structure, nursery raising, solid waste recycle, fodder growing, vermicompost production, building eco-friendly rural infrastructures, solar lamp production, developing eco-friendly energy sources, garment production with eco-friendly fabrics and natural dyes, green livelihoods focusing on food security and other environmentally friendly and economically beneficial activities. Demand for such training is ten fold.

Biomass, which was earlier burnt, is now being used as a source of organic manure. More than 13 lakh farmer families have been benefited from these eco-friendly campaigns, 26 Lakh hectares of land are brought under organic cultivation and 2018924 trees have been successfully planted and maintained.

Through these Green Energy and Livelihood Initiatives, SEWA has been at the forefront in promoting green energy and generating green livelihoods in villages.

“If poor and women can take leaps towards green and clean economy the others have excuse to be inactive. May we invite all Indians, and also all Americans, today to catch up?” Reema requested.

Beverly Gage–a history professor at Yale University–wrote an interesting piece in the NYT this weekend called “The Unacknowledged Victories of the American Left” in a book review of Michael Kazin’s “American Dreamers. There’s really not much of a left wing left in the US today, but what is left does have a proud history.

“American Dreamers” is Kazin’s bid to reclaim the left’s utopian spirit for an age of diminished expectations. An editor at Dissent magazine and one of the left’s most eloquent spokesmen, Kazin presents his book as an unapologetic attempt to give the left a history it can celebrate. For more than two centuries, he writes, American radicals have sounded the alarm about crucial injustices — slavery, industrial exploitation, women’s oppression — that the rest of society refused to see. It is time for the left to stand up and take credit for these efforts.

Who is — or was — “the left”? Today, many Americans use the word interchangeably with “liberal.” As Kazin points out, this would have been anathema to earlier generations, when leftists and liberals often viewed each other as ideological foes. For most of the 20th century, liberalism meant tinkering, finding a kinder and gentler way to preserve the status quo. Leftists, by contrast, put their faith in structural change. Kazin’s left includes all those who fought for a “radically egalitarian transformation of society,” from abolitionists to Communists to the modern feminist and gay rights movements.

By far the most important of the early movements was abolition, and abolitionists linger throughout the book as Kazin’s archetypal leftists, prophets and dreamers who saw an injustice and fought to correct it despite the blindness and hostility of the larger society. The best among them practiced what they preached, forming interracial cooperatives and marrying across color lines. They also suffered for their ideals, enduring violence, social ostracism and, in some cases, death. In the end, they were vindicated by history, the ideals that they championed finally inscribed as the nation’s conventional wisdom.

There’s also a fascinating article up at Spiegel On line on the work German scientists are doing on computers studying differences between Neanderthals and modern humans that is worth a look.  Here’s more information on ongoing work to determine what was going on back during the time when Neanderthals still walked the earth.

Last year’s decoding of the Neanderthal’s genetic makeup provided strong evidence in support of this thesis. Researchers working under Svante Pääbo, the director of the Department of Genetics at the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany, found that modern Eurasians inherited a small portion of their DNA sequence from Neanderthals . This suggests that the two species of man must have had sexual intercourse.

What’s more, the genetic researchers were also able to narrow down the timeframe of this momentous genetic intermingling. According to their findings, the intercourse took place between 65,000 and 90,000 years after modern man set foot on the Eurasian landmass, presumably on the eastern edge of the Mediterranean.

Scientists are now trying to determine the exact relationship the inhabitants of these Israeli caves had with the forefathers of modern-day Eurasians. In particular, they are examining the fossil remains to see if there are traces of the interaction between the two species.

Okay, so I tried to throw in a little interesting news along with the general economic and political malaise items. What’s on your reading and blogging list today?


Sunday Night Stars

It’s a quiet Sunday for me even though I have a variety of friends and family out doing the football thing this weekend.  Doctor Daughter and her official now fiance–I’m going to be in for a Bollywood wedding in May so be prepared for a fish out of water story from me–and my sister and her husband went to the Nebraska-Washington football game yesterday,  U Dub brother in law was clearly outnumbered by our Nebraska degree bearing family.  Youngest Daughter was obsessed with LSU on Thursday.  The entire city is celebrating da Saints defeating da Bears. My dad’s just a football fan period and is known to root for skilled coaches and a good game period.  I’m the loner in the family who basically ready books through super bowls and every other game I’ve ever attended. It’s just one big yawn to me.  Wayyyyyy to slow for my tastes and watching people get severe injuries just ain’t my thing at all.

So, I’m going to do this open thread in rememberance of a country that used to be good at science, knowledge and technology before going down the bread and circuses road.

That’s a very old photo on the left that was taken today in 1977.  It’s got a fascinating story.

Here’s what our corner of the universe looks like to any incoming aliens — the Earth and. in the background, its only moon.

It’s a unique photograph because no one has ever been in a position to take it. Actually, it’s an old photograph newly released by NASA.

This photo was snapped by an outbound Voyager I back on Sept. 18, 1977.

NASA scientists ordered the craft to turn around and take it 34 years ago tomorrow, a last look at where the pioneering craft began its literally endless journey to the outer reaches of our solar system, which continues today. Both Voyager 1 and II are still in radio communication with NASA/JPL several times a week.

When today’s pic of the week was taken, Voyager I was 7,250,000 miles from Earth.

Today, it is right around 11,000,000,000 miles from Earth, a distance that’s grown by 1,000 miles while you read this. Track the Voyagers yourself right here.

So, it’s the Emmy awards too and I’m still gazing at that photo and those stars!  It’s an open thread!  Have fun!


Obama calls for Taxing Millionaires at Middle Class Rates; Republicans Panic

In yet another move messaged as “bold” but actually typically spineless as far as returning policy from the Bush years to reality goes, Obama has called for taxing millionaires. The problem is that this doesn’t return our tax system to even the Reagan concept of a progressive tax system.  Obama wants millionaires to pay taxes at the same level as median tax earners. How friggin’ bold is that?  That means, millionaires would get taxed at the same rate as people that make about $50,000 a year which is around 20%. The problem is that’s lower than tax tables in the law now enacted by Ronald Reagan.  The “Buffet Rule” makes Ronald Reagan’s tax reform look downright socialist.

Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.

Mr. Obama will not specify a rate or other details, and it is unclear how much revenue his plan would raise. But his idea of a millionaires’ minimum tax will be prominent in the broad plan for long-term deficit reduction that he will outline at the White House on Monday.

Mr. Obama’s proposal is certain to draw opposition from Republicans, who have staunchly opposed raising taxes on the affluent because, they say, it would discourage investment. It could also invite scrutiny from some economists who have disputed Mr. Buffett’s assertion that the megarich pay a lower tax rate over all. Mr. Buffett’s critics say many of the rich actually make more from wages than from investments.

In a speech on Thursday, Speaker John A. Boehner, Republican of Ohio, agreed with Mr. Obama that the deficit-reduction committee “can tackle tax reform, and it should,” to get rid of many tax breaks and allow for lower marginal rates.

“Tax increases, however, are not a viable option for the joint committee,” Mr. Boehner said. Instead, he emphasized that meeting the deficit-reduction target should come largely from overhauling benefit programs like Medicare, Medicaid and Social Security.

So, we’re getting this packaged as the “Buffet Rule”.  Score one for attempted messaging. Subtract major points for substance.  Let me just quote a turn of phrase from Robert Reich which is the QOTY as far as I’m concerned.

So when the President refers to his new initiative to raise taxes on millionaires as the “Buffett rule” we might expect he’d start the bargaining from a tough position.

But this is Barack Obama, whose idea of negotiating is to give away half the house before he’s even asked the other side for the bathroom sink.

But, let me get back to the idea that Ronald Reagan was a socialist using Reich’s analysis.  I’m really glad he crunched the numbers so I don’t have to.

America’s median income is about $50,000. The typical taxpayer at that level pays approximately 20 percent in taxes.

Granted, that’s a higher rate than most of today’s super rich pay because of countless deductions, credits, and loopholes – including, especially, their ability to take their incomes in the form of capital gains, taxed at 15 percent. That’s a big reason Buffett’s hundreds of millions a year are taxed at just over 17 percent — a lower rate than his secretary faces, as Buffett often says.

But a 20 percent rate is still ridiculously low compared to what millionaires and billionaires ought to be paying. Officially, income over $379,150 is supposed to be taxed at 35%.

And even 35 percent is a pittance compared to the first three decades after World War II. Before Ronald Reagan slashed taxes on the rich in 1981, the highest marginal tax rate was over 70 percent. Under Dwight Eisenhower it was 91 percent. Even if you include deductions and credits, the rich are now paying a far lower share of their incomes in taxes than at any time since World War II.

The estate tax (which only hits the top 2 percent) has also been slashed. In 2000 it was 55 percent and kicked in after $1 million. Today it’s 35 percent and kicks in at $5 million. Capital gains – comprising most of the income of the super-rich – were taxed at 35 percent in the late 1980s. They’re now taxed at 15 percent.

Meanwhile, the top 1 percent’s share of national income has doubled over the past three decades (from 10 percent in 1981 to well over 20 percent now). The richest one-tenth of 1 percent’s share has tripled. And they’re doing better than ever. The last time the top 1 percent got that much was in the roaring 1920s.

So much money is now concentrated at the top that what we really need are more tax brackets at the high end, higher marginal rates in each bracket, and a tax code that treats all sources of income – whether ordinary or capital gains – the same.

I hate to say this again and again, but here we go.  That last sentence is important.  Buffet, Soros, and friends live off of capital gains income.  Unless you deal with the capital gains tax, you’re not really going to impact the really really rich dudes.  If they make it from a salary, they’re paying a 35% percent marginal tax rate.  Their stock options with appreciation only get taxed at 15%. You have to apply the tax rate to capital gains to really get at their revenues.  So, how is this plan going to attack the major source of income for the richest of the rich?  It’s not! But that’s not stopping the morality-impaired Republicans from screaming class warfare.

Republicans Sunday criticized President Obama’s plan to call for a new minimum tax rate on millionaires as “class warfare” that would do little to create new jobs and instead would hurt the small businesses that drive the economy.

“Class warfare. . .may make for good politics, but it makes a rotten economics,” Rep. Paul Ryan (R-Wisc.), chairman of the House budget committee, said on “Fox News Sunday.” “We don’t need a system that seeks to divide people. . .We need a system that creates jobs and innovation.”

There’s some excellent analysis over at WAPO on the tax loopholes that have evolved over the last 25 years since the last time the tax code was reformed.  It shows how much tax breaks really go out to all levels of incomes already.  Many of them benefit middle income earners as much as wealthier individuals.  Upper middle class families–those earning in the $100,000 – $300,000 level–get an incredible amount of tax largess right now. By not limiting some of the more pedestrian tax breaks to lower income families and by giving special consideration to capital gains, we lose a lot of revenues from truly well-off individuals. These ideas have not been put on the table by the President.

The number of tax breaks has nearly doubled since the last major tax overhaul 25 years ago, with lawmakers adding new benefits for children, college tuition, retirement savings and investment. At the same time, some long-standing breaks have exploded in value, such as the deduction for mortgage interest and the tax-free treatment of health-insurance premiums paid by employers.

All told, federal taxpayers last year received $1.08 trillion in credits, deductions and other perks while paying $1.09 trillion in income taxes, according to government estimates.

Only about 8 percent of those benefits went to corporations. (The write-off for corporate jets equals about .03 percent of the total.) The bulk went to private households, primarily upper-middle-class families that Obama has vowed to protect from new taxes.

“The big money is in the middle-class subsidies,” said Syracuse University economist Leonard Burman, former director of the nonpartisan Tax Policy Center. “You’re not going to balance the budget by eliminating ethanol credits. You have to go after things that really matter to a lot of people.”

I’ve just basically come to the conclusion that the Bush tax cuts should expire for every one at this point.  But, if the president is truly interested in going after the big money–which is a fine idea–he needs to quit coming to the table with piddling suggestions.  Capital gains need to be taxed like normal income, for one.  Giving them preferential treatment has just subsidized Wall Street Gambling as far as I’m concerned and provided a huge tax benefit for the richest of the rich.  Again, this Obama plan makes the Reagan Tax reform look socialist.  The fact that Republicans are screaming about it on the Sunday New Shows demonstrates just how extreme our policies have gotten in terms of benefiting the donor class these days.  What a mess!!!