Cookiegate: Mitt Romney’s Latest Foot-in-Mouth Episode

Turtle Thumbprint cookies from the Bethel Bakery

On Tuesday, Mitt Romney met with several preselected middle-class couples. They sat around a picnic table in Bethel Park, PA and discussed taxes. “over a table of lemonade, pretzels, chips and cookies from Bethel Bakery.” The Bakery is beloved by the community and is considered a local “landmark.”

The meeting got off to a rocky start, however, when the governor sat down at a picnic table set with food and made an apparent attempt at humor.

“I’m not sure about these cookies,” Mr. Romney said. “They don’t look like you made them,” he said turning to one of the women at the table. “Did you make those cookies? You didn’t, did you? No. No. They came from the local 7-Eleven bakery or wherever.”

The cookies, in fact, were donated from the popular Bethel Bakery around the corner from the community center, and once Mr. Romney’s comment was broadcast on local airwaves offended residents took to Facebook and Twitter to complain.

Next, the locals attempted to explain to the oblivious and smirking Mr. Romney the need for community services like teachers and good schools.

One woman at the gathering said she was scared about the fate of her public schools, given deep cuts to the state budget (incidentally, the man who pushed those cuts, Pennsylvania Gov. Tom Corbett, endorsed Romney today). “I don’t like to see cuts made in anything in education,” she said, citing her daughter’s experience. Another man chimed in, noting that “the fat” had already been trimmed and now important education programs were being hit.

A man then told Romney,

“None of us like to pay more taxes, but sometimes that’s necessary.” Another woman added, “It’s a necessary evil.” “Right, right,” a third person said as everyone in the group nodded.

Later, the Bethel Bakery offered a “Cookiegate special.”

Julie Lytle, the bakery’s sales and marketing assistant, said the popular local fixture since 1955 “turned a negative into a positive” by printing a sign offering customers a “CookieGate Special!” — a free half dozen cookies with the purchase of a dozen cookies today and Thursday.

“I was a little shocked,” Ms. Lytle said. “I didn’t think too much of it at the time, and I didn’t think it would blow up like it has. We decided to have fun with it and not to get offended.”


Thursday Reads: Defense Authorization Bill, Ron Wyden, the Filthy Rich, and Bird Crashes

Good Morning!!

So far I haven’t been locked up in Guantanamo or debtors’ prison. I hope the rest of you Sky Dancers still have your freedom too, such as it is.

Yesterday the U.S. House of Representatives passed the Defense Authorization bill, which includes language permitting indefinite detention by the military of “al Qaeda members” without specific charges or trials. You can read the bill here.

Our craven and cowardly President had promised to veto this bill, but today the White House reneged on that promise, and Obama is set to sign it once it passes the Senate tomorrow or Friday.

The White House backed down from its veto threat of the defense authorization bill Wednesday, saying that the bill’s updated language would not constrain the Obama administration’s counterterrorism efforts.

While the White House acknowledged it still has some concerns, press secretary Jay Carney said President Obama’s advisers wouldn’t recommend a veto, a threat that had been hanging over the Pentagon policy bill for the past month.

Obama and his crew don’t care about the fifth amendment, habeas corpus and all that jazz–just that the president is the one who decides who is an “al Qaeda member” and therefore will be whisked away to indefinite detention. Wanna bet there are suddenly going to be a lot of “al Qaeda members” in the Occupy movement? From Anti-War.com:

As revealed in the Senate deliberations last week, the Obama administration itself requested the principal authors of the provision – John McCain and Carl Levin – to include language authorizing due-process-free military custody for American citizens. The initial threat of veto was apparently nothing more than political theater on the part of the White House.

According to The Hill, the following changes satisfied the White House concerns:

The bill deleted the word “requirement” from the section on the military detention of terror suspects, which was among the most contentious parts of the bill.

The national security waiver allowing the executive branch to move terror suspects from military to civilian courts was placed in the president’s hands rather than the Defense secretary’s, a change Levin said Obama had asked for.

The conference bill was based on the Senate language, which was not as harsh as the House bill when it came to trying terror suspects in civilian courts.

The administration called the provision in the bill that establishes the authority for military detentions unnecessary because the executive branch already was given this authority following Sept. 11.

Carney’s statement said if the administration finds parts of the law “negatively impact our counterterrorism professionals and undercut our commitment to the rule of law,” it expects the bill’s authors will correct those problems.

Oh well, then no worries… Except that lots of people who care about the Constitution aren’t so happy about it. Here’s a statement from Laura Murphy of the ACLU:

“The president should more carefully consider the consequences of allowing this bill to become law,” Laura W. Murphy, director of the ACLU Washington Legislative Office. “If President Obama signs this bill, it will damage both his legacy and American’s reputation for upholding the rule of law. The last time Congress passed indefinite detention legislation was during the McCarthy era and President Truman had the courage to veto that bill. We hope that the president will consider the long view of history before codifying indefinite detention without charge or trial.”

Unfortunately, Barack Obama is no Harry Truman.

Here’s a statement from Human Rights Watch:

“By signing this defense spending bill, President Obama will go down in history as the president who enshrined indefinite detention without trial in US law,” said Kenneth Roth, executive director of Human Rights Watch. “In the past, Obama has lauded the importance of being on the right side of history, but today he is definitely on the wrong side.”

The far-reaching detainee provisions would codify indefinite detention without trial into US law for the first time since the McCarthy era when Congress in 1950 overrode the veto of then-President Harry Truman and passed the Internal Security Act. The bill would also bar the transfer of detainees currently held at Guantanamo into the US for any reason, including for trial. In addition, it would extend restrictions, imposed last year, on the transfer of detainees from Guantanamo to home or third countries – even those cleared for release by the administration.

There are currently 171 detainees at Guantanamo, many of whom have been imprisoned for nearly 10 years. As one of his first acts in office, Obama signed an executive order for the closure of Guantanamo within one year. Instead of moving quickly to close the prison and end the use of the discredited military commissions, he supported modifications to the Military Commissions Act.

“It is a sad moment when a president who has prided himself on his knowledge of and belief in constitutional principles succumbs to the politics of the moment to sign a bill that poses so great a threat to basic constitutional rights,” Roth said.

The bill also requires the US military take custody of certain terrorism suspects even inside the United States, cases that previously have been handled by federal, state and local law enforcement authorities. During debate over the bill, several senior administration officials, including the secretary of defense, attorney general, director of national intelligence, director of the FBI, and director of the CIA, all raised objections that this provision interfered with the administration’s ability to effectively fight terrorism. In the last 10 years over 400 people have been prosecuted in US federal courts for terrorism related offenses. Meanwhile during that same period, only six cases have been prosecuted in the military commissions.

“President Obama cannot even justify this serious threat to basic rights on the basis of security,” Roth said. “The law replaces an effective system of civilian-court prosecutions with a system that has generated the kind of global outrage that would delight recruiters of terrorists.”

The bill also reauthorizes the AUMF that Bush used to get us into Iraq. Emptywheel has a lengthy post in which she wonders: Feinstein’s “Fix” on AUMF Language Actually Authorize Killing American Citizens? You probably should read the whole thing, but here’s the summation:

…by affirming all purportedly existing statutory authority, DiFi’s “fix” not only reaffirmed the AUMF covering a war Obama ended today, but also affirmed the Executive Branch’s authority to use deadly force when ostensibly trying to detain people it claimed present a “significant threat of death or serious physical injury.” It affirms language that allows “deadly force” in the name of attempted detention.

In any case, it’s one or the other (or both). Either the AUMF language became acceptable to Obama because it included American citizens in the Afghan AUMF and/or it became acceptable because it affirmed the Executive Branch’s authority to use deadly force in the guise of apprehending someone whom the Executive Branch says represents a “significant threat.”

My guess is the correct answer to this “either/or” question is “both.”

So DiFi’s fix, which had the support of many Senators trying to protect civil liberties, probably made the matter worse.

In its more general capitulation on the veto, the Administration stated that the existing bill protects the Administration’s authority to “incapacitate dangerous terrorists.” “Incapacitate dangerous terrorists,” “use of deadly force” with those who present a “significant threat of death or serious physical injury.” No matter how you describe Presidential authority to kill Americans with no due process, the status quo appears undiminished.

Finally Al Jazeera asks: Is the principle of indefinite detention without trial now an accepted and permanent part of American life? I wonder if Michelle Obama is still proud to be an American today?

There is some other news, of course. For one thing, it seems as if Rep. Ron Wyden of Oregon must have more energy I can imagine having. As of today he managed to get the decisions on rural post office closings postponed until next May; he joined with Rep. Paul Ryan (!) to propose a medicare overhaul; and he and Darrel Isa (!) have proposed an alternative to the entertainment industry bill that would effectively shut down social networking on the internet. Check out those links if you’re interested.

One of my favorite economists, Robert Reich, has an analysis of Newt’s Tax Plan, and Why His Polls Rise the More Outrageous He Becomes.

Newt’s plan increases the federal budget deficit by about $850 billion – in a single year!

….

Most of this explosion of debt in Newt’s plan occurs because he slashes taxes. But not just anyone’s taxes. The lion’s share of Newt’s tax cuts benefit the very, very rich.

That’s because he lowers their marginal income tax rate to 15 percent – down from the current 35 percent, which was Bush’s temporary tax cut; down from 39 percent under Bill Clinton; down from at least 70 percent in the first three decades after World War II. Newt also gets rid of taxes on unearned income – the kind of income that the super-rich thrive on – capital-gains, dividends, and interest.

Under Newt’s plan, each of the roughly 130,000 taxpayers in the top .1 percent – the richest one-tenth of one percent – reaps an average tax cut of $1.9 million per year. Add what they’d otherwise have to pay if the Bush tax cut expired on schedule, and each of them saves $2.3 million a year.

To put it another way, under Newt’s plan, the total tax bill of the top one-tenth of one percent drops from around 38 percent of their income to around 10 percent.

What about low-income households? They get an average tax cut of $63 per year.

Oh, I almost forgot: Newt also slashes corporate taxes.

Wow!

Dakinikat clued me in to this post at Naked Capitalism: “Let Them Eat Pink Slips” CEO Pay Shot Up in 2010, which links to this article in the Guardian.

Chief executive pay has roared back after two years of stagnation and decline. America’s top bosses enjoyed pay hikes of between 27 and 40% last year, according to the largest survey of US CEO pay. The dramatic bounceback comes as the latest government figures show wages for the majority of Americans are failing to keep up with inflation.

America’s highest paid executive took home more than $145.2m, and as stock prices recovered across the board, the median value of bosses’ profits on stock options rose 70% in 2010, from $950,400 to $1.3m. The news comes against the backdrop of an Occupy Wall Street movement that has focused Washington’s attention on the pay packages of America’s highest paid.

The Guardian’s exclusive first look at the CEO pay survey from corporate governance group GMI Ratings will further fuel debate about America’s widening income gap. The survey, the most extensive in the US, covered 2,647 companies, and offers a comprehensive assessment of all the data now available relating to 2010 pay.

And these oligarchs couldn’t care less if we like it or not. They own the White House and the Congress and we don’t.

I’ll end with a bizarre and very sad story out of Utah:

Thousands of migratory birds were killed or injured after apparently mistaking a Wal-Mart parking lot, football fields and other snow-covered areas of southern Utah for bodies of water and plummeting to the ground in what one state wildlife expert called the worst mass bird crash she’d ever seen.

Crews went to work cleaning up the dead birds and rescuing the injured survivors after the creatures crash-landed in the St. George area Monday night.

By midday Wednesday, volunteers had helped rescue more than 3,000 birds, releasing them into a nearby pond. There’s no count on how many died, although officials estimate it’s upwards of 1,500.

“They’re just everywhere,” said Teresa Griffin, wildlife program manager for the Utah Division of Wildlife Resource’s southern region. “It’s been nonstop. All our employees are driving around picking them up, and we’ve got so many people coming to our office and dropping them off.”

Those are my recommendations for today. What are you reading and blogging about?


Taxes are the solution, not the problem

As far as I can tell, if corporations and the top 1% paid anything like a fair share of taxes, budget problems would melt away.

I feel a bit like the recent physicists who seemed to find faster-than-light neutrinos in their data. (There’s the big difference that I’m an amateur at taxes, and they’re anything but amateurs at physics.) But, like them, I’m so boggled by the results that I want to throw it out there for people to pick apart.

Let’s begin at the beginning. The current US deficit is around $1.5 trillion per year. Current US GDP is around $14 trillion per year. Current yearly tax revenues are near $1.1 trillion (IRS pdf, 2008 numbers). In better years revenue is higher, deficits are lower.

An aside: Those numbers are smaller than the multiple trillions of cuts the Super Committee throws around. That’s because they say they need to come up with money for ballooning future costs of social insurance. (The powers-that-be didn’t seem to be worried about the future when tax cuts were implemented.) I don’t consider those future costs a real issue. Social Security doesn’t have any real problems. National health care costs could be cut in half with Medicare for All, based on the evidence from all the industrialized countries that do have national health care systems. (Link is to Congressional Research Service, 2004, pdf. See e.e Table 1, Fig. 1, Fig. 2.) So Medicare for All is the place to start for anyone who is actually concerned about future costs, and not some other agenda.

Further, a healthy deficit level is said to be around 2% of yearly GDP. In addition to other considerations, the ability to buy US Treasury bonds and bills is an important factor in global finance. Zero deficit means the end of that whole asset class, which is not a Good Thing. One wants a sustainable and easily carryable deficit, and 2% is a conservative estimate of that level. Two percent of $14 trillion is $280 billion. (I saw this most clearly expressed somewhere in Krugman’s writing, but all I can find right now is a passing reference here.)

So the yearly shortfall, in round numbers, is $1.2 trillion ($1.5T deficit – 0.280T healthy deficit).

If Fortune 500 corporations actually paid tax on their corporate profits, there’d be much less freeloading from that end. When even Marketwatch headlines “Big Profits, Zero Taxes” you know it’s not a small issue. It’s hard (for me) to find unequivocal numbers on how much difference that would make to revenue, but there are fairly clear data on corporate tax payments as a share of GDP. It’s now at a recent all-time low of 1% of GDP. Moving that back to 4%, about where it was in the 1960s would bring in an extra $480 billion (1% of GDP = $160B, 3% = 480B).

That would entail ending all the corporate loopholes, such as income-shifting in transnationals to whichever tax haven suits them that year, as well as ending special tax breaks for wildly profitable industries such as oil and finance. It would involve adding necessary new taxes, such as a financial transaction tax that would have other beneficial social consequences by slowing down market trading velocity. And it would involve raising rates on large corporations. (Update from comments below: 25 CEOs received more in compensation than their companies paid in taxes. Just mindboggling.)

Then, the other task is to raise taxes on the top 1%. According to the IRS (pdf), in 2008 the top 1% was composed of households making an average of $1.2 million per year. Their effective tax rate is 20% ±5% (CBO pdf, Table 3), and at that rate they contributed well over $350 billion in tax revenue. (For instance, in 2009 the top 1% contributed 36.7% of total income taxes. That proportion is typical during the last decade, plus or minus a few percent. Total income tax revenue in 2008, the last year for which I could find complete IRS data, was $1.081 trillion. 36% of 1.081T = $389 billion.) If their tax rates went to 60%, there would be an extra $700 billion revenue.

So, $700 billion plus $480 billion approaches $1.2 trillion, pretty much the entire yearly shortfall of $1.2 trillion.

That doesn’t pay down the debt. Nor does it provide funds for essential projects such as switching to clean, sustainable energy. But those are one-time charges, as it were, not permanent features of fiscal balance, which I gather is what the Super Committee is worrying about.

Raising taxes on the megarich is not the same as taxing the middle class. It’s not even taxing the upper middle class, such as the heart surgeons and mid-size successful business owners. It involves only having the massively wealthy corporations and households pay something vaguely like their fair share. What’s more, it wouldn’t make a bit of difference to their lifestyles. For an income of $1.2 million per year, that tax increase would drop them from living on $80,000 per month to living on $40,000 per month. They could still jet to Paris for the weekend. Anybody who feels deprived living on $40,000 per month needs therapy, not tax breaks.

All this is something to think about while the news covers the new super ways the Super Committee has found to shred the safety net. Nor is this just a classic “Don’t tax him, don’t tax me. Tax the fellow behind the tree.” The fellow behind the tree has been tax cheating for far too long, and it’s time to rebalance. If the megarich paid their fair share, we could have a future that was more than collapsing bridges and work on their plantations.

Crossposted to Acid Test


Balanced Budget Amendments are Bad Policy

I always have to cover this topic in any introductory macroeconomics class I teach because usually one nutjob or another running for office always brings this up and people fall for it.  The arguments are usually based on complete fallacies and misunderstanding of the math of economics, but hey, for some reason balanced budgets sound ‘reasonable’ when they are anything but.

I used to talk theoretically about how balanced budget amendments will kill state economies when the next real recession hits.  Well, it hit a few years ago and we’re there.  States continue to make their own economies worse day in and day out but there’s still those people that insist that if a family has to balance its budget, then so should the country.  That’s even stupid considering most families have mortgages and car payments and probably student loans. Take Michele Bachmann as an example. She’s got all of the above plus farm subsidies and government grants.  Even the President is guilty of that false equivalency.  No person or family exists in perpetuity.  No person or family can print money.  No person or family has the power of taxation.  Because of these three things, you cannot compare government to a family.  Nor can you compare government to a business.  Businesses exist to make a profit.  Government exists to provide services and goods that the private sector will not provide or provides at an outrageous cost.  It exists to administer justice and ensure level playing fields and fair play exists.  Everything about a government is unique and is no way comparable to either businesses or households.

Macroeconomists know from years of study that the federal government can influence the economy at large.  It does so through its spending and taxing priorities and policies.  This is called fiscal policy.  We have found several economic laws that guide the relationship between taxes and government spending and the behavior of Gross Domestic Product (GDP) which roughly measures all the legal and reported spending by households, governments, foreigners, and businesses.  In our economy, household spending comprises about 68% of all GDP.

Investment or purchases by businesses is the smallest and most erratic component of GDP.  Keynes said that it is easily spooked and subject to animistic spirits.  Because it’s an unreliable source of growth, Keynes argued that in down turns, government should use its power to spend.  Business investment usually only does fine in good economies. Please note,  Keynes said deficit spend in recessions.  Keynes’ prescription also said that Federal governments should run balanced budgets during times when the economy is fully employed and surpluses during bubble or boom times to relieve inflationary pressure.  As usual, conservative politicians completely lie about the nature of Keynes and his highly proven and credible theories on fiscal policy.  A lot of what we know about Monetary Policy comes from Milton Friedman, however, that is not the subject today.  What I want to emphasize is that both men spent a lot of time analyzing panics and the Great Depression and are very much at the heart of accepted theory.  We are seeing a classical lack of aggregate demand today.  It is what’s driving the budget deficit.  It is what’s driving the joblessness. It is what’s driving the slow recovery.  Government must and will by automatic stabilizers be in a deficit position during downturns.  It is simple math.  More revenues come in during good times than bad.  More safety net spending increases during bad times than good.  We naturally run towards deficit in bad economies and towards surplus in good.

However, show me an economy that’s booming with high revenues and lower safety net spending and I will show you a group of politicians spending wildly.  This tends to create inflation and can lead to bubbles.  However, you never hear them complain at that point in time.   That’s because it should be relatively easy to balance a budget then, but they do not do so or if they do its by expanding programs that cannot be sustained without borrowing during bad economies.

With that short explanation, let me cite you some folks that tell you why balanced budget amendments are bad policy.  This first quote is from Simon Johnson who is the former chief economist for the IMF.  He asks us to keep in mind that GDP is a measurement that is fraught with problems.   He also mentions the fact that a balanced budget amendment makes the government make recessions worse.

Second and more seriously, imagine that this constitutional amendment were in place and that federal spending were roughly at its limit relative to the size of the economy. Then, what happens should the financial sector blow up again — either through no fault of its own (which, believe it or not, is the current prevailing myth on Wall Street about 2007-9) or because of some toxic combination of malfeasance and malpractice (the current predominant view of 2007-9 among many other people)?

The blame game is irrelevant when G.D.P. drops 10 percent; the issue is how to prevent a Great Depression. But note that with such a decline in G.D.P., a level of nominal spending that was 18 percent of G.D.P. is suddenly 20 percent, and now a constitutional crisis awaits – even before we get to the question of whether tax cuts or other forms of stimulus might be appropriate.

It makes no sense to take aim, as a matter of constitutional process, at two numbers that are both outcomes of deeper economic processes.

And to be frank, sometimes it makes a great deal of sense to apply an economic stimulus to an economy in free fall. One such moment was 1930 (and 1931 and 1932), when no stimulus was applied. Other moments were 2008 and 2009; both President Bush and President Obama initiated stimulus packages. When credit for and confidence in the private sector evaporates, do you really want the government sector to be forced to make quick cuts — or to raise taxes?

James Ledbetter at Reuters argues that even conservatives should oppose a balanced budget amendment (BBA).  His reasons are more pragmatic.  He argues that it won’t work.

Historically, conservatives have opposed extending government authority in places where it is not effective. You can find all the evidence you need to conclude that balanced budget requirements are useless by simply investigating the oft-repeated claim that 49 states have laws requiring a balanced budget. Leave aside the falsity of the claim and just consider the logic: if so many states are required to balance their budgets, why are so many states in the red?

The answer is that requiring state governments to annually balance their books simply encourages them to find clever ways to disguise debt and deficits. For example: California has both a Constitutional and a statutory requirement that its budgets be balanced. Would any sane person maintain that the state’s books have been anything resembling healthy for at least a decade? This year, after some brutal spending cuts, the governor’s office found that the state still had a short-term deficit of more than $9 billion and $35 billion in long-term debt. The governor’s budget report noted that California’s “massive budget deficits for most of the past decade…have been largely the result of a reliance on one-time solutions, borrowing, accounting maneuvers, and cuts or revenues that were illusory and therefore did not materialize.”

If that sounds familiar, it may be because, as Richard Quest pointed out on CNN Sunday evening, we’ve witnessed numerous Congressional attempts in recent decades to rein in federal deficits—including Gramm-Rudman in 1985 and the Budget Enforcement Act of 1990—all of which fell victim to legislative legerdemain. Why would a federal balanced budget amendment be any different?

Here’s something from The Economist on “Fiscal Rules”.  Some fiscal rule–rather than a balanced budget amendment–would better stop congress from spending during booms and full employment cycles rather than balancing its budget via a BBA. This would be a rule that attaches the spending mandates to what’s going on in the economy.  But again, I doubt they’d follow it since they’ve ignored a good portion of the Keynesian prescription for years any way.

It is difficult for Congress to tie its own hands. Any law that can pass Congress can later be undone or changed. In the rare cases that Congress puts together a near-perfect piece of legislation, that’s a bad thing. In the vastly more common occurrence that Congress passes highly imperfect legislation in need of significant future tweaks, that’s a very good thing. Support for an amendment to the constitution is a spectacular vote of confidence in the ability of a legislature to design near-perfect legislation, because the only thing rarer than an amendment to the constitution is a subsequent amendment undoing or clarifying a previous amendment.

I see the argument for a well-designed, over-the-business-cycle balanced-budget amendment. But the idea of enshrining this Congress’ pathologies into the constitution is terrifying. Let’s see Congress design some quality fiscal rules using the normal legislative process first, and then we can talk about adding those to the constitution.

Bruce Bartlett has some excellent analysis up for the current go round of balanced budget amendments.  Mark Thoma explains how a BBA is a very bad idea. His analysis includes looking at the destabilizing effects that states’ BBAs have had on their economies. There’s a nifty graph that I did not include here if you’d like to go view it.

I’ve argued on many occasions that one of the big lessons we need to learn from this recession is that state-level balanced budget requirements are highly destabilizing. When a recession hits, spending goes up for social services and taxes fall as income, sales, property values, and other sources of revenue for state and local governments decline.

The result is a big hole in state and local government budgets, and that forces either increases in taxes or cuts in spending both of which make things even worse. And though some state and local governments were an exception to this, far and away the choice is to cut spending. We can see this in the state and local government employment statistics:

That’s not what we want to have happening when we are trying to recover from a recession. It would be much better if states had rainy day funds to rely upon, and if the rainy day funds fall short, the federal government could backfill the budget holes to prevent the destabilizing downsizing.

So have we learned the lesson? Nope, at least not if you are a Republican. They’d like to impose the same destabilizing rules on the federal government:

You really would have to search high and low for an economist that actually supports a BBA.  The more conservative ones go for the fiscal rule that attaches spending to business cycles but even they believe that it would be unenforceable and easy to avoid. Can you imagine some District Judge trying to look over a complex macroeconomic model and figure out if the government forecast was correct or not?

A group of leading economists, including five Nobel Laureates in economics, today publicly released a letter to President Obama and Congress opposing a constitutional balanced budget amendment. The letter outlines the reasons why writing a balanced budget requirement into the Constitution would be “very unsound policy” that would adversely affect the economy. Adding arbitrary caps on federal expenditures would make the balanced budget amendment even more problematic, the letter says. The Economic Policy Institute and the Center on Budget and Policy Priorities organized the letter.

“A balanced budget amendment would mandate perverse actions in the face of recessions,” the letter notes. By requiring large budget cuts when the economy is weakest, the amendment “would aggravate recessions.”

The signatories of the letter are Nobel Laureates Kenneth Arrow, Peter Diamond, Eric Maskin, Charles Schultze, William Sharpe and Robert Solow; Alan Blinder, former Vice Chair of the Federal Reserve System’s Board of Governors and former member of the Council of Economic Advisors; and Laura Tyson, former Chair of the Council of Economic Advisors and former Director of the National Economic Council.

I’ll let former Reagan economist Bruce Bartlett have the last word here. He looks at the recent debate in Congress on the BBA.

Next week, House Republicans plan to debate a balanced budget amendment to the Constitution. Although polls show overwhelming public support, it is doubtful that many Americans realize that the measure to be debated is not, in fact, a workable blueprint to enforce a balanced budget. In fact, it’s just more political theater designed to delight the Tea Party.

We really need improved economic literacy in this country.  I genuinely can’t get over what some of the morons in congress can get away with saying.  Economists call them on it but it appears no one every listens.


Architect of Bush Torture and Spy Policies is Tea Party Point man at Heritage Foundation

David Addington

Wow, these ultra-right-wingers are like zombies. They never stop, they never die. They just keep popping up again and again where you least expect them.

Remember David Addington? He was the secretive, publicity-shy legal counsel to Vice President Dick Cheney from 2001-2005. Later, after Scooter Libby was forced to step down because of his involvement in the Valerie Plame outing, Addington replaced him as Cheney’s Chief of Staff from 2005-2009.

Addington was heavily involved in designing the Bush administration’s torture and NSA wiretapping policies. In addition, his was the legal mind behind Bush’s hundreds of signing statements and generally was a powerful force in the Bush administration’s efforts to expand executive power.

You’d think someone who had been involved in such execrable behavior would have the good grace to slink away and never be heard from again, but that’s not how it works with these psychopathic types. Today, according to The National Journal,

Addington has taken on a new role as enforcer of tea party dogma during the intensifying partisan bickering over the debt ceiling. From his perch as the Heritage Foundation’s vice president for domestic and economic policy, Addington is throwing verbal thunderbolts at House Speaker John Boehner’s current debt-ceiling proposal, which he argues will pave the way to tax increases.

The merits of Addington’s arguments about the need to oppose Boehner’s proposals are in some ways less interesting than the simple fact that Addington is the one publicly making them. Addington kept a low profile during the Bush years, granting no interviews and largely shunning lawmakers from either party. But he wielded enormous power behind the scenes, helping Cheney craft the Bush administration’s warrantless eavesdropping program and most of its detention initiatives.

Critics of those policies say they’re horrified by Addington’s reemergence onto the public stage.

“To see this person who led the country into legal and moral disaster resurface as a respected commentator is somewhat galling,” said Ben Wizner, the litigation director of the American Civil Liberties Union’s National Security Project. “Addington was as responsible as anyone else for the U.S. becoming a torturing nation. He has done damage to the U.S. that will take decades to reverse.”

Indeed. Especially because we’ll have to wait until President Obama leaves office before much reversing takes place–if it ever does. But I digress. Addington’s new role is to help keep the Tea Party Caucus in line while undercutting House Speaker Boehner. How very very interesting. At the New Republic, Jonathan Chait called it “Hot Republican-On-Republican Action.”

The internecine fighting among conservatives over the Boehner plan has much of the same ideological and stylistic feel of a late 1960’s feud pitting left-wing factions that favor immediate violence against those seeking more time to radicalize the masses. The less-extreme faction clearly has the better of the argument, yet the overwhelming impression is the sheer fanaticism of the whole political subculture.

Is it possible this GOP infighting could be helpful to our side? Addington’s greatest concern about the Boehner plan is that it includes the “committee” that we have been calling “Catfood Commission II.” Addington fears that because this group will have the power to write legislation that cannot be amended and must be voted on up or down, they might end up proposing new taxes. Now I never thought of that possibility! Here’s Addington blogging at the Heritage Foundation website on Monday:

The second step in the [Boehner] plan is a set of recommendations from a new dozen-member joint select committee of Congress. The committee’s recommendations to Congress would not be subject to amendments and would get a straight up-or-down vote. The plan directs the committee to propose reductions in the deficit by at least $1.8 trillion over 10 years. The government runs a deficit when it spends more than it takes in from Americans as taxes, and the government has run deficits in most years for decades. As always, there are two ways to reduce a bloated government’s deficit — the right way of cutting spending and the wrong way of hiking taxes. While the second step of the Boehner plan may produce some useful spending cuts, the second step also allows the Committee to propose raising taxes as part of its unamendable, fast-track legislative package. Thus, the second step greases the way for tax hikes.

As you can imagine, taxes are anathema to Addington.

Tax hikes in a weak economy slow economic growth and kill jobs. As students of American history (or the movie “Ferris Bueller’s Day Off”) know, enactment of the tax hike known as the Smoot-Hawley Tariff Act during the Great Depression hurt the already weak economy and made unemployment worse. Job-killing tax hikes in the current weak economy, as millions of Americans go without jobs and the unemployment hovers above 9 percent, will have a similar effect. However good the intentions of the drafters of the Boehner plan may have been, the plan sets up America for higher taxes and fewer jobs. Conservatives should continue to fight plans that either hike taxes now or set America up for tax hikes in the future.

Now wait a minute. I know Dakinikat will have plenty to say about that last paragraph–if she can get away from all the student exams and papers she’s grading. But I’ll take a crack at it even though I am not an economist.

Tarriffs are not equivalent to income taxes. The Smoot-Hawley Tarriff Act was raised tarriffs so high that our trading partners retaliated with their own tarriffs, leading to dramatic decreases in U.S. imports and exports. Now that is a job-killing tax. That is not the same thing as restoring the tax rates on the rich to Clinton administration levels and perhaps making the children of the super-rich pay a little more in estate taxes. As Dakinikat is fond of saying, if cutting taxes led to job creation, we wouldn’t be in the mess we’re in now. The Bush tax cuts would have taken care of everything.

Addington summed up his insane economic theories in another post, written in response to President Obama’s speech on Monday night.

Americans sent a message in the election of 2010 — cut the size and cost of government. Conservatives must act now to drive down spending on the way to a balanced budget, while protecting America, and without raising taxes. Forget the McConnell, McConnell-Reid, Coburn, Gang-of-Six, Boehner, and Reid plans. Go with the American plan — cut government spending, deeply and right now, for the good of the country.

Man, he’s looney-tunes!

Anyway, I think it’s just fascinating that Addington is leading the charge against the Boehner plan and pushing for an even crazier one. Addington has a history of accomplishing a great deal. What he accomplished was evil, of course, but he showed himself to be highly competent and efficient, unlike President Pushover. This battle could be really entertaining. I’m hoping for a major Republican meltdown.