Tuesday Reads: Daniel Inouye, Richard Engel, and Fiscal Slope Trial Balloons and Lead Balloons

Sen. Dan Inouye reads with children

Sen. Dan Inouye reads with children

Good Morning!!

Senator Dan Inouye, who died yesterday at age 88 was a Japanese American who fought for the U.S. in World War II. From Time Magazine:

On Dec. 7, 1941, high school senior Daniel Inouye knew he and other Japanese-Americans would face trouble when he saw Japanese dive bombers, torpedo planes and fighters on their way to bomb Pearl Harbor and other Oahu military bases.

He and other Japanese-Americans had wanted desperately to be accepted, he said, and that meant going to war.

“I felt that there was a need for us to demonstrate that we’re just as good as anybody else,” Inouye, who eventually went on to serve 50 years as a U.S. Senate from Hawaii, once said. “The price was bloody and expensive, but I felt we succeeded.”

Inouye had wanted to become a surgeon, but he lost his right arm in a firefight during the war. He was elected to the House in 1959 after Hawaii became a state. Inouye became well known nationally as a member of the Senate Watergate Committee and later as chairman of the Congressional committee that investigated the Iran Contra scandal.

In one of the most memorable exchanges of the Watergate proceedings, an attorney for two of Nixon’s closest advisers, John Ehrlichman and Bob Haldeman, referred to Inouye as a “little Jap.”

The attorney, John J. Wilson, later apologized. Inouye accepted the apology, noting that the slur came after he had muttered “what a liar” into a microphone that he thought had been turned off following Ehrlichman’s testimony.

Inouye achieved celebrity status when he served as chairman of the congressional panel investigating the Iran-Contra affair in 1987. That committee held lengthy hearings into allegations that top Reagan administration officials had facilitated the sale of weapons to Iran, in violation of a congressional arms embargo, in hopes of winning the release of American hostages in Iran and to raise money to help support anti-communist fighters in Nicaragua….

The panel sharply criticized Reagan for what it considered laxity in handling his duties as president. “We were fair,” Inouye said. “Not because we wanted to be fair but because we had to be fair.”

NBC foreign correspondent Richard Engel and his production team have been released after five days in captivity in Syria. The Guardian reports:

The group disappeared shortly after crossing into north-west Syria from Turkey last Thursday (13 December). NBC had no contact with the kidnappers and asked for a news blackout about the incident, which was observed by mainstream news outlets.

There was no request for a ransom during the time Engel and his crew were missing.

After being abducted they were put into the back of a truck and blindfolded before being transported to an unknown location, believed to be near the small town of Ma’arrat Misrin.

Throughout their captivity they were blindfolded and bound, but otherwise not physically harmed, said the network.

Read more at the link.

According to Beltway Bob (AKA Ezra Klein), a deal between President Obama and Speaker Boehner is in the offing, and it isn’t a good deal for old ladies who are trying to survive on Social Security.

Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House’s oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion. Congress will get instructions to use this new baseline to embark on tax reform next year. Importantly, if tax reform never happens, the revenue will already be locked in.

On the spending side, the Democrats’ headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion, but also expect it to lack many specifics. Whether the cuts come from Medicare or Medicaid, whether they include raising the Medicare age, and many of the other contentious issues in the talks will be left up to Congress.

Now how is that a win for Democrats? If we go over the cliff, Republicans are going to be blamed, and taxes will go up on everyone until Republicans give in to public outcry in early January. But Social Security, Medicare, and Medicaid cuts will inevitably be blamed on Democrats, who are supposed to fight for the social safety net. Then in 2014, Republicans will attack them for those cuts, and it will work–just as it did when Romney and Ryan falsely accused Obama of cutting Medicare benefits in the recent presidential campaign. Back to Beltway Bob:

The deal will lift the spending sequester, but it will be backed up by, yes, another sequester-like policy. I’m told that the details on this next sequester haven’t been worked out yet, but the governing theory is that it should be more reasonable than the current sequester. That is to say, if the two parties can’t agree on something better, then this should be a policy they’re willing to live with.

On stimulus, unemployment insurance will be extended, as will the refundable tax credits. Some amount of infrastructure spending is likely. Perversely, the payroll tax cut, one of the most stimulative policies in the fiscal cliff, will likely be allowed to lapse, which will deal a big blow to the economy.

Again, that doesn’t sound like a win for Obama at all. Let’s hope Beltway Bob is wrong again.

Dean Baker on the chained CPI: He argues that the chained CPI is not really applicable to seniors.

The Bureau of Labor Statistics (BLS) has constructed an experimental elderly index (CPI-E) which reflects the consumption patterns of people over age 62. This index has shown a rate of inflation that averages 0.2-0.3 percentage points higher than the CPI-W.

The main reason for the higher rate of inflation is that the elderly devote a larger share of their income to health care, which has generally risen more rapidly in price than other items. It is also likely that the elderly are less able to substitute between goods, both due to the nature of the items they consume and their limited mobility, so the substitutions assumed in the chained CPI might be especially inappropriate for the elderly population.

Baker explains for the umpteenth time that it is wrong to use Social Security cuts to lower the deficit.

It is important to remember that under the law Social Security is supposed to be treated as a separate program that is financed by its own stream of designated revenue. This means that it cannot contribute to the budget deficit under the law, because it is only allowed to spend money from the Social Security trust fund.

This is not just a rhetorical point. There is no commitment to finance Social Security out of general revenue. The projections from the Social Security trustees show the program first facing a shortfall in 2033 after which point it will only be able to pay a bit more than 75 percent of scheduled benefits. While this date is still fairly far in the future, at some point it will likely be necessary to address a shortfall.

It is reasonable to expect that the changes needed to keep the program fully funded will involve some mix of revenue increases and benefit cuts. However if the chained CPI is adopted as part of a budget deal unconnected to any larger plan for Social Security then it effectively means that there will have been a substantial cut to Social Security benefits without any quid pro quo in terms of increased revenue. This hardly seems like a good negotiating move from the standpoint of those looking to preserve and strengthen the program.

There is much much more at the link. Digby has been writing about this issue for months, and she had another good post on it yesterday.

There has always been some fantasy, mostly held by people who are about to be fleeced by Wall Street sharpies, that this country should be run like a cash business. It cannot and should not be done that way. (Ask Mitt Romney about the role of debt in a modern economy.) The problem is that this focus on debt is making it impossible to do the things we need to do to spur economic growth in the short term, which would close the deficit, and apparently the only way anyone in Washington can see to get around that is to sell off the future security of American citizens as some sort of human sacrifice for no good reason. It simply is not necessary, as Krugman shows.

John Boehner came up with a new “offer” this week-end to raise the rates on those who make a million or more each year and also agreed to take the debt ceiling off the table for the next year. Krugman thinks this is a bad deal which Obama has no good reason to take — and I would agree with him if I didn’t still see a very dangerous possibility that the administration wants to pursue some unacceptable spending cuts in order to deliver on that “balanced approach.” A looming debt ceiling fight is a very good excuse for them to do that. If kicking the can down the road another year will stop them from cutting more spending, then I’m inclined to say take the deal.

Obviously, this whole thing is ridiculous. They should get rid of this idiotic debt ceiling vote altogether: after all once they appropriate the funds they’ve agreed to pay for them whether through taxation or borrowing. This yearly vote allows them to get credit for the goodies and then later refuse to pick up the tab. But unless they are willing to give it up completely, I’d be glad to at least see it be delayed until the White House stops talking about cutting vital programs.

And yes, the taxes should go up for all income over $250,000. They can afford it. But not if the price is changing to the Chained CPI which will take the food out of the mouths of 90 year old women and squeeze veterans and disabled people who can’t afford it. In other words, the devil is in the details. If Obama hangs tough as Krugman prescribes and wins on all these points without giving up the store (also known as “making tough choices ” his own base “won’t like”) then I say go for it. I’m just not sure I have much faith that’s the game plan. If it isn’t, then maybe he should take Boehner’s offer, repeal the sequester and put this to bed for the time being. There’s been more than enough cutting already to drag this economy down. Let’s see what happens if we stop the austerity insanity for a while.

Dr. Dakinikat would probably agree with that.

Meanwhile, most Americans disapprove of the the proposed cuts to safety net programs, so maybe this will turn out to be another trial balloon that goes over like a lead balloon.

Most Americans want President Obama and congressional Republicans to compromise on a budget agreement, though they, too, are unhappy about the options that would avert the “fiscal cliff,” according to a new Washington Post-ABC News poll.

The strong support for compromise belies widespread public opposition to big spending cuts that are likely to be part of any deal.

Most Americans oppose slashing spending on Medicaid and the military, as well as raising the age for Medicare eligibility and slowing the increase of Social Security benefits, all of which appear to be on the table in negotiations. Majorities call each of these items “unacceptable.”

Wow. I’m running out of space already? Suddenly, a week before Xmas there’s more happening in the news. We’ll have to discuss other items in in the comments. So what’s on your reading list today?


Has the Time Come to Break Up the Union?

Via Matt Yglesias at Slate, this map–originally posted at The Economist last year– shows fiscal transfers from wealthier states to poorer ones by means of taxes collected by the federal government and then distributed to states as Medicaid, unemployment insurance, and so on.

As Yglesias points out many of the states that get more back than they put in in taxes tend to be more conservative, but that’s not always the case. States that are lower in population also pay less in taxes and get more back. For example, North Dakota and Iowa are experiencing a great deal of growth and prosperity at present, but they still get more held from taxpayers in more populous states like New York, Connecticut, and Massachusetts.

Yglesias points out that the situation here in the U.S. is different from the Eurozone:

Two key points I would make about this in relation to the eurozone are that these transfers are both really big and extremely persistent. Mississippi and Alabama have lagged behind the rest of the nation in economic development for a very long time and I see no particular reason to believe they’ll ever catch up.

Making the obvious mental leap, Derek Thompson writes at The Atlantic:

Unlike the United States, the euro zone collects a teensy share of total taxes at the EU level and has no legacy of permanent fiscal transfers from the richer countries, like Germany, to the poorer countries, like Greece.

Would wealthy, populous states like New York and Texas be better off establishing their own currencies, Thompson asks?

On their own, they could spend a lot more. Today, the states can’t borrow money. But on their own, the richer ones might be able to borrow cheaply enough to eventually run persistent small deficits to make up for whatever infrastructure, education, and per capita health care spending they were receiving from Washington. Once they got in on NAFTA, they could trade freely with the other states as the dollar zone disintegrating into history.

Perhaps the northeastern states should secede and form their own union. Quite a prosperous country could be made up of MN, IL, IN, OH, PA, NY, MA, NH, ME, VT, DE, RI, and CT. Only IN, VT, and ME would be on the poor side. Other areas of the country could form their own coalitions.

Perhaps a more interesting question is whether the possibility of this happening might stimulate enough concern among conservatives in Congress for them to stop fooling around with the wars on women and science and start doing something about the real problems we’re facing in this country?

Desperate times call for desperate measures.


Tuesday Reads

Out of Town News, Harvard Square

Good Morning!!

Frankly, I’ll be very glad when this holiday season is over. It goes on way too long. This year I saw Christmas stuff at Halloween! At least I don’t get depressed at this time of year anymore, and I’m very happy for people who enjoy the celebration. I’ll probably have a nice time at Christmas dinner, but why do we need a two month build-up? Please forgive my grumbling…. I’ll get to the news, such as it is.

MSNBC’s First Read reports that Boehner and his merry men in the House “punted” on the payroll tax cut bill last night; supposedly they’ll vote on it today.

House Republican leaders emerged following a meeting with rank-and-file members to say that the House would take up their votes on Tuesday. Lawmakers had planned to vote around 6:30 p.m. ET on Monday evening, but the 6 p.m. meeting of GOP lawmakers lasted longer than expected, over two hours.

Majority Leader Eric Cantor (R-VA) said that the House Rules Committee, which sets the parameters for votes in the House, would meet tonight to set the stage for tomorrow’s series of votes. Those Tuesday votes would include a measure to reject the Senate’s two month extension, and instead instruct lawmakers to meet in a conference — the formal process of resolving differences with legislation in the Senate.

“Our members do not want to just punt and do a two-month, short-term fix where we have to come back and do this again,” House Speaker John Boehner (R-OH) told reporters at the Capitol.

House Republicans prefer legislation to extend the expiring tax cut by a whole year, and produced legislation to that effect. But Democrats in the Senate rejected that proposal because of some of the cuts used to offset the cost of the bill, which also includes an extension of unemployment insurance.

Meanwhile, Jake Tapper is reporting that the two month extension passed by the Senate and backed by President Obama cannot be implemented in it’s current form.

Officials from the policy-neutral National Payroll Reporting Consortium, Inc. have expressed concern to members of Congress that the two-month payroll tax holiday passed by the Senate and supported by President Obama cannot be implemented properly.

Pete Isberg, president of the NPRC today wrote to the key leaders of the relevant committees of the House and Senate, telling them that “insufficient lead time” to implement the complicated change mandated by the legislation means the two-month payroll tax holiday “could create substantial problems, confusion and costs affecting a significant percentage of U.S. employers and employees.”

ABC News obtained a copy of the letter, which can be read HERE. Isberg agreed that it would be fair to characterize his letter as saying that the two-month payroll tax holiday cannot be implemented properly.

Why on earth can’t those morons on Capital Hill just extend the unemployment insurance for Pete’s sake? The Congressional Republicans make Scrooge look like a piker when it comes to mean-spiritedness. Aren’t most of them supposed to be “Christians?” Good grief!

Please, can’t someone force Boehner and Cantor to visit some homeless shelters and perhaps some parks and street corners in Washington D.C., where no doubt some of the 1.6 million homeless children in the U.S. reside? One out of every 45 kids in this country were homeless last year! And these evil bastards are trying to make this horrendous situation worse!

A huge winter storm was pounding the Southwest and the lower Great Plains States last night.

Interstates and highways were shut down Monday night as a large winter weather system brought heavy snow, fierce winds and ice to at least five states in the West and Midwest.

There were blizzard conditions in parts of western Kansas and southeast Colorado, with visibility of less than a quarter-mile, said Ariel Cohen, a meteorologist with the National Weather Service’s Storm Prediction Center in Norman, Oklahoma.

A blizzard warning was in effect for those areas along with northeastern New Mexico, the northwest Texas panhandle and the Oklahoma panhandle, he said. The severe weather was starting to affect Missouri late Monday, with a winter weather advisory in effect for the northwest corner of the state.

Roads were closed in Texas and New Mexico because of blizzard conditions. Wow, some of those people rarely see snow. If you live in the storm area, please stay inside and don’t drive!

The New York Times calls handling of Kim Jong Il’s death “an extensive intelligence failure.”

Kim Jong-il, the enigmatic North Korean leader, died on a train at 8:30 a.m. Saturday in his country. Forty-eight hours later, officials in South Korea still did not know anything about it — to say nothing of Washington, where the State Department acknowledged “press reporting” of Mr. Kim’s death well after North Korean state media had already announced it.

For South Korean and American intelligence services to have failed to pick up any clues to this momentous development — panicked phone calls between government officials, say, or soldiers massing around Mr. Kim’s train — attests to the secretive nature of North Korea, a country not only at odds with most of the world but also sealed off from it in a way that defies spies or satellites.

Asian and American intelligence services have failed before to pick up significant developments in North Korea. Pyongyang built a sprawling plant to enrich uranium that went undetected for about a year and a half until North Korean officials showed it off in late 2010 to an American nuclear scientist. The North also helped build a complete nuclear reactor in Syria without tipping off Western intelligence.

As the United States and its allies confront a perilous leadership transition in North Korea — a failed state with nuclear weapons — the closed nature of the country will greatly complicate their calculations. With little information about Mr. Kim’s son and successor, Kim Jong-un, and even less insight into the palace intrigue in Pyongyang, the North’s capital, much of their response will necessarily be guesswork.

Not good. Maybe the CIA and NSA should concentrate on actual intelligence gathering rather than bugging Americans phone calls and reading their e-mails and tweets and Facebook postings.

Did you notice that Jeb Bush had an op-ed in the Wall Street Journal yesterday? With Gingrich tanking and Ron Paul rising in Iowa, are the Republicans getting ready to push another Bush for president? Charlie Pierce of Esquire thinks it looks that way:

He was supposed to be the savvy one, the presidential one, not that dolt of a brother who ducked his National Guard duty, ran several businesses into the dust of west Texas, got drunk and challenged the Auld Fella to a fistfight, and kept driving his car into the bushes. But the dolt got Daddy’s money and Daddy’s lawyers behind him and got installed as president, where he did his utmost to lodge the family brand somewhere between those enjoyed by Corvair and leprosy. Meanwhile, the golden child got to be governor of Florida for a while longer.

And now, in the widening gyre, slouching toward Manchester to be born, our moment of… Jeb (!)

Make no mistake. You don’t write an op-ed for the Wall Street Journal at this point in the Republican primary process unless somebody, somewhere wants to make people think you’re an legitimate option. You certainly don’t write one as stuffed full of free-market banana-oil as this one unless somebody, somewhere wants to raise enough money to make the world think you’re a legitimate option. There was enough Jeb (!) buzz over the weekend that it’s becoming plain that some very important someone’s have looked over the current Republican field and decided that, by god, it’s just bad enough that there’s room in there to bring back the most discredited surname in American politics. The slogan writes itself:

“Jeb! This time, let’s try the smart one.”

I don’t know. I don’t think any of the Bushes are all that bright. They’re way too inbred. Maybe another Bush presidency is what the Mayans predicted as the world-ending event?

I’ll end with an upbeat story. Remember Jessica Lynch? She just graduated from college.

I don’t really like to talk about what it took to get here. I don’t want anyone to feel sorry for me, or to think I don’t know how fortunate I am. Everyone else in my vehicle in Iraq was killed. My best friend, Lori Piestewa, died as a prisoner of war. I’m still here.

I’m also incredibly proud of this moment. I always dreamed of becoming a teacher, ever since my own kindergarten teacher took me under her wing when I was frightened on the first day of school. We are still in touch today. That’s the kind of teacher I want to be.

In the eight years since my captivity, I’ve had 21 surgeries. I have metal parts in my spine, a rod in my right arm, and metal in my left femur and fibula. My right foot is held together by screws, plates, rods, and pins. I have no feeling in my left leg from the knee down, and I wear a brace every day. Sometimes I’ll get a flash of pain, or feel upset because I can’t run, and then I’ll remind myself: I’m alive. I’m here. Take some ibuprofen.

Go read the whole thing. It’s not very long, and it’s a nice, inspirational story.

Now what are you reading and blogging about today?