Thoughtbasket readers, if you live in San Francisco, or in other parts of California, and haven’t had time to read up on all the initiatives and propositions on next month’s ballot, a friend of mine took the time to prepare a voter guide. I can’t vouch for his recommendations — I don’t agree with all of them — but his summaries are concise and amusing, which is a pretty good combo. Make up your own minds, of course, but this might be a useful tool.
Check out the quick voter guide at www.quickvoterguide.org
Like most (all?) Washington politicians, Paul Ryan is a liar and a hypocrite. Read about it here. Skip to page 6 for the ultimate example of Ryan’s nearly pathological fakery.
A key Republican talking point is that the wealthy are “job creators” and that any tax on these job creators will cause them to fold their cards and go home, hurting the economy in the process. This is clearly ridiculous, and I have challenged before the concept that tax rates diminish incentives to build companies, but here is a great essay from an entrepreneur and investor (a successful one — he is clearly in the 1%) describing how people don’t create jobs, the economy does. And the economy is made up of regular folks — the 99% — who need to buy the products produced by the entrepreneurs. Without a successful consumer class, nobody will be a job creator.
S&P downgraded US debt from AAA yesterday, knocking Treasuries from their perch as the safest debt on earth. We will see what happens to yields on Monday, but so far it’s not clear that the markets agree with S&P. After all, this is an agency that had AAA ratings on subprime mortgage-backed securities not that long ago.
But in the meantime, the GOP is using the downgrade to attack Obama, saying “look what happened on his watch.” The president doesn’t deserve all the blame, but I understand why the GOP has seized the downgrade as a bludgeon. And in the same way, democratic operatives are putting the blame on the tea party and its refusal to compromise on deficit cutting.
But you know who isn’t saying anything? Democratic leaders. The White House, Harry Reid, Nancy Pelosi — they are all keeping silent on this. They are trying to be the “adults” and not play the blame game. I appreciate that high-mindedness, but here’s the thing: the game is being played, with or without them. If they stay silent then they just let the GOP control the narrative. You know the Sunday talk shows will be full of Boehner and Cantor and Romney and the gang piling on Obama for the downgrade.
The Democrats have to realize that they are in the middle of a street fight and if they don’t fight back they will lose. And they’ll deserve to lose. If you are going to suck ass at politics, then you shouldn’t be a politician. Regular readers know that I mostly support Democratic policies (with some huge exceptions that I ought to detail one of these days), but I sure don’t support Democratic fecklessness. The Democrats got rolled on the debt ceiling negotiation, and now they are getting rolled on the downgrade. It’s pathetic. Or, to quote a senior democratic official: “if this White House showed a gram of leadership on the debt crisis we could have avoided this historic embarrassment.”
Posted in Business, Politics
Tagged barack obama, Business, debt, deficit, democrats, downgrade, economics, Politics, republicans, S&P, taxes, tea party
OK, maybe not all of us. But a lot of us. Really a lot. Cornell political scientist Suzanne Mettler has an article in the Washington Monthly about what she calls the “submerged state,” or the massive amounts of money at play in various tax deductions (eg. the mortgage interest deduction) that benefit particular populations.
As the chart below shows, there are all kinds of tax deductions that many people take, but those same people continue to insist that they don’t get any help from the government. Mettler’s point, backed up by her survey data: despite their cost, these programs are invisible to the public, making the public more susceptible to claims that government is too big.
Yves Smith on the macro effects of oversized Wall Street pay.
I normally don’t love Paul Krugman, despite his Nobel Prize, since he is too strident and preachy and predictable, but this take on what really separates Right from Left in America is pretty interesting.
John Mearsheimer on American foreign policy and realpolitik.
John Cassidy on whether Wall Street adds value to society. Hint: it doesn’t. This is from the New Yorker, so it won’t be available online forever.
Law professor David Beatty compares American constitutional jurisprudence to how they do it in other countries. I’m no expert, but I found it fascinating.
Posted in Business, Politics, Pop culture, Trends
Tagged ayn rand, bonuses, Business, economics, goldman sachs, GOP, greed, Politics, republicans, Trends, wall street
Jack Balkin has a great post describing how Congress, particularly the Republicans, are acting like a European style parliament. His forecast: more gridlock, worse policy, and a decaying country.
The Wall Street Journal recently ran an article by Jonah Lehrer asking whether humans might not be as averse to paying taxes as our political discussion currently assumes. He describes a study by scientists at Caltech which showed that people dislike inequality. Study participants were put into scanners, and the pleasure areas of their brains lit up more when money was given to others than when money was given to them. This was especially true of those who had started the study “rich,” which was determined by random assignment. Following this study to its logical conclusion, perhaps people who are well off might not be as unhappy as politicians seem to think about paying higher taxes to help the less fortunate.
However, Lehrer points out that the random assignment of riches skews the study. Other studies have shown that this altruism effect is less powerful when the rich feel that their wealth is earned. When we bring this back to politics and tax rates it opens a whole can of worms. What is “earned” in a society where massive advantages (not just wealth) are passed down through the generations? I won’t open that can of worms here, but point you to this post from last year on some of the challenges of “earning” wealth for the lower classes.
The bipartisan deficit panel has come out with its first set of recommendations, and everyone is hopping mad. Lefties say the cuts in spending are unacceptable, and conservatives are adamant that tax revenues never go up again. Good! I have no opinion about the specific recommendations made by the panel chairmen, but I know that if both sides are pissed off then the panel must be doing something right.
Listen people…this deficit is serious business. It will bite us in the ass if we don’t fix it, and fixing it is going to require some pain on everyone’s part. We’ve been living for too long with this fantasy that government could increase spending while cutting taxes. Now the party is over, and the hung over cleanup has to begin. Headaches? Nausea? Yes, exactly.
So liberals, accept the fact that spending will be cut, and not just military spending. I hate it too, but Social Security has to be on the table. Increasing the retirement age by two years over the next 65 years? That’s really not so bad. Tying other benefits to inflation? Also not unreasonable. We need a safety net, of course, but we need to be smart about it.
And conservatives, you too are in for some pain. Face facts: spending cuts alone won’t balance the budget. We need to increase taxes. You like to claim that any tax increase will kill the economy, but the facts don’t bear that out. This chart shows that in Germany tax revenues are 40% of GDP, far more than America’s 28%. And yet Germany’s economy is doing fine, kicking our ass in exports, despite having to absorb East Germany. This chart shows that marginal tax rates for individuals are lower than ever. In fact, during America’s economic heyday, in the 50s and 60s, top marginal rates were in the 70%-90% range, far higher than today’s 35%, and yet there was still plenty of investment, of people working hard, of entrepreneurs starting businesses. All the arguments the right uses against raising taxes are belied by that glorious period of American business. Speaking of that great Happy Days era, the chart below shows that the share of taxes paid by the wealthiest citizens back then was significantly higher than it is now. Again, showing that higher taxes do not necessarily stifle economic growth.
There will be plenty of unpleasantness to go around; Democrats and Republicans will each get their share. Our legislators need to get off their high horses, stay away from the cameras and microphones and acknowledge that their pet causes are secondary to the national cause. But as either Mark Shields or David Brooks (I still can’t tell their voices apart on radio) said on the PBS NewsHour, our politicians won’t make this happen until the public forces them to. Our culture needs to accept the need for hard choices, and then push our politicians to make them.
Posted in Business, Politics
Tagged bailout, Business, congress, economics, GOP, greed, Politics, republicans, taxes, tea party
If you have the time, read James Kwak‘s interview in The Straddler. He has some interesting things to say about how our culture is oddly enamored of the idea of the swashbuckling wall streeter, and yet intimidated by economics and finance, and how that has influenced policy decisions. He’s a smart cat. Here is a small sample:
“And Wall Street’s argument that it has this mysterious power, that you have to trust it that it’s using it for good, and that if you take it away, the world will end, is obviously obnoxious—but it’s a hugely successful debating point. Congressmen are afraid of it. They’re afraid that they don’t understand what’s going on, and they’re hearing these lobbyists say that if you push too hard on the banking industry, the world will end.”
Posted in Business, Politics, Trends
Tagged 13 bankers, Business, consumerism, culture, economics, james kwak, Politics, regulation, republicans, taxes