Monthly Archives: August 2011

My Framework: Where I Go from Here

Posted on by
1

I think I’ve figured out a pretty strong beginning. In shorthand:

The economy isn’t working for most of us — and we don’t think we can do anything about it. It’s just the way it is.

But it’s not. The economy we have today wasn’t natural or inevitable — and it was better before (“the middle-class was no accident”). The only reason we think it’s natural or inevitable is because the rich and big corporations want us to think so — if we pretend decisions aren’t being made, nobody asks why corporations and the rich are getting to make them.

The next part — we have the power to shape the economy, but only if we {understand its limits/embrace its tensions/embrace uncertainty/??} — is where it starts to get wobbly.

I think I’ve figured out why. It’s a symptom of the underlying problem: how I’m talking about the 3 principles.

I could be kidding myself, but I don’t think the problem lies with the principles themselves. I think Stack the Odds in Favor of the Good Guys, We Aren’t As Smart As We Think We Are, and Use Checks and Balances (or how ever I end up talking about power in the economy) are pretty solid intellectually. And I think they’ve got the potential to be really useful. But when I get to them, the anger and energy of the beginning of my argument peters out. It feels dry, mechanical, like a PowerPoint slide in a boring policy wonk presentation.

So what I need to do next is figure out how I pull out the emotions buried in the three principles and connect it back to the beginning.

The Full Cost of the Deficit Obsession Disorder

Posted on by
Reply

How much is the insane obsession with deficits costing us? Krugman explains, using the latest projection from the Congressional Budget Office, which optimistically assumes that the economy will bounce back by 2015:

the projection says that we’ll have a cumulative output gap of $5.1 trillion, with $2.8 trillion of that having already happened.

Surely it would have been worth making an extraordinary effort to avoid this outcome. In particular, an $800 billion stimulus, a significant fraction of which was stuff that would have happened anyway (like extending the patch on the alternative minimum tax) looks ludicrously underpowered. Yet policy has been timid and conventional….

The CBO also projects unemployment staying above 8 percent until late 2014 — again, with no clear explanation of why it should fall sharply in 2015. This translates into a human catastrophe for the long-term unemployed.

Our side has got to get our ass in gear.

More from Warren Buffett On Taxing the Rich

Posted on by
Reply

In a great New York Times op-ed, “Stop Coddling the Super-Rich,” Warren Buffett lays out why folks like him should be paying more taxes:

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors….

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent….

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others….
Continue reading →

Warren Buffett: Higher Capital Gains Taxes Won't Scare off My Tribe

Posted on by
Reply

If we start taxing capital gains — the money folks make from investments — at the same rate we tax salaries, will investors stop investing? No, says Warren Buffett:

I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.

If you need some fancy math to back up Buffet, Jared Bernstein‘s got some for you.

Obama's Power

Posted on by
Reply

Eschaton nails it:

Floating around out there is the basic idea that the presidential bully pulpit isn’t very powerful. I can accept that no amount of presidential jibber jabber can force through policy (might be true, might not, but a reasonable argument). So, then, the entire point of presidential jibber jabber is simply the politics. It isn’t the package, it’s the advertising. Fair enough.

Has the focus on cutting the deficit for the past 20 months or so really been good politics?

This doesn’t let us off the hook — regardless of who’s President, you can’t expect much movement without a Movement. But it’s a good quote to keep in mind for the next time someone says, “but Obama was basically powerless because of the Republicans.”

Another Way of Posing the Problem

Posted on by
Reply

Here’s another way of posing the problem I need to solve:

Many people think, “the world sucks: the rich and big corporations are doing great, and the rest of us are struggling to keep our heads above water. But that’s the way it is. It’s the law of the jungle.”

I need a response that gets us out of the “inevitable” game but also acknowledges that there are serious limits to what we can do.

Silver Lining for Enviros in Bad Budget News?

Posted on by
Reply

What will the deficit-cutting mania mean for the environment? In a sick, twisted way, says Jeff Goodell, it might be good news:

environmental and clean energy activists have no choice now but to reevaluate their strategy now the federal government is being strangled to death…

As Joe Romm of the Center for American Progress points out, the deficit deal means that federal spending on energy and environmental issues will be slashed for years to come.

So maybe this is the “fuck ‘em” moment. Maybe this is the moment when enviros and clean-energy advocates stop being quite so polite and deferential. Maybe more people will climb trees located on mountaintop-removal sites in an effort to stop the blasting. Maybe more climate activists will think about the climate change not as an international problem to be resolved in an air-conditioned meeting hall, but as a guerilla war to be fought in the streets. (That’s certainly how the Sierra Club is thinking about it with their Beyond Coal campaign, and it attracted the attention – in the form of $50 million – from New York City mayor Michael Bloomberg.) All the real action is in the states now anyway: the northeast has a carbon-trading system up and running, California is pushing hard to speed the adoption of electric cars, New Jersey is pioneering innovative ways to finance solar power, and many states are adopting increasingly aggressive renewable portfolio standards.

Yeah, it’s a bleak time. And if the economy continues to tank, all bets are off. But for years, climate activists have been wondering what it would take to wake people up to how much is at stake in these climate and energy battles. Some thought an epic drought would do it. Or a series of freak hurricanes. Or the sudden calving of a massive ice sheet in Greenland. But the one thing nobody considered was a budget battle.

Color me skeptical — but I hope I’m wrong. Changing direction is really, really hard. I hope they can pull it off.

Larry Summers: Slow Growth, Big Deficit

Posted on by
Reply

So the debt ceiling deal may be a really, really bad for a lot of folks, but it least it will reduce the long-term deficit, right? Don’t plan on it, says Larry Summers:

Objective observers would forecast larger U.S. budget deficits in the out-years than would have been predicted a few months ago. The economic forecast has deteriorated, and it is reasonable to estimate that even a half-a-percent reduction in growth averaged over 10 years adds more than a trillion dollars to the national debt in 2021.

Bottom line: even if you care more about the deficit than about the millions of Americans who don’t have jobs or are barely keeping afloat, focusing on the deficit is a losing game right now. We can’t reduce the long-term deficit without growth and jobs.

The Debt Debacle's Clear Winners: Health Care and Defense Lobbyists

Posted on by
Reply

It’s a depressing day to be a Liberal/Progressive — and Tea Party activists aren’t much happier either. And although the cuts look pretty awful, it’s hard to tell in advance whether conservatives will have won a real victory. When the conversation goes from “cutting the government” to cuts to programs folks – or big companies with lots of money at stake – care about, we’ll see how much actually gets cut. But there’s one clear winner in this mess: healthcare and Defense lobbyists.

Healthcare lobbyists have their work cut out for them given the cuts that were already agreed to and either the cuts coming from whatever deal the “Super Congress” comes up with or the healthcare provider cuts that happen if no deal is reached:

The hospital industry, which agreed to cuts of $150 billion to help pay for Obama’s expansion of coverage to the uninsured, says it’s just about had it. Nonpartisan analysts in the government predict the cuts in the health care law alone are enough to push about 15 percent of hospitals, nursing homes and home health agencies into the red.

“America’s hospitals find it difficult to support a debt ceiling proposal that could negatively affect Medicare for our nation’s seniors,” American Hospital Association president Rich Umbdenstock said in a statement. “Access to care could be curtailed by further cuts to Medicare funding for hospital care.”

Defense lobbyists have an even bigger board to play on. They’ll get millions of dollars to lobby hard to ensure that the trigger isn’t pulled. And if the Republicans decide to play a tough game in the fall and allow the trigger to happen but come back with a separate bill to increase spending on Defense — either through the regular budget or through the “emergency” spending that was used to fund a lot of of the last couple of wars — these lobbyists will get to spend millions more running ads to scare Democrats into voting for it.

Nice work if you can get it.