When Paul Ryan says he wants "tax reform," what he means is that he wants to cut taxes on the rich. That means top marginal rates, capital gains rates, dividend rates, and estate tax rates. Primarily this is because Republicans have few economic goals left on earth except cutting income taxes on corporations and the rich. Here's one reason why:

Basically, there's no income tax to cut anymore until you get to household incomes in the six figures. Even at $200,000, the federal income tax rate is pretty modest. So if you're going to cut income taxes, it's pretty hard to cut them very much for anyone but the rich.

Of course, households with lower incomes still pay a lot in payroll taxes, state sales taxes, and other flat or regressive taxes. The federal income tax is the main bulwark that makes the overall tax system progressive, so it's easy to see why Republicans hate it.

Daniel Gross has some advice for the free-market titans in the homebuilding industry who are facing a shortage of willing American workers:

What’s mystifying here is the fact that capitalist homebuilders and their cheerleaders at the Journal are, well, mystified over why Americans don’t seem to want to work construction. There’s a simple reason why Americans aren’t filling construction jobs—and the construction industry appears to be missing it.

Free-market types will tell you that there’s no such thing as a shortage of a commodity—of energy, of food, and, theoretically, of labor. Rather, there is only a shortage of the proper incentives, people willing to pay the appropriate prices or to send the signals that a commercial endeavor is worth undertaking....And yet the market sharpies collectively are throwing up their hands over the construction labor shortage instead of homing in on the obvious solution: Pay people more—a lot more if need be.

Let's roll the tape. Has the construction industry tried this novel approach?

Starting in 2014, construction wages did indeed go up after falling for four years. But by the end of 2016, having barely made up the earlier decline, homebuilders gave up on this exercise in experimental economics. Wages have dropped 2 percent since October even though the construction industry is apparently still facing a labor shortage. They're now paying wages lower than they did in 2010.

Paying more isn't always an option. In the agriculture industry, for example, there's a point at which paying higher wages to field workers makes your produce uncompetitive. It can't compete with lower-priced fruits and vegetables from Chile and Mexico. It's not clear where that point is, but it's somewhere.

But homebuilding is a nontradeable sector. You don't have to worry about foreign competition. At some point, it's true, your costs might go up so much that your homes are too expensive and people won't buy them, but that's a long way off. A few dollars-per-hour in labor costs doesn't add enough to the price of a house to make a noticeable difference. Besides, if there's a shortage of labor, then there's a shortage of new houses, and you can price your houses higher.

So don't give up, homebuilders! Your experiment would have worked if only you'd kept at it. Start paying your workers $28 or $29 per hour and they'll come flocking.

Lunchtime Photo

Yesterday Thersites demanded a picture of sunset to go along with Wednesday's picture of sunrise. I live to serve.

Here is last night's sun setting over the old Marine Corps Air Station in Tustin, which was shuttered as part of the 1994 base closings. Its two World War II blimp hangars were left intact, and so was the old control tower. I guess blimps need control towers too. In the end, I narrowed down all the photos to two, but then I couldn't make up my mind between them. I like the composition of the bottom one better, but the colors of the top one are exquisite. So today you get both.

The Hawaii judge who halted enforcement of President Trump's executive order on immigration has now gone a step further, turning his temporary restraining order into a preliminary injunction. Dara Lind explains:

A temporary restraining order is only supposed to last a couple of weeks. It’s supposed to grant enough time for the judge to do another round of briefs and hearings, and then issue a more considered decision about whether to keep the provision on hold indefinitely while the case works its way through the courts. That indefinite hold is called a preliminary injunction, and a judge in the Western District of Maryland (part of the Fourth Circuit) has already issued one against part of the executive order.

With two separate courts ruling against the travel ban, the administration’s only hope to get the ban back into effect without Supreme Court intervention was for both of those rulings to be overturned — or for the Maryland injunction to be overturned and Judge Watson to decide not to extend his temporary order into a preliminary injunction.

The first option wasn’t likely. The Ninth Circuit is famously liberal, and it’s the same court that put the first version of the travel ban on hold. So the administration’s last hope was Watson.

On Wednesday night, Watson did exactly what the administration hoped he wouldn’t. He issued a preliminary injunction covering both the section of the travel ban temporarily banning people from particular countries and the part temporarily banning refugees.

This may seem like it's not too big a deal. The immigration order has been on hold for weeks, and now it's going to stay on hold. But it's actually a huge deal. For all practical purposes, it means Trump might as well give up.

As you'll recall, the original immigration order was temporary: it would last about three months, which would give the Trump administration time to put "extreme vetting" procedures into place. That three months is up at the end of May. Presumably, DHS has been working diligently on the new procedures all along, so they should be ready to put them into effect by then.

At some point in May or June, the case becomes legally moot. But that doesn't really matter. More practically, by the end of May the extreme vetting procedures should be in place and Trump no longer needs the travel ban. After all, its only purpose was to provide time to work out the new procedures.

This is only about six weeks away. Maybe eight if they've run into snags. There's no realistic chance that this case is going to get through two levels of lower courts and the Supreme Court in that time. Trump may keep fighting in order to save face, but it's pointless. This case is now dead.

The BBC's Paul Wood writes today about the infamous "dossier" that claims a substantial connection between Russian officials and the Trump campaign team:

The BBC has learned that US officials "verified" a key claim in a report about Kremlin involvement in Donald Trump's election — that a Russian diplomat in Washington was in fact a spy.

....At one point [the dossier says]: "A leading Russian diplomat, Mikhail KULAGIN, had been withdrawn from Washington at short notice because Moscow feared his heavy involvement in the US presidential election operation... would be exposed in the media there."...Sources I know and trust have told me the US government identified Kalugin as a spy while he was still at the embassy.

....I understand — from former officials — that from 2013-16, Steele gave the US government extensive information on Russia and Ukraine....One former senior official who saw these reports told me: "It was found to be of value by the people whose job it was to look at Russia every day"....Another who dealt with this material in government said: "Sometimes he would get spun by somebody. [But] it was always 80% there."...In light of his earlier work, the US intelligence community saw him as "credible" (their highest praise).

....Members of the Obama administration believe, based on analysis they saw from the intelligence community, that the information exchange claimed by Steele continued into the election.

"This is a three-headed operation," said one former official, setting out the case, based on the intelligence: Firstly, hackers steal damaging emails from senior Democrats. Secondly, the stories based on this hacked information appear on Twitter and Facebook, posted by thousands of automated "bots", then on Russia's English-language outlets, RT and Sputnik, then right-wing US "news" sites such as Infowars and Breitbart, then Fox and the mainstream media. Thirdly, Russia downloads the online voter rolls.

The voter rolls are said to fit into this because of "microtargeting". Using email, Facebook and Twitter, political advertising can be tailored very precisely: individual messaging for individual voters....This would take co-operation with the Trump campaign, it is claimed.

Hmmm. Thousands of bots? Apparently so:

On Wednesday the Washington Post published a story about "Source D" in the dossier:

In June, a Belarusan American businessman who goes by the name Sergei Millian shared some tantalizing claims about Donald Trump....The allegations by Millian — whose role was first reported by the Wall Street Journal and has been confirmed by The Washington Post — were central to the dossier compiled by the former spy, Christopher Steele. While the dossier has not been verified and its claims have been denied by Trump, Steele’s document said that Millian’s assertions had been corroborated by other sources, including in the Russian government and former intelligence sources.

The most explosive allegation that the dossier says originally came from Millian is the claim that Trump had hired prostitutes at the Moscow Ritz-Carlton and that the Kremlin has kept evidence of the encounter.

Nobody knows for sure if Millian is genuinely plugged in at high levels, or if he's just a fast-talking huckster. But put all this together and it's easy to see why the Trump-Russia story won't go away. The FBI believes Steele to be credible. In the cases where it's been possible to check out the allegations in the dossier, they've turned out to be true. Other intelligence corroborates much of the alleged Russian activity. And Millian's claims are genuinely explosive.

This isn't going away anytime soon.

Mexico is threatening to use the power of corn to fight Donald Trump's tough talk on trade:

As President Trump threatens Mexico with drastic changes on trade, its leaders are wielding corn as a weapon. Mexico’s Senate is considering legislation calling for a boycott of U.S. corn, and the government has begun negotiating with Argentina and Brazil to import corn from those nations tax-free. The threat of a boycott is Mexico’s latest and perhaps cleverest attempt to fight back against Trump, whose threats to pull out of free trade agreements and slap a 20% import tax on Mexican products have shaken confidence in Mexico’s economy.

And apparently it's working:

The Trump administration is signaling to Congress it would seek mostly modest changes to the North American Free Trade Agreement in upcoming negotiations with Mexico and Canada, a deal President Donald Trump called a “disaster” during the campaign.

....The draft, reviewed by The Wall Street Journal, talks of seeking “to improve procedures to resolve disputes,” rather than eliminating the panels. The U.S. also wouldn’t use the Nafta negotiations to deal with disputes over foreign currency policies or to hit numerical targets for bilateral trade deficits, as some trade hawks have been urging.

....Jeffrey Schott, a trade scholar at the Peterson Institute for International Economics...noted that a number of the proposed negotiating objectives echo provisions in the Trans-Pacific Partnership, a 12-nation trade pact among Pacific Rim countries. Mr. Trump campaigned heavily against the TPP.

Do not underestimate the power of corn! Alternatively, maybe corn has nothing to do with it. Maybe Trump was just blathering all along and never really had any intention of getting tough with Mexico. In the end, he'll build a few more miles of fencing, make a few modest changes to NAFTA, and then call it the greatest boon to the working man since the Wagner Act. I've also read a few pieces recently about China, and apparently all those Goldman Sachs folks Trump hired have talked him into backing down on a trade war there too. I guess Goldman Sachs has to be good for something.

Anyway, having given up on Mexico and China, now Trump is going after the ultra-conservatives of the House Freedom Caucus:

I'll bet they're scared shitless. Trump is demonstrating that his talk may be big, but he can't make it stick. In his first two months, he's failed on his immigration order and his health care plan, has no chance of building his wall, and has backed down on Mexico and China. His bark is unquestionably worse than his bite.

The health care bill would have flamed out in the Senate anyway. The HFC did everyone a favor by getting it off the agenda quickly so Congress could move on to more important matters like cutting taxes for the rich.

Donald Trump appears not to care about science. CAN THIS REALLY BE TRUE???

On the fourth floor of the Eisenhower Executive Office Building, the staff of the White House chief technology officer has been virtually deleted, down from 24 members before the election to, by Friday, only one.

....Mr. Trump has not yet named his top advisers on technology or science, and so far, has made just one hire: Michael Kratsios, the former chief of staff for Peter Thiel, the Silicon Valley investor and one of the president’s wealthiest supporters, as the deputy chief technology officer.

Neither Mr. Kratsios, who has a bachelor’s degree in political science from Princeton, nor anyone else still working in the science and technology office regularly participates in Mr. Trump’s daily briefings, as they did for President Barack Obama. “The impression this leaves is that Trump isn’t interested in science and that scientific matters are a low priority at the White House,” said Vinton G. Cerf, a computer scientist, vice president of Google and one of the chief architects of the internet.

The problem with science is (a) it's bo-o-o-o-o-ring, (b) it's depressing, and (c) it often clashes with stuff you want to do. Really, it's just a bummer all around. Why on earth would anyone want to staff the egghead department, anyway?

Jordan Weissmann writes this today:

One of Tom Price’s go-to criticisms of the Affordable Care Act is that it does not, in fact, provide people much in the way of care. The law has helped many Americans obtain insurance, sure. But because the policies have such high deductibles, he argues, patients still can’t afford medical help. "People have coverage, but they don’t have care," the Health and Human Services secretary likes to say.

We can all agree that high deductibles are a problem. Weissman, however, describes a new study which shows that actual medical care, not just insurance coverage, has increased under Obamacare. This is true of both people covered by the Medicaid expansion and people covered by the exchanges.

But did we really need a lot of fancy statistics to figure this out? Focusing only on the exchanges (since Medicaid has no deductibles):

  • CBO estimates that total federal subsidies this year will amount to $31 billion.
  • Add another third or so paid out of pocket, and we get to $40 billion in total premiums paid to insurance companies.
  • Insurance companies are required to spend 80 percent of premiums on actual medical care, which comes to $32 billion.
  • Finally, the exchanges cover about 10 million people, which means the average Obamacare recipient will receive about $3,200 in medical care this year.

My arithmetic might be off a bit here and there, but not by a lot. One way or another, the average person insured through the Obamacare exchanges receives $3-4,000 in medical care. There's no way around that.

High deductibles may be a problem, but they aren't preventing people from getting a pretty considerable amount of medical care that they weren't getting before. Where do Republicans get this stuff, anyway?

On January 20th,  Donald Trump was inaugurated president in a nightmare I somehow am still unable to wake  from. You may remember it! It was poorly attended and he was very upset and spent like a week crying and made his press secretary go out and lie about the attendance and then was mad at that same press secretary not for lying but for wearing ill-fitting suits. These are all things that happened only months ago and yet the trauma, tragedy, and sheer ridiculousness of the last few months make them feel like a lifetime ago.

Another thing that is real and happened once in life is that the US in the olden days—the Before Time—had this president named George W. Bush who was the son of another president named George Bush. (What's that saying? 'Fool me once, shame on you. Fool me twice, shame on Humpty-Dumpty. Fool me three time, the baby is going out with the bath water'?) Neither of them were very good presidents. Indeed, the Younger was quite unGood. Started an unnecessary war against the wrong country, in which hundreds of thousands of civilians were killed. Liked clearing brush in Texas. He's a painter now.

These two surreal characters, each of which would be considered an unrealistic element in an even moderately good screenplay, shared screen-time during the inauguration. Obama and Clinton, and the other presidents former, were there too. Some others as well. Not many but some.

So what did the last Republican president think of the current Republican president's inauguration?

According to occasional Mother Jones contributor Yashar Ali's report in New York Mag, not much!

But, according to three people who were present, Bush gave a brief assessment of Trump’s inaugural after leaving the dais: “That was some weird shit.” All three heard him say it.

A spokesman for Bush declined to comment.

He's not wrong!

Have a super evening but don't forget to, before you go to sleep tonight, fold your hands and pray that in the morning we all wake up and it's 1999 and none of this ever happened.

I Am Still Not A Lawyer, and I don't want to go too far down this rabbit hole, but I've gotten a fair amount of pushback to my post last night suggesting that the folks who did the undercover Planned Parenthood videos shouldn't be prosecuted. The pushback takes two forms. First, they're horrible people who did horrible things. Second, California law requires consent from both parties for any kind of recording, and they broke that law. They should pay for this.

As to the first, I agree that they did horrible things and endangered people. But that's not what they're charged with. As to the second, California law (link here) is not as clear-cut as you might think:

If a real live California attorney with specific experience in this area wants to chime in, I'm all ears. For now, though, no matter how much I loathe what they did, I don't like the idea of prosecuting people for political activities unless their violation of the law is very serious and very clear. This is neither.

Criminal prosecution of secret recordings is rare in California, and I'd just as soon keep it that way. There's a huge amount of prosecutorial discretion involved in this case, and that's a recipe for political retaliation against ideas we don't like. That's where I get off the train.

UPDATE: Then again, we have this:

The penal code is stricter than the civil code, "but excludes a communication made in a public gathering." I don't know if this refers only to public meetings (town halls, protests, etc.) or to any public place, like a restaurant. Probably the former.

This is all kind of strange. Why would there be an "investigatory" exception for lawsuits but not for criminal prosecutions?