2009 - %3, January

Video: Explaining NY's "Obesity Tax" on Non-Diet Sodas

| Thu Jan. 8, 2009 12:54 PM EST

The New York State Commissioner of Health, Dr. Richard Daines, is going to break it down for you. Yes, that tax on non-diet soda that New York Governor David Paterson is proposing feels a bit heavy-handed in these difficult economic times. Yes, it seems silly (and statist!) to try and direct people's consumption habits. But listen up: Americans drink roughly six cans of soda more per week than they did in 1970. That translates to 13 pounds of straight sugar and 21,000 additional calories per year! I learned that and more from Dr. Daines and his awesome visual aides in the video below. (Courtesy of the U.S. Food Policy blog.) I encourage you to take a look.

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The Fairness Doctrine

| Thu Jan. 8, 2009 12:24 PM EST

THE FAIRNESS DOCTRINE....Steve Benen passes along the news that a small gaggle of Republican congressmen are continuing to obsess over the possibility that the Fairness Doctrine might make a comeback. I assume Rush Limbaugh is bloviating daily about this too. I'm torn on what to do.

Option A: Let 'em rant. These guys need something to harangue their base about, and this is fairly harmless. It keeps them off the street and away from the matches.

Option B: Let 'em have their way. Stick in a Fairness Doctrine ban as an amendment to some random bill and pass it. I'm opposed to the Fairness Doctrine, so I wouldn't mind, and nearly all Democrats are opposed to it too. It's a freebie that will make David Broder happy, soothe the bipartisan waters, and shut up the conspiracy theorists.

I guess I Iean toward Option B. It was entertaining for a while, but I'm bored hearing about this nonsense. Go ahead and throw the whack jobs a bone.

Updated Senate Phone List Erases Norm Coleman

| Thu Jan. 8, 2009 12:09 PM EST

The Democratic Senate leadership is doing everything it can to pretend that Norm Coleman doesn't exist. It shut down his Capitol Hill office earlier this week, and a Senate source provides Mother Jones with a copy of an updated phone list (pdf) sent out Thursday by the Sargeant-at-Arms that makes no mention of the mostly-defeated Coleman.

Coleman's term officially expired over the weekend, and Al Franken hasn't been sworn in, meaning that Minnesota has only one senator on the list.

senate_phone_list.gif

Corn on Bloggingheads.tv: Will Congress Treat Panetta Like a Pinata?

| Thu Jan. 8, 2009 11:44 AM EST

On this episode of Bloggingheads.tv, David Corn and James Pinkerton discuss why the Panetta pick could set up a nasty confirmation fight. Watch:

Why CIA chief is a lousy job:

Invade the Caymans!

| Thu Jan. 8, 2009 1:44 AM EST

INVADE THE CAYMANS!....In our current issue David Cay Johnston has a great piece about all the tax loopholes we ought to close as we tackle the long-term reengineering of our fiscal system. Here's my favorite:

The Obama administration could tell the Caymans — now fifth in the world in bank deposits — to repeal its bank secrecy laws or be invaded; since the island nation's total armed forces consists of about 300 police officers, it shouldn't be hard for technicians and auditors, accompanied by a few Marines, to fly in and seize all the records. Bermuda, which relies on the Royal Navy for its military, could be next, and so on. Long before we get to Switzerland and Luxembourg, their governments should have gotten the message.

Barring gunboat diplomacy (tempting as it is), there is no reason we cannot pass laws to block financial transactions with tax havens or even, Cuba-style, make it a crime for Americans to visit or do business with them without special permission. Congress could declare the hiding of funds a threat to national security and require that anyone with offshore assets disclose them to the IRS within 30 days and pay taxes, interest, and penalties within 180 days. For the holdouts, temporary special teams in the IRS and Justice Department could speedily pursue civil or criminal charges.

Boo yah! Other (slightly less bloodthirsty) suggestions include rules preventing companies from keeping two sets of books; increasing top marginal rates on the super-rich; reining in abuse of tax deferrals; ending utility scams (a new one to me); ditching the home mortgage deduction (good luck with that); bringing back usury laws; ending the burglar alarm subsidy (seriously); and a whole slew of others. A great read.

The Housing Market

| Thu Jan. 8, 2009 12:55 AM EST

THE HOUSING MARKET.....Barack Obama talks to the New York Times:

He said that he intended to propose a broad overhaul of financial regulation by April, and that he was working with Congressional leaders on his promised plan to limit foreclosures in the wake of the mortgage crisis.

"We've got to prevent the continuing deterioration of the housing market," he said.

But that's not true. Housing prices are still well above where they ought to be. Unfortunately, they need to deteriorate some more.

This is the big problem with efforts to rescue homeowners rather than banks. It makes sense that if banks have lots of assets that are toxic because they're based on uncertain house values, then rather than bailing out the banks directly we should just do something to make house prices more certain. Mortgage-backed assets would become easier to value, bank balance sheets would firm up, credit markets would start to ease, and distressed homeowners would get relief in the process. It's a win-win.

Except for one thing: we don't want to prop up housing prices at their current unsustainable levels, and we probably couldn't do it even if we wanted to. Rather, we need to find ways to help out homeowners even though prices are going to continue to deteriorate for a while. That's pretty tricky, though, since anything you do to rescue homeowners also has a tendency to keep house prices propped up.

Still, some things are better than others. Programs that motivate lenders to reach workout agreements with owners who are underwater probably have the biggest bang for the buck, and hopefully that's the kind of thing Obama has in mind. But whatever it is, it better not be something that tries to hold back the tide of falling house prices. It didn't work for King Canute and it won't work for President Obama either.

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Attention Spans

| Wed Jan. 7, 2009 6:50 PM EST

ATTENTION SPANS....Mike O'Hare is unhappy about decreasing attention spans and what that means for the news business. I couldn't quite make it through his entire post1, but here's his conclusion:

Maybe a workable business/technology model can be created for digital newspapers, but the newspaper itself cannot be the same as the once-a-day package of lots of long stories and a 'readership' of googlers and texters may just not support the journalism on which a democracy depends.

....I am quite down about all this. It drives me nuts that my students have almost never engaged with a work of art or explication for more than the length of a music video; I assign them one of Wagner's longer operas and their mental state becomes a little labile, understandably, but even a ninety-minute class discussion often pushes the new limits of attention. I don't know how to get our arms around the facts of declining-marginal-cost goods in three-minute blips.

My mother was a fourth-grade teacher, and she told me once that when she started teaching (circa 1970) she could schedule activities for a maximum of 30 minutes before the kids got too antsy to control. By the time she retired (circa 2000), that was down to 15 minutes. I've long been of the opinion that there's an upside to this (primarily a better ability to multitask), but I confess that I'm less and less sure of that these days.

1Just a wee joke.

Pipeline Politics

| Wed Jan. 7, 2009 5:27 PM EST

PIPELINE POLITICS....Russia wants to hike the price that Ukraine pays for its natural gas. Ukraine doesn't want to pay. Russia says Ukraine is siphoning off gas destined for Europe. Ukraine says that's a lie. So Russia has closed the taps on its pipeline and no gas is flowing to anyone. Robert Farley takes a stab a figuring out who's really at fault in this spat:

On balance (and at risk of being once again denounced as a Kremlin stooge) I'm rather less sympathetic to the Ukrainian case; of course accepting a discount from a Russian national gas concern was going to give Russia influence over Ukraine. That's the price of doing business. I'm singularly uncompelled by the notion that Russia supplying energy to Europe gives the Russians some kind of undue, ominous influence over European affairs, any more than the folks down at Chipotle have ominous influence over me through their control of burrito supplies. Market transactions inevitably create short term dependence, but of course that goes both ways; Russia can interfere with supply only at significant cost to Russia.

Even at the higher prices Russia wants to charge Ukraine, the Ukranians would still be getting gas at a discount. And Ukraine's previous contract only ran through the end of the year. So I think I agree with Farley: although regional power politics are obviously behind Russia's actions, this is still primarily a commercial issue. Both Gazprom and Ukraine are in pretty serious economic straits right now, and neither one wants to back down. It's more a routine dispute over money than anything else.

UPDATE: In the Financial Times, Jérôme Guillet and John Evans provide more background. Nickel version: Russia and Ukraine have been fighting this exact same fight for a long time and they both know that neither side can do without the other. So a few years ago Gazprom "solved" its Ukraine problem by privatizing much of its gas trade: customers would pay less for their gas, but they'd pay a third-party supplier who was supposedly unrelated to either Ukrainian gas authorities or Gazprom:

Political infighting in Ukraine can largely be understood by the struggle to be the Ukrainian counterparty to the trade. (It is no coincidence that Yulia Tymoshenko, the prime minister, made her fortune in gas trading in the 1990s and that Viktor Yanukovich, the pro-Russia opposition leader, represents some of the largest heavy industrial gas buyers in eastern Ukraine.) In Russia, similarly, both the Kremlin and Gazprom are rife with infighting between shifting coalitions.

So while the world focuses on the predictable brinkmanship between Ukraine and Russia, the real fight over the share-out is taking place more discreetly between a few oligarchs in Moscow and Kiev. This is perhaps the whole purpose of the noisy puppet show. Worries about Russia or Gaz­prom using the "gas weapon" against Europe are misplaced. In their official capacity, both are keenly aware of their absolute dependency on exports to Europe for a huge share of the country's income, and on the need for stable, reliable, long-term relationships to finance the in­vestments needed in gas infrastructure.

So it really is a routine dispute over money, it's just that the dispute isn't really between Russia and Ukraine. It's between a small group of rich Russians and a small group of rich Ukrainians. You can read about this in even more gruesome detail here.

Via WhirledView.

A Question on Burris

| Wed Jan. 7, 2009 4:21 PM EST

Does anyone know his positions on anything? Just asking.

Entitlements

| Wed Jan. 7, 2009 4:08 PM EST

ENTITLEMENTS....From the New York Times account of Barack Obama's press conference this morning:

Changes in Social Security and Medicare will be central to efforts to bring federal spending in line, President-elect Barack Obama said on Wednesday, as the Congressional Budget Office projected a $1.2 trillion budget deficit for the fiscal year.

"We expect that discussion around entitlements will be a part, a central part" of efforts to curb federal spending, Mr. Obama said at a news conference. By February, he said, "we will have more to say about how we're going to approach entitlement spending."

This comes at about the 6:20 mark of the linked video. "We will have some very specific outlines in terms of how it's going to be done," he said. Now, maybe this is just me zoning out, but I don't recall Obama saying anything quite this unambiguous about Medicare and Social Security reform before. And I haven't read any leaks along these lines either.

On the Medicare front he may just be talking about the impact of his overall healthcare plan, but I don't have a clue what he might have in mind for Social Security. At a guess, though, he's got something typically Obamian in mind, a mixed bag of moderate tax hikes (maybe increasing the payroll tax cap, which I think he's talked about before) and moderate benefit cuts (maybe increasing retirement age a year or two) that will get bipartisan support. Wait and see.