2010 - %3, June

Fixing Social Security

| Wed Jun. 30, 2010 9:38 AM PDT

Megan McArdle responds today to the idea of balancing Social Security's books in one fell swoop by removing the cap on earnings that are hit by the payroll tax. This cap changes with inflation each year and it's currently set at a little over $100,000. If we removed the cap and taxed all income, Social Security's financing would be in great shape:

This is not actually surprising, since what this amounts to is hiking the marginal tax rates on high incomes by 15 percentage points--making the Federal Tax take on the highest incomes 55% in 2012, assuming that Obama/Congress follows through and allows the Bush tax cuts to expire in 2011.

This is obviously a gigantic hike, and moreover, when Medicare and state/local taxes are added in, would push the tax burden on the highest incomes to over 2/3 in the hightest tax jurisdictions.

Whatever you think of this plan, this is not an easy solution. It would be fought bitterly in Congress; it would cause high earners to put enormous effort into generating income in forms (capital gains) that are not subject to payroll tax; and at that level, you would start seeing serious avoidance activity, as well as possibly simply diminished effort.

This is basically right — though I think the marginal increase would be 12.4%, not 15%. But that's still a helluva lot. If we're ever going to raise marginal rates on the rich by that amount, I'd want to use it for more than just balancing Social Security's books.

Really, though, you don't need to go down this road. Contra Megan's headline ("No Easy Way To Fix Social Security"), Social Security is a pretty easy problem to address, and the reason it's easy is that you don't have to limit yourself to a single big solution. In fact, Social Security reform practically cries out for a basket of small, almost imperceptible changes. You could, for example, partially uncap the payroll tax or change the tax rate slightly (or a combination of the two); gradually increase the retirement age to 68; and adjust the inflation calculation for annual benefits slightly. This would fix Social Security's problems entirely and would be barely noticeable for most people. There are lots of other possibilities, and the more of them you put together the less painful they are. Chapter 4 of this report can help you put together your own plan.

There are several nice things about Social Security. First, it's a long-term problem. The trust fund doesn't go out of balance for several decades, so we have plenty of time to phase in changes slowly. Second, its demographics are well known and flatten out after about 2035. Unlike Medicare, which will need constant vigilance over the next few decades, a proper Social Security fix probably only has to be done once. And third, Social Security's funding problem is modest (less than 2% of GDP) and can be solved without very much pain.

Of course, even given all that, we still haven't solved it. Needless to say, this doesn't bode well for our ability to fix genuinely hard problems like climate change and healthcare costs.

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Elena Kagan Talks Environment

| Wed Jun. 30, 2010 9:15 AM PDT

At yesterday's confirmation hearings for Supreme Court nominee Elena Kagan, Sen. Dianne Feinstein (D-Calif.) brought up the question of whether citizens should have the right to sue for damage to the environment.

This has been the subject of some debate. There are those who argue that citizens don't have the constitutional standing to bring such cases because they can't prove they've been directly harmed by problems like global warming, the elimination of a species, or air or water pollution. Kagan affirmed that she believes citizens do have this right. Here's the video of the exchange:

Do We Have Quotas of Dogmatism?

| Wed Jun. 30, 2010 8:55 AM PDT

Tyler Cowen, responding to a question about whether deeply religious people tend to be generally dogmatic, says this:

I don't know of any systematic evidence, but often I favor portfolio models of dogmatism....That is, most people have an internal psychological need to fulfill a "quota of dogmatism." If you're very dogmatic in one area, you may be less dogmatic in others. I've also met people — I won't name names — who are extremely dogmatic on ethical issues but quite open-minded on empirics. The ethical dogmatism frees them up to follow the evidence on the empirics, as they don't feel their overall beliefs are threatened by the empirical results.

I am, of course, just guessing here, but this doesn't feel right to me. If I had to extrapolate from my experience, I'd say that rigidity of thought is a general personality characteristic, and that people tend to be either rigid or open across the board. Religious fundamentalists, for example, often seem to be political fundamentalists, moral fundamentalists, and lifestyle fundamentalists as well. Curious people tend to be curious about lots of different things.

But there's one aspect of this where Tyler seems right: I often run into people who are generally rigid but have one particular area, usually a specialty, where they understand the level of complexity involved and therefore tend to be more open to alternatives. Likewise, I've run into people who are generally open but have one particular obsession where they're absolutely unmovable.  Unfortunately, although Tyler agrees about this, I suspect his advice — "If you wish to be a more open-minded thinker, adhere to some extreme and perhaps unreasonable fandoms, the more firmly believed the better and the more obscure the area the better" — gets the causality backwards. Open-minded people may sometimes develop obsessions, but I doubt that obsessions help you stay open minded about the rest of your life. (Though if the obsession is strong enough, it might make you apathetic about the rest of your life. This is not quite the same thing, though.)

Thoughts?

BP Spill Plan Prepared for Hurricane? Nope

| Wed Jun. 30, 2010 8:47 AM PDT

How stupid could BP have been? It drilled a mile beneath the ocean's surface—and punched a hole in the ocean's floor—but had no effective plan in place for dealing with a problem. But it gets worse. It turns out, according to Rep. Ed Markey (D-Mass.), the chair of the House energy and environment subcommittee, that BP's shoddy (and silly) response plan for a Gulf oil spill does not once mention "hurricane" or "tropical storm." That is, it contains no provisions for handling a spill before, during, or after a major storm.

As Hurricane Alex moved through the Gulf on Wednesday, Markey issued a sharply-worded press release and fired off a letter to BP asking why it had overlooked the possibility of contending with a spill in the middle of a hurricane or storm.

From the release:

"The BP plan had walruses in the Gulf, but no hurricanes," said Rep. Markey...."Walruses haven't been in the Gulf in a few million years, while a hurricane is just a few hundred miles from the spill site right now. This is yet another example of BP serial complacency."

At an Energy and Environment Subcommittee hearing on June 15th, Chairman Markey and others revealed that the major oil companies had response plans that were 90 percent identical, and included references to walruses in the Gulf of Mexico, and emergency contact information for long-deceased experts. The CEOs of the major oil companies testifying admitted that their response plans contained significant flaws, calling them an "embarrassment."

The BP response plan uses the word "weather" in several instances, but never does so in an analysis of extreme weather that could markedly affect response capabilities.

Here are six questions that Markey has put to BP America CEO Lamar McKay:

1) What is BP’s plan for spill response in the event that a tropical storm or hurricane passes over the overall spill area? Does BP have any such a plan or plans for increasing severity of hurricanes? Or does BP plan on simply "playing it by ear"  up to the point at which a full evacuation is required and all spill response operations cease?

2) What does BP expect will be the effects of a tropical storm or hurricane on the damage the oil spill will cause to the environment? How could a storm change the impact of oil in the open ocean and the coast?

3) What is BP doing to prepare for disruption of oil clean up activities due to the impacts of a storm in the Gulf of Mexico? How could a storm impact the clean up of the oil?

4) Does BP have a plan for returning to spill response activities after a tropical storm or hurricane has passed over the spill area? If a hurricane passes over the spill area and spreads oil over large areas of the gulf coast, does BP have a plan for dealing with the combination of oil and general hurricane damage?

5) Last week I asked for information regarding the factors that could lead to delay or disruption of the installation of a better fitting cap. Given reports that Hurricane Alex could delay installation of the cap by one week, please indicate the amount of time delay that you would expect to result from a hurricane or tropical storm passing over the accident site. 

6) Similarly, how would a tropical storm or hurricane affect the drilling of the relief wells? As I understand it, each time a full evacuation of the drilling rigs occurs, 14 days of delay will result. Is this accurate and was this possibility factored into the projected mid-August completion date for the relief wells?

Prepared for walruses, not prepared for hurricanes. This is yet another stark BP failure. But it is also a failure of government regulation. You don't have to be a weatherman to know that storms hit the Gulf of Mexico quite regularly—and that any spill response plan ought to take this into account. Yet no regulator forced BP to do the obvious. And BP, no surprise now, didn't do so on its own.

GOP, Corporate Spenders Lose With Supreme Court Dismissal

| Wed Jun. 30, 2010 8:22 AM PDT

Amid the flurry of activity at the Supreme Court this week as it prepared to recess for the summer came a decision that dealt a blow to the GOP—as well as to the corporate interests and advocacy groups likely to funnel money into the party. The Court declined on Tuesday to hear a challenge to Republican National Committee vs. Federal Election Commission, which upheld a ban on unlimited "soft money" contributions to political parties for purposes other than backing federal elections.

The RNC, along with other affiliated Republican groups, wanted to be able to use such funds to back redistricting—the redrawing of congressional districts that happens every decade—as well as state elections and grassroots advocacy. The decision to dismiss the case marked a victory for campaign finance reform advocates, who feared that RNC vs. FEC could create yet another opportunity for unfettered corporate and interest group spending in the wake of Citizens United—one that would allow groups to funnel money into the national parties directly, rather than having to attach their names to independent efforts or go through third-party organizations. (And if the DISCLOSE Act, which passed the House last week, fails to pass the Senate, no third-party group would have to reveal its donor list for federal campaign expenditures either.)

Kagan Confirmation Hearings: Day Three

| Wed Jun. 30, 2010 7:06 AM PDT

Elena Kagan is facing a third day of hearings assessing her suitability for the Supreme Court. For a primer on what to expect from Kagan's GOP inquisitors, see my preview here. And for a compilation of Kagan's best one-liners from yesterday's session, go here. I'm covering the action on Twitter:

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Enviro Links: Climate Flop at White House, Cities Getting Hotter, and More

| Wed Jun. 30, 2010 5:00 AM PDT

Today in climate news:

In yesterday's White House energy and climate summit, President Obama apparently called for a carbon cap in comprehensive legislation. Democrats offered to scale back plans, with John Kerry remarking, "We believe we have compromised significantly, and we’re prepared to compromise further."

But Republicans rejected the entreaty, bashing it as an "energy tax." Sen. George Voinovich (R-Ohio) says that the climate bill looks even less likely to pass now. So, yesterday was basically just another day in Washington.

Meanwhile, the planet is still getting warmer, and those cities that are already hot cities are just going to get hotter. That includes Washington, D.C. in fact, in case you're paying attention, senators.

In oil disaster news:

Turns out, Louisiana Gov. Bobby Jindal's ranting about the government response to the Gulf disaster is mostly off base.

Red tape and a slow approval process are preventing foreign skimmers from joining the clean-up effort in the Gulf, reports the Times-Picayune.

BP agreed to put up $500 million for academic research over the next 10 years, but since the White House directed BP to consult with Gulf Coast governors on allotting the funds, the money is all going to state universities.

The Project on Government Oversight wants to know why the entity formerly known as the Minerals Management Service (now the Bureau of Ocean Energy Management, Regulation and Enforcement) has not yet consulted with the Occupational Safety and Health Administration on new oil rig safety guidelines.

Sen. Dianne Feinstein (D-Calif.) wants to end the royalty relief program for deepwater drilling.

Nevada Republican Senate candidate Sharon Angle argues that the real problem in the US is that we're "over regulating" the oil and coal industries.

The Atlantic looks at five lessons we should take away from the oil disaster.

ProPublica finds a BP presentation form March on the company's "key sources of growth" beyond 2015. Number one was to expand deepwater drilling, which has worked out so well for them now.

In other environmental news:

Let us not forget that the late Sen. Robert Byrd was also a leading advocate for the humane treatment of animals.

The Natural Resources Defense Council has filed suit to force the Food and Drug Administration to ban bisphenol A in food packaging.

Meet Kagan's Astroturf Military Attackers

| Wed Jun. 30, 2010 3:22 AM PDT

When witnesses are called before the Senate Judiciary Committee to discuss Supreme Court nominee Elena Kagan this week, the minority party will deploy a heavy military offensive against her: Republican senators plan to call three former officers who will likely testify that Kagan is a pro-gay, anti-troops, anti-American extremist who barred military recruiters from campus when she was the dean of Harvard Law School.

All lean, clean-cut, and articulate, the three men look to be part of America's best and brightest. But these witnesses aren't typical rank-and-file soldiers: They're paid professional conservative activists.

Angle Admits That Her Suggestion to Shoot Harry Reid Was "A Little Strong."

| Wed Jun. 30, 2010 3:03 AM PDT

It was bound to happen eventually: Nevada senate candidate Sharron Angle sat down for a half-hour televised interview last night in Reno in which she tried to come off as someone other than the woman who clobbered the primary's GOP front runners by cornering the wing nut vote. But the Reno NBC station's political reporter, Jon Ralson, wasn't buying it. Ralston pressed her hard about exactly what she meant by people having "Second Amendment remedies" against her opponent, Senate Majority Leader Harry Reid.

Ralston played the tape of an interview Angle gave with a conservative talk show host back in January in which she sounded a lot like a member of the Oathkeepers (which she wants to be):

You know, our Founding Fathers, they put that Second Amendment in there for a good reason and that was for the people to protect themselves against a tyrannical government. And in fact Thomas Jefferson said, it's good for a country to have a revolution every 20 years. I hope that's not where we're going, but, you know, if this Congress keeps going the way it is, people are really looking toward those Second Amendment remedies and saying, my goodness, what can we do to turn this country around? I'll tell you, the first thing we need to do is take Harry Reid out.

"A lot of people think that's pretty outrageous rhetoric," said Ralston. He wondered if it meant that President Obama was a tyrant comparable to King George III.

Photos From the Gulf

| Wed Jun. 30, 2010 3:00 AM PDT

At a TED conference in Washington, DC yesterday, a small band of photographers presented images they'd acquired during a week-long trip to the Gulf. Along with a journalist who blogged about the trip, the photographers found ways around BP's control of oiled beaches and the airspace over the Gulf. They captured aerial views of frothy crude and controlled burns, panoramic scenes of pelicans rising above oiled wetlands, and moving portraits of Gulf residents.

Click here for a slide show of some of their photos. You can find their full archive on flickr.

This post was produced by the Atlantic as part of the Climate Desk collaboration.