2011 - %3, October

Chart of the Day: The Cost of the Perry Tax Plan

| Mon Oct. 31, 2011 5:27 PM PDT

The Tax Policy Center has now done a more detailed analysis of Rick Perry's flat-tax proposal, and guess what? It's really great for rich people! Since Perry's gimmick is that everyone can choose to stick with the current tax system if they want, nobody would end up paying higher federal tax rates under his proposal. So the only question is how much everyone's rates go down, and the chart below tells the tale. If you're smack in the middle of the middle class, your rate goes down about 2 percentage points. If you're a millionaire, your tax rate goes down 20 percentage points.1 Ka-ching!

On a side note, this is how you one-up Herman Cain. Perry's plan offers lower rates than Cain's 9-9-9 plan to every single income class. The poor pay less, the middle class pays less, and the rich pay less. Of course, this also means that Perry's plan produces way less revenue than Cain's plan: TPC estimates that it would produce $1 trillion less than current law in 2015. But TPC is using fusty, old-fashioned static analysis, while all the cool wingers use dynamic scoring, which assumes that Perry's tax plan supercharges the economy and therefore pays for itself. Just like Reagan's tax cuts and Bush's tax cuts. Caveat emptor.

1All of this is based on the assumption that the Bush tax cuts expire as scheduled. The "current rate" numbers are a little different if you assume that the Bush cuts are extended. But why would anyone bother to extend them if they're going to pass Perry's shiny new plan that just replaces the current code anyway?

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NRO Fumbles Its Defense Of Walid Phares

| Mon Oct. 31, 2011 2:53 PM PDT
Walid Phares.

Mario Loyola's National Review op-ed attacking my piece on Mitt Romney's Middle East adviser Walid Phares takes several hundred words to contest exactly one fact in the entire story. He spends the rest of the time griping that Phares' involvement with the Lebanese Forces militia wasn't portrayed more favorably.

Loyola does not dispute that Phares worked with the LF training militia-men in the ideology of the organization in the early 1980s. He doesn't contest that this ideology involved a narrative of civilizational conflict between Islam and the West. He does not deny that Phares was a top adviser to former Lebanese warlord turned anti-Syrian politician Samir Geagea, or that Phares became a member of the LF executive committee days after Geagea ousted rival warlord Elie Hobeika in a battle that, according to a 1989 Los Angeles Times article, killed more than 200 people in mostly Christian East Beirut. Loyola does not contradict the recollections of Phares' colleague Toni Nissi that Geagea subsequently made Phares "responsible for training the lead officers in the ideology of the Lebanese Forces." He merely argues that Phares had "no official position with the Lebanese Forces until 1986," disproving a claim the article did not make. He then spends a couple of paragraphs absolving Phares of any personal involvement in the Sabra and Shatila massacre (again disproving an allegation Mother Jones not only didn't make, but literally stated wasn't the case) as though killing civilians wasn't a constant aspect of the war from beginning to end. 

Loyola insists that Phares' long history with the LF is of no concern because he was part of an organization "committed to resisting Syria's and Hezbollah’s domination of Lebanon (fully in line with longstanding U.S. policy)." Shorter Loyola: It doesn't matter if an organization committed atrocities, as long as it was on the right side. I'm sure the Arab and Muslim countries the US has to deal with will completely understand the distinction should Phares be placed in a high-level position in a future Republican administration.

(Michelle) Obama Derangement Syndrome

| Mon Oct. 31, 2011 2:47 PM PDT

One of the key things that's long convinced me that Obama Derangement Syndrome is way stronger than Bush Derangement Syndrome ever was is the disparate treatment of their wives. I occasionally saw some snotty comments about Laura Bush in various precincts of the blogosphere and the partisan media, but nothing either serious or sustained. But Michelle Obama? Holy cow. There are times when you'd think she was the antichrist. The poor woman decides to make childhood obesity one of her focuses — about as First-Ladyish a subject as you can possibly imagine — and gets hammered by the wingnut brigade for supposedly being the vanguard of Stalinesque Big Government rules decreeing exactly what all of us will and won't be allowed to eat in the future. And that's just for promoting the idea of better nutrition and more exercise for kids!

Simon Maloy has more, treating us today to a dissection of a new column from Joe Curl that's headlined — in unwitting Dr. Seuss style — "The very angry first lady Michelle Obama." The First Lady, says Curl, is back, "and she's madder than ever," "ready to spew her bilious disgust with America on the campaign trail," blah blah blah.

I mean, it's comical in a way, but weirdly revealing in another. The level of blind, lick-spittled rage it takes to produce this stuff is pretty remarkable. And presumably there's a ready audience for it. You could almost understand where this came from in the case of Hillary Clinton: a feminist child of the counterculture who was deeply involved in policy creation was always bound to get under the skin of a certain type of social conservative. But Michelle Obama? Sure, she's a liberal and she supports her husband's initiatives, but her own work has centered on military families, childhood obesity, national service, arts education, and cultivating her organic garden. How traditional do you have to be to get the right-wing crazies to calm down?

NATO's Libya Mission Officially Ended Monday

| Mon Oct. 31, 2011 1:45 PM PDT
A Libyan rebel fighter celebrates on the day of Qaddafi's death.

Monday marked the official end of NATO's air war in Libya. NATO Secretary-General Anders Fogh Rasmussen was in Tripoli to formally announce the conclusion of the aerial bombing campaign that proved vital in aiding the Libyan rebel fighters. "Our operation for Libya will end on October 31," Rasmussen said during Monday's press conference. "Until then, together with our partners, we will continue to monitor the situation. And if needed, we will continue to respond to threats to civilians."

Mustafa Abdul Jalil, the chairman of Libya's National Transitional Council, thanked Rasmussen and declared that "Today, we have achieved victory by the grace of God and a resolution has been handed to put an end to NATO operation by midnight."

The announcements come four days after the UN Security Council unanimously passed a resolution ending the March 17 mandate that had authorized member states to take "all necessary measures," including a no-fly zone and direct military action, to protect civilians in Libya.

With the seven-month effort coming to a swift close, two things are becoming especially pronounced: the hypocrisy and hollowness of the right's freak-out over President Obama's approach, and the sobering difficulties for Libya that lie ahead.

Yes Indeed, Income Inequality Really is Growing

| Mon Oct. 31, 2011 1:38 PM PDT

James Pethokoukis is on a mission to show that rising income inequality isn't really a big deal. The big gun in his arsenal is a 2009 paper by Robert Gordon, which says:

This paper shows that the rise in American inequality has been exaggerated in at least three senses. First, the conventional measure showing a large gap between growth of median real household income and of productivity greatly overstates the increase compared to a conceptually consistent alternative gap concept, which increases at only one-tenth the rate of the conventional gap between 1979 and 2007....Second, the increase of inequality is not a steady ongoing process; after widening most rapidly between 1981 and 1993, the growth of inequality reversed itself and became negative during 2000-2007.

Pethokoukis, responding to a CJR piece by Ryan Chittum, says: "Chittum, nor other liberal economic pundits such as Ezra Klein, Jonathan Chait, Kevin Drum, Ryan Avent, have made an effort to dispute Gordon, hardly a conservative economist. Liberals don’t even like quoting that above bit."

Gordon is a good economist, and I haven't made an effort to dispute him because I don't really dispute most of what he says. I just think it's largely irrelevant. Let's take the various claims in his paper one at a time:

  • Comparing income growth to productivity growth is a bad way of demonstrating the sluggishness of middle-class wages. Fine. I rarely do this, because I happen to agree that it's problematic. But this has nothing to do with the existence of income inequality itself. For that, all you need to do is compare the incomes of the poor and the rich over time.
  • Income inequality didn't grow between 2000-2007. Yes, but those dates are egregiously cherry-picked. The dotcom bubble reached its height in 2000 (see chart at right), which meant that the income of the very rich also peaked that year. It fell during the dotcom bust and then started increasing again around 2003. It fell again during the financial crisis of 2008, and then started rising again within a year. If you look at a graph of the top 1%, you see peaks and valleys because their income is fairly volatile. But you also see a secular rise over the past three decades that shows no real signs of stopping.
  • Income inequality is mostly a phenomenon of the top 1%. This is absolutely true. The top 10% have done well over the past 30 years and the top 20% have done OK. Nothing spectacular though. The real action has been elsewhere: an enormous movement of income from the bottom 80% to the top 1% (see table at right). I'm not sure why Pethokoukis thinks this is evidence against the growth of income inequality, though. In fact, it's evidence that it's even worse than you think.
  • Inflation has been lower for the poor than the rich. I'm not qualified to judge this, but who cares anyway? If it's true, it might be good news for the poor, though it depends a lot on just why inflation rates for the poor are lower. If it's because cheap goods have gotten better and cheaper, that's great. But if it's because the poor have been forced to switch to ever crappier goods over time, that's not so great. In any case, this is mostly useful if you're interested in evaluating the lived experience of the poor. That's a fine topic, and one that deserves study. But if you're interested in income inequality, it's irrelevant. In that case, you just want to know how the private economy is allocating income to various classes of people, and the answer is pretty simple: over the past 30 years, less and less is going to the poor and middle class and more and more is going to the well-off and the rich.

Jon Chait has a somewhat more epic response here. The nickel version, though, is that Gordon's paper does say that income inequality has increased dramatically over the past three decades.1 He just has some caveats to the data. But while those caveats are interesting, none of them change the fact that the rich have hoovered up a vastly disproportionate and increasing amount of America's income growth since the mid-70s. There's just no getting away from that simple raw reality.

UPDATE: Matt O'Brien tweets: "I talked to Robert Gordon here. He was flabbergasted his work was being used to argue inequality is a myth." Here's more:

Consider the research and writing of Robert Gordon, a professor of social sciences at Northwestern University. He has done pioneering work questioning the extent of the aforementioned gap between productivity and median wages—work that Pethokoukis misappropriates to claim that income gains have been shared “fairly equally.” Gordon found that the productivity gap may be about a tenth the size as what is commonly thought, but, as he told me, that doesn’t negate the story about runaway wealth at the top of the income distribution. “The evidence on the long-term increase of inequality within the bottom 99 percent is ambiguous and complex, but what stands out like a searchlight is the unprecedented and increasing inequality between the bottom 99 percent and the top 1 percent,” Gordon told me.

There's more at the link on Pethokoukis's other claims.

1Here's the direct quote: "The evidence is incontrovertible that American income inequality has increased in the United States since the 1970s."

Cain on Student Loans: "I Don't Have a Position"

| Mon Oct. 31, 2011 1:14 PM PDT
GOP presidential candidate Herman Cain discussed student loan reform at the National Press Club on Monday. Well, not really.

GOP presidential candidate Herman Cain just finished up a 30-minute press conference at the National Press Club in DC by singing, at the request of the moderator, "Amazing Grace." That came just a few hours after Cain was aked at the American Enterprise Institute what fellow presidential candidate he'd dress up as for Halloween (answer: Ron Paul). But, on a day he's been accused of possibly breaking federal campaign finance laws, and forced to respond to reports of sexual harassment, Cain was asked some nuts-and-bolts policy questions, too.

Specifically, the former talk radio host and Godfather's pizza CEO was asked what he would do to control the rising cost of attending college—and what actions he might take to make student loans more manageable. Cain's answers were revealing:

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Wisconsin Republicans' Last-Ditch Schemes to Prevent Recalls

| Mon Oct. 31, 2011 12:17 PM PDT
A Wisconsin man protests Republican Jeff Fitzgerald, the speaker of the state Assembly.

When you think of gerrymandering, shady back-door dealings, and brazen acts of dirty politics, state capitals like Albany, Austin, and Sacramento come to mind. But the Republican-controlled legislature in Madison, Wisc., is giving the most brazen of them a run for their money with a pair of rushed bills aimed at blunting recall efforts targeting GOP Gov. Scott Walker and Republican state senators.

The first bill Wisconsin Republicans are trying to ram through would force (PDF) individuals collecting signatures for a recall petition to have their own signatures notarized. Currently in Wisconsin, people who circulate petitions are required, on each petition, to sign, date, list their residence, and attest that all the signatures they gathered are real, accurate, and belong to people in the correct jurisdiction or district. Fudging signatures is no laughing matter: Filing a phony petition is a felony offense.

Can You Mail a Brick to a Bank?

| Mon Oct. 31, 2011 11:54 AM PDT

The San Francisco "poet, editor, and marketer" in the video below has a sneaky, Occupy Wall Street-inspired idea: When banks send you unsolictited credit card applications, use the postage-paid envelope to send them a bunch of junk, making them pick up the extra postage costs. It's not just about nickel and diming Wall Street into submission, he says, "The real effect of this is to force banks to react to us."  

If you can send an envelope filled with paper, wood shims, and roofing shingles, could you affix the postage-paid envelope to, say, a brick? A site called Office of Strategic Influence has a guide for sending heavy objects back to junk mailers:

You know those obnoxious "refinance your home" or credit card scams offers that you get in the mail? This is called direct marketing, where marketers use a reduced bulk postal rate to send entire forests of paper mail to you.

So this is something you can do in response.

Find a shoebox, or a storage bin, or any cardboard box you have laying around. Fill it up with bricks, big blocks of iron, or maybe cement. Tape the box up with everyday packaging tape. Use a junkmail's postage-paid envelope and tape it neatly to the top cover of the box. NEATLY. And mail it off. Envelope revenge!

The site claims that a sending an eight-pound package with prepaid postage will cost the receiver $25. (It also maintains that "[i]f we do this enough, the USPS will make so much money, that they will lower postage costs.")

But can you really get away with this? Believe it or not, Americans have been pissed off about junk mail since at least 1984, which is when this very question was posed to Straight Dope columnist Cecil Adams. His conclusion:

Unfortunately, your bricks-for-business scheme, admirable though it is in theory, won't work in practice. According to rule 917.243(b) in the Domestic Mail Manual, when a business reply card is "improperly used as a label"—e.g., when it's affixed to a brick—the item so labeled may be treated as "waste." That means the post office can toss it in the trash without further ado. 

Sure enough, current postal regulations state that business-reply mail "may not be used for any purpose other than that intended by the permit holder, even when postage is affixed." In other words, if you mail a boxload of bricks to Citibank, it may not reach its intended destination. But would a postal employee notice a really fat business-reply envelope? Probably not, right? So then the question is, how many overstuffed envelopes will it take for a bank to take notice that someone is trying to send a message?

Update: An astute reader notes below that the mail-a-brick trick can be traced back to Abbie Hoffman, who advocated it in Steal This Book:

Those ridiculous free introductory or subscription type letters that you get in the mail often have a postage-guaranteed return postcard for your convenience. The next one you get, paste it on a brick and drop it in the mailbox. The company is required by law to pay the postage. You can also get rid of all your garbage this way.

Also, a relation who's worked in the mail-processing business informs me that banks would be unlikely to notice any junk being sent to them, since their incoming credit-card applications are likely handled by contractors. Likewise, mass mailers may pay flat fees for their return postage, which means that a brick is unlikely to weigh on the conscience of a banking executive.

And Artie Moffa, the maker of the video above, has officially come out against mailing bricks, bowling balls, and rabid alligators. His advice: Stick to stuffing envelopes.

 

 

Chart of the Day: Our Weak, Uncertain, Fragile Economy

| Mon Oct. 31, 2011 11:50 AM PDT

Felix Salmon directs us today to the Kauffman Foundation's fourth-quarter survey of prominent economics bloggers. Asked to assess the U.S. economy in one word, here's how they responded:

Take it for what it's worth, but econbloggers seem to be a pretty gloomy lot. The Kauffman group also leans right a bit, which makes this chart interesting too:

They're very bullish on the world economy, but they also think inflation will be higher, poverty will be higher, interest rates will be higher, and the budget deficit will be higher. Even more interestingly, they unanimously think that tax rates on the rich will go up. That can't be due to economic fundamentals, so presumably it means they have (a) a very high regard for the Democratic Party's ability to hold firm on allowing the Bush tax cuts on the rich to expire next year, and (b) a very low regard for the likelihood that a Republican will become president in 2012 and put them right back in place. I wonder why?

Is Herman Cain Hiding Behind a Settlement Agreement?

| Mon Oct. 31, 2011 11:24 AM PDT
2012 GOP presidential candidate Herman Cain.

GOP presidential candidate Herman Cain has emphatically denied that he ever sexually harassed anyone. He says that he was falsely accused by the women referred to in the blockbuster Politico story Sunday alleging that he had made inappropriate sexual advances and engaged in other unseemly behavior towards women while serving as head of the National Restaurant Association (NRA).

Cain may think this line of attack is a sensible media defense strategy, given that the settlement agreements between the women who said he harassed them and the NRA are confidential. But according to at least one prominent employment lawyer, calling his accusers fabricators could open Cain up to a defamation lawsuit, especially if it turns out their allegations have substance. Debra Katz, a DC employment lawyer who frequently represents plaintiffs in sexual harassment cases, says that if she were advising those women, she might suggest a counter-offensive. "These women have potentially got a claim against him. That's potentially defamatory," she says of Cain's comments.

Katz notes that no one knows what the actual allegations are against Cain, so it's hard for the public to really know what happened. But Katz says Cain's media strategy has the potential to backfire on him. "Herman can continue talking," she says, but "he’s going to get himself in trouble in this."

If Cain was really falsely accused, Katz notes, there is one way that he could clear the air about the allegations: make the settlement agreements public. The NRA reportedly paid off at least two women who complained about Cain's behavior, and in exchange, the women signed confidentiality agreements promising not to talk about their allegations publicly and left the organization. The details of many of their charges, as well as the amounts they were paid, have not been made public. At the National Press Club Monday, Cain reiterated that his former employer has a policy against releasing personnel information, so it can't produce the documents that might back him up.

The settlement agreement makes it difficult for the women themselves to speak publicly or to instigate a change to the terms of the settlement agreement, which may carry serious financial penalties for breaching it. But Katz says that there's not much stopping the NRA from doing so, despite what Cain says. In fact, she says, NRA could also disclose many details about the allegations the women made, without revealing their names, without even violating the agreement. Cain probably just needs to ask them to do it.

"There are many way they can legally find ways to disclose the information without violating the agreement," she notes. Not releasing the details, she says, is simply "a convenient way to duck the allegations."