2011 - %3, October

Rick Perry's Miraculous Tax Plan

| Mon Oct. 24, 2011 8:14 PM PDT

Huzzah! Rick Perry's new tax plan is out:

The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents....My plan also abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses....To help older Americans, we will eliminate the tax on Social Security benefits....We will eliminate the tax on qualified dividends and long-term capital gains to free up the billions of dollars Americans are sitting on to avoid taxes on the gain.

In addition, Perry is going to lower the corporate tax rate, move to a territorial tax system, pass a Balanced Budget Amendment, ban earmarks, freeze federal hiring and salaries through 2020, halt all pending federal regulations, repeal Obamacare and Dodd-Frank, repeal section 404 of Sarbanes-Oxley, and add private accounts to Social Security (presumably without paying for them, per normal Republican doctrine)

I'm disappointed. Perry only wants to repeal section 404 of Sarbanes-Oxley? Why not the whole enchilada? What a sellout.

What can you even say about this? It sounds less like a tax plan than a big ol' stew pot of right-wing applause lines, all the way up to the inane insistence that eliminating the estate tax has nothing to do with rich people and is only designed to provide "needed certainty to American family farms and small businesses." Should we laugh or cry? Perry has actually managed to combine two separate conservative memes (the estate tax is all about family farms, uncertainty is hobbling the economy) into one single sentence that makes even less sense than either of them separately. It's hard not to be impressed.

But can we please spare a moment for the people who are really going to suffer because of this? Yes, I'm talking about whichever poor schlubs at the Tax Policy Center draw the short straw and have to go through the dreary motions of scoring this. We all know the basic answer, of course: Perry's plan represents a massive tax cut for the rich and a huge loss of revenue for the federal government. But we want numbers, dammit! Not that they really matter, since once they're produced we'll merely be told that they represent old-fashioned static thinking. What we need is a shiny new dynamic scoring of Perry's plan that takes into account the fact that it would, as James Pethokoukis puts it, "supercharge growth." I assume he tweeted that with a straight face, but on the internet you never know, do you?

And one last thing: you sort of have to admire Perry's gimmick of allowing everyone to choose between his plan and the existing income tax. You can almost imagine the conversation: one of his advisors points out that no matter how careful you are, someone will pay more under the new plan. Probably people with low incomes, and you just know the librul media will have a field day with that. "It's regressive! Rick Perry hates the poor!" It'll be a nightmare.

But Perry has a brainstorm! Give everyone a choice! This means that not one single person will pay more under his plan, because they can always choose the old system if they want. This means keeping all 60,000 pages (or whatever) of the old tax code, of course, so nothing really gets simplified. Still, no one pays more, and that's a guarantee. Beat that, Herman Cain.

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Corn on Hardball: Is Rick Perry a Birther?

Mon Oct. 24, 2011 4:40 PM PDT

David Corn and the Dallas Morning News' Wayne Slater joined Chris Matthews on MSNBC's Hardball to discuss GOP presidential candidate Rick Perry's recent comments that it's not definitive that Obama was born in the US. One of Perry's reasons for his uncertainty? "I don't know. I had dinner with Donald Trump the other night," he said.

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter.

Tennessee Hotel "Now Under Shariah Law," Anti-Shariah Activist Says

| Mon Oct. 24, 2011 2:26 PM PDT

If you didn't buy your plane tickets yet to November's Preserving America Conference in Nashville, you might want to wait a little while. The Veterans Day conference is dedicated to combatting the very, very stealth threat posed by Islamic Shariah law in the United States. But on Thursday, the hotel that was scheduled to host the shindig announced that it was cancelling the contract and asking organizers to find a new location. That's too bad, because Central Tennessee—where local activists (with some help from GOP presidential candidate Herman Cain) have been pushing to halt the construction of a mosque they believe is a front for the Muslim Brotherhood—seemed like a natural place for the conference. Per the Tennessean:

Steve Eckley, senior vice president of hotels for Amerimar Enterprises, said he wasn't fully aware of the topic or the people involved when he booked the event in Nashville, and now he fears that resulting protests could turn violent. As well, the hotel's other clients that day expressed concerns.

William Murray, chairman of the Preserving Freedom conference, responded: "The Hutton Hotel is now under Sharia law."

Devastating. Given that these kinds of events go off without incident all the time in the United States, it's hard to see why the hotel was so concerned about violent protests. As the Murray's reaction suggests, the only real consequence of the cancellation will be to further the organizers' perception that their views under siege, and the Caliphate is one step closer to being realized. Anyway, according to the conference's website, the event will be headlined by Center for Security Policy's Frank Gaffney (who believes Grover Norquist's American Conservative Union has been infilitrated by the Muslim Brotherhood), blogger Pamela Geller, former congressional candidate Lou Ann Zelenik, and—not making this up—"Gopher" from Love Boat:

Team Obama Hires TransCanada Lobbyist

| Mon Oct. 24, 2011 1:44 PM PDT

Critics of TransCanada's proposed Keystone XL pipeline are crying foul over yet another example of the revolving door ties between the company and the Obama adminstration. On Monday, the Obama team announced that Broderick Johnson had been hired as a senior adviser to the president's reelection campaign. Johnson, a lobbyist at Bryan Cave LLP, had lobbied on behalf of TransCanada.

According to public disclosure forms, Johnson lobbied Congress, agencies, and the White House in support of the pipeline in 2010. Bryan Cave reported $120,000 in lobbying income and six registered lobbyists for the fourth quarter of 2010 alone; it is among several firms that TransCanada has hired to lobby the US government on its behalf. Johnson, who is the husband of NPR's Michele Norris, has also lobbied on behalf of Anheuser Busch Companies, Comcast, FedEx, and Microsoft.

The Obama campaign doesn't seem too excited to highlight his lobbying work, as Politico's Mike Allen wrote earlier today:

The Obama campaign’s press release did not mention his lobbying experience. But a campaign official said later that Broderick "is no longer a lobbyist — he deregistered in April — and he will not discuss any matters related to his former firm’s clients with the campaign."

Pipeline critics have already raised concerns about the close ties between TransCanada and the Obama administration. Paul Elliot, the company's top lobbyist, was once a national deputy director for Hillary Clinton's 2008 presidential campaign; according to internal emails obtained through a Freedom of Information Request, he has proved to be well-connected in her office. The former US special envoy on energy also left the State Department earlier this year for a consulting job and has since advocated for the approval of the pipeline in that role. DeSmogBlog, which first coverd Johnson, has more on the Keystone lobbying connection.

The latest hire in the Obama campaign has provided more fodder for critics in the environmental community. "President Obama ran for office in 2008 promising that the days of lobbyists setting the agenda in Washington were over, yet now he's hired a top oil pipeline lobbyist into his campaign," said Kim Huynh, a campaigner at Friends of the Earth, in a statement. "This is a deeply troubling development. A lobbyist who has taken corporate cash to shill for this dirty and dangerous pipeline now has even more opportunity to whisper into the president's ear."

The Race Against Artificial Intelligence

| Mon Oct. 24, 2011 1:30 PM PDT

A pair of MIT economists, Erik Brynjolfsson and Andrew McAfee, have written a new book suggesting that computers are finally getting smart enough to do jobs that only people could do in the past. Nothing new there. But they've joined a (still small) but growing number of observers who are afraid that the jobs being displaced are being displaced for good:

Faster, cheaper computers and increasingly clever software, the authors say, are giving machines capabilities that were once thought to be distinctively human, like understanding speech, translating from one language to another and recognizing patterns. So automation is rapidly moving beyond factories to jobs in call centers, marketing and sales—parts of the services sector, which provides most jobs in the economy.

During the last recession, the authors write, one in 12 people in sales lost their jobs, for example. And the downturn prompted many businesses to look harder at substituting technology for people, if possible. Since the end of the recession in June 2009, they note, corporate spending on equipment and software has increased by 26 percent, while payrolls have been flat.

…Productivity growth in the last decade, at more than 2.5 percent, they observe, is higher than the 1970s, 1980s and even edges out the 1990s. Still the economy, they write, did not add to its total job count, the first time that has happened over a decade since the Depression.

In the same way that investors get giddy when economic booms have lasted a long time (this time is different!), there's always a danger of getting too pessimistic when an economic downturn lasts a long time. Just because this recession is a deep one doesn't necessarily mean that it has brand new causes or that it's never going to end.

That said, take a look at the chart on the right. You've probably seen it dozens of times: It shows the percentage of people in the United States who are employed. Here's the important thing about it: It didn't peak in 2007 and then plummet during the Great Recession. It peaked in 2000, and it's been dropping ever since. Even the huge housing/credit bubble of the aughts was only able to hold it at bay slightly.

In other words, something happened around 2000 that pushed people out of the labor force. There are lots of possible culprits, so it's wise not to get too invested in a single explanation. Still, I'd say that 2000 is also about the time that computers seriously started to do human jobs. Just a little bit at first, and then more and more. This trend was masked a bit by the high fever we ran in 2003-07, but when the fever broke we compressed seven or eight years of decline into two.

My back-of-the-envelope guess has always been that job losses during the Great Recession have been about one-third structural and two-thirds cyclical. The cyclical part we could address with fiscal and monetary policy if our political leaders had the guts to do it. But I suspect that at least some of the explanation for the structural part is the growing sophistication of computers, and it's not clear what we can (or want to) do about that. Computers can't drive cars or trucks yet, but that day isn't far away. And when it comes, I still wonder what all those drivers are going to do.

Iraq On $256 Million a Day

| Mon Oct. 24, 2011 1:04 PM PDT

Last Friday, President Obama announced that the remaining American troops in Iraq will leave the country by the end of 2011, fulfilling an agreement signed by the Bush administration in 2008. As the war winds down, here's a quick reminder of the war's price tag. 

So far, the war has cost taxpayers around $7.8 billion a month, or $256 million a day. According to the Congressional Budget Office (PDF), from 2003 through 2012 the war will cost the United States a total of $823.2 billion, including military operations, reconstruction, and veterans' medical costs.

 

 

 

 

 

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DOJ: Secret Record? What Secret Record?

| Mon Oct. 24, 2011 11:17 AM PDT
Attorney General Eric Holder.

Here's a thought experiment: If you've requested a national security-related document through the Freedom of Information Act (FOIA) but the Justice Department says it doesn't exist, could it exist anyway? Under a sweeping set of new rules proposed by the DOJ, the answer could soon be yes. 

Current FOIA law allows the government to withhold information—lots of it. Typically, such withholdings come with a simple explanation called a "Glomar denial," which says that the government can neither confirm nor deny the existence of the records in question. But, as ProPublica reports, the new rules "would direct government agencies to 'respond to the request as if the excluded records did not exist'"—meaning that the government can just pretend away your request, along with the information in question.

The DOJ first published the revised rules in March. At the request of open-government organizations, it allowed them to file comments on the law until October 19. And comment they did: The American Civil Liberties Union, Citizens for Responsibility and Ethics in Washington, and OpenTheGovernment.org wrote a letter to the DOJ, writing that the rule would "dramatically undermine government integrity by allowing a law designed to provide public access to government to be twisted to permit federal law enforcement agencies to actively lie to the American people." They also argue that the new rule's restrictive wording is unnecessary:

[T]he government can craft a response to FOIA requests for records that fall within section 552(c) exclusions that is truthful and informative, yet does not confirm whether excludable records exist. We suggest that when DOJ determines that a requester is trying to obtain information excluded from FOIA under section 552(c), the agency should simply respond that "we interpret all or part of your request as a request for records which, if they exist, would not be subject to the disclosure requirements of FOIA pursuant to section 552(c), and we therefore will not process that portion of your request." This response requires no change to the current FOIA regulation.

The open government groups' comment doesn't even suggest rolling back the law; instead, it asks only that the DOJ not mislead FOIA filers. People requesting the protected information can, as a last resort, sue to obtain those records. But since the new rule makes it seem as if the records in question don't even exist, the ACLU, CREW, and OpenTheGovernment argue that requesters are unlikely to pursue that course and give up altogether.

This would seem to fall right in line with the Obama administration's vigorous anti-transparency agenda, which The New Yorker's Jane Mayer and others have reported on. But although this latest rule may be true to form, it seems to break new ground. The DOJ is essentially saying that something that it knows exists, doesn't—giving itself some pretty broad authority to lie with impunity.

Instead of wrestling with individuals and organizations seeking sensitive public information, the DOJ apparently prefers to pretend information seekers away, along with the information they're asking for. And the fact that the ACLU, et. al's, comment doesn't actually seek to undo the the new rule—only re-phrase it—seems to suggest that they're picking their battles judiciously.

Who Should Pay the Price for Financial Failure?

| Mon Oct. 24, 2011 10:39 AM PDT

If you read my epic post on NGDP targeting this morning, you'll recall that one of its virtues is that it automatically encourages higher inflation when the economy turns down and automatically encourages lower inflation when the economy is heating up. This is good for purely economic reasons, since low real interest rates help spur growth during recessions, but Steve Randy Waldman writes today that it has moral benefits too, including this one:

A second moral benefit is that under (successful) NGDP targeting, any depressions that occur will be inflationary depressions....If depressions occur even while the NGDP path is stabilized, then they will reflect some failure of supply or technology. Our aggregate investment choices will have proved misguided, or we will have encountered insuperable obstacles to carrying wealth forward in time. It is creditors, not debtors, whom we must hold accountable for patterns of aggregate investment. There always have been and always will be foolish or predatory borrowers willing to accept a loan that they will not repay. We rely upon discriminating creditors to ensure that funds and resources will be placed in hands that will use them well.

....I do not relish inflation for its own sake, or advocate punishing creditors because they are rich and the tall poppies must be cut. But if, despite NGDP stabilization, real GDP cannot be sustained, someone has to bear real losses. There are only two choices: current producers can be taxed in order to make creditors whole in real terms, or past claims can be devalued so that losses are borne at least in part by creditors. In my view, the latter is the only moral choice, and the only choice that creates incentives for investors to maximize real-economic return....

In theory — the theory being that the Fed is really, truly, rock-solid committed to NGDP level targeting and everyone knows it — creditors understand that they're going to pay the price for foolish loans. They might become insolvent, obviously. But even if they don't, they understand up front that if the economy tanks they're going to see the value of their loans erode because the Fed will temporarily engineer higher inflation. One way or another, they're going to pay the piper, and this will make them more careful in their lending practices.

Now, I'll confess that I have my doubts about that last sentence. Thinking Minskyishly, I suspect that creditors are just bound to act stupidly at the height of economic booms. If the fear of bankruptcy doesn't give them pause, a little bit of inflation won't either. As Steve says, they might deserve to take a hit more than, say, taxpayers or borrowers, but I doubt that the prospect of future inflation will change their behavior much.

No, the real virtue of NGDP targeting, if it works, is that it provides a good set of rules for countercyclical monetary policy, which should prevent economic booms from getting too far out of hand in the first place. But I think a bit of caution is still in order here. The Fed, along with other central banks, has been searching for a good monetary policy rule ever since the ancien régime collapsed in the post-Bretton Woods era, and so far the search for something truly automatic has been fruitless. NGDP targeting is the latest flavor of the day, and who knows? Maybe it really is the magic bullet. But while it might be a pretty good rule, something tells me that, like any rule, it will somehow be deemed inadequate during some future crisis. There is, after all, always the legitimate question of what the proper level target should be (it depends on population growth, technological growth, productivity growth, etc.) and there are measurement problems too, even for something as simple as NGDP. Finding some kind of mechanical monetary rule that automatically produces stable growth is sort of a Holy Grail among a certain set of economists, but we're probably not going to find one anytime soon.

In the meantime, though, it's possible that NGDP targeting is the best bet we have. It's certainly worth all the attention it's getting.

Libyan TNC Chairman: We're Investigating Gaddafi's Death

| Mon Oct. 24, 2011 10:30 AM PDT
Moammar Qaddafi.

The Libyan Transitional National Council has ordered an investigation into the death of former Libyan dictator Moammar Qaddafi, the New York Times reports. TNC Chairman Mustafa Abdel-Jalil has raised the possibility that Qaddafi had been killed not by rebels, but by loyalists who wanted to silence him:

"Let us question who has the interest in the fact that Qaddafi will not be tried," he said. "Libyans want to try him for what he did to them, with executions, imprisonment and corruption. Free Libyans wanted to keep Qaddafi in prison and humiliate him as long as possible. Those who wanted him killed were those who were loyal to him or had played a role under him, his death was in their benefit."

Last week's celebrations following Qaddafi's death appeared to drown out concerns about the manner of his demise. But there is a growing volume of evidence that the dictator was not killed during or as a result of wounds sustained in combat, but instead summarily executed by his captors. Several videos obtained by the media showed Qaddafi captured alive. Videos taken later show Qaddafi lifeless with a fresh bullet wound to the head. Although the videos do suggest that the dictator was killed post-capture, there isn't much there to suggest he was killed by current or former loyalists as some sort of cover-up.

Human Rights Watch offers more disturbing news from Sirte, the town near where Qaddafi was ultimately found:

"We found 53 decomposing bodies, apparently Gaddafi supporters, at an abandoned hotel in Sirte, and some had their hands bound behind their backs when they were shot," said Peter Bouckaert, emergencies director at Human Rights Watch, who investigated the killings. "This requires the immediate attention of the Libyan authorities to investigate what happened and hold accountable those responsible."

Human Rights Watch saw the badly decomposed remains of the 53 people on October 23, 2011, at the Hotel Mahari in District 2 of Sirte. The bodies were clustered together, apparently where they had been killed, on the grass in the sea-view garden of the hotel.

The summary execution of captives is a war crime under the Geneva Conventions. And although it might be tempting to dismiss Qaddafi's death as a single capricious act by people who experienced unimaginable suffering at the hands of a tyrant, the other bodies at Sirte suggest a level of pattern or practice that can't be as easily brushed away.

There was some consternation in response to Abdel-Jalil's speech over the weekend declaring that Libya will "strive for a state of the law, for a state of prosperity, for a state that will have Islamic sharia law the basis of legislation." The TNC's original draft constitution stated that the "principal source of legislation is Islamic Jurisprudence (Sharia)," so this isn't exactly news. Libya is an overwhelmingly conservative Muslim country, so it follows that a government responsive to Libyan public opinion will reflect that. The answer to the possibility of illiberal democracy in mostly-Muslim nations is not endless iron-fisted rule by American-backed strongmen.

But the nature of Qaddafi's death and the evidence of other unlawful killings in Sirte raise another, more disturbing possibility: that Libya's future will be governed by the rule of the gun, not the rule of law, Islamic or otherwise.

Quote of the Day: Newt Laments His Party's Ignorance

| Mon Oct. 24, 2011 10:01 AM PDT

From Newt Gingrich, free associating on Herman Cain's road to the presidency:

I think one of the Republican weaknesses has been that we rely too much on consultants and too much on talking points. And we don’t rely enough on actually knowing things.

Seriously? Newt "Language: A Key Mechanism of Control" Gingrich is concerned that Republicans are relying a bit too much on mindless talking points these days? When did he have this Road to Damascus moment?