Over at the mothership, Stephanie Mencimer takes a look at the latest release of the biennial American Values Survey and notes a disturbing finding:

Tea party critics won’t be surprised to hear that 61 percent of people who identify with the movement said discrimination against whites "is as big a problem as discrimination against blacks and other minorities."....That view was shared by only 28 percent of Democrats and about half of independents. Republicans were closer to the tea party on that question, with 56 percent agreeing that discrimination against whites is a big problem.

This perception, of course, drives a tremendous amount of resentment against liberal elites who are viewed as responsible for this state of affairs. And mockable though it may be, mockery won't make it go away. I'm not sure what will.

However, the AVS also has some good news. As the chart on the right shows, over the past five years 19% of Americans report that their views on gay and lesbian rights have grown more supportive. That's a pretty massive sea change, all things considered, and something that the tea partiers have little chance of stopping. The full report is here.

Paul Krugman points out today that core inflation is at its lowest level since recordkeeping began in 1957. But that's a lot clearer in chart form, isn't it? So here it is:

This, of course, explains the Fed's quantitative easing program. For a variety of good reasons, the Fed primarily uses core inflation to measure price levels in the economy, and core inflation dropping to 0.6% has put the economy at risk. So we want more inflation, and we can get it with very little prospect of future trouble. For comparison, here's a chart showing inflation in Great Britain recently:

Ryan Avent writes:

The Bank of England is in a tricky position. It likely feels that prices haven't risen more based on market belief in the Bank's credibility, but each month that the Bank doesn't clamp down on inflation that credibility erodes a bit. The Bank is reluctant to supress price increases just now, however, because of the substantial fiscal tightening that's looming just over the horizon. On the one hand, this is a tricky position for a central bank to be in. On the other hand, it's the rare rich world country that wouldn't trade places with Britain. The last two quarters have produced surprisingly strong growth, giving both the Bank of England and the government more of a cushion to address other policy goals.

Tricky indeed, but take a look at the graph. When did inflation start rising in Britain? In the middle of 2009. And when did growth start surging? About two quarters later. Analysts claim that Britain is now "overshooting" its inflation target, but if this is the result of overshooting then maybe we could use a bit of the same ourselves?

Not everyone feels the same way, of course. The result has been a strange-bedfellow war against the Fed, described well today by Noam Scheiber. It's yet another example of the rich enlisting the poor to support policies designed to safeguard the rich. So far they've been pretty successful.

Money, Meet Mouth

Via dKos, this Politico story about the travails of tea party members of Congress really is spectacular:

A band of conservative rebels has taken over the House, vowing to slash spending, cut the deficit and kill earmarks. And of course they’d love a seat on the powerhouse Appropriations Committee so they can translate their campaign zeal into action, right?

Not really. Rep. Michele Bachmann (R-Minn.) was asked to be an appropriator and said thanks, but no thanks. Rep. Steve King (R-Iowa), a tea party favorite, turned down a shot at Appropriations, which controls all discretionary spending. So did conservatives like Lynn Westmoreland (R-Ga.) and Jim Jordan (R-Ohio), an ambitious newcomer who will lead the influential Republican Study Committee.

....“Anybody who’s a Republican right now, come June, is going to be accused of hating seniors, hating education, hating children, hating clean air and probably hating the military and farmers, too,” said Jack Kingston (R-Ga.), a fiscal conservative who is lobbying to become chairman of the House Appropriations Committee. “So much of the work is going to be appropriations related. There’s going to be a lot of tough votes. So some people may want to shy away from the committee. I understand it.”

Kingston said he’s approached Bachmann, King and Westmoreland about the committee, and they all told him they weren’t interested.

I can't even think of anything snarky to say about this. I'll just repeat what I've said before: not only do tea party politicians have no real interest in the deficit, they have no real interest in cutting spending either. They know perfectly well that most spending isn't waste and they know perfectly well that most spending is pretty popular. Voting against the occasional "welfare" proposal is fine, but the idea of actually being forced to vote against meaningful amounts of spending instead of just railing about it on Fox News is another thing entirely.

How long will the rank-and-file tea partiers continue to fall for this charade? Long enough, I suppose. The faux earmark ban should hold everyone at bay for a few weeks, and a well-considered selection of other meaningless symbolic votes should keep everyone on board as long as they're staggered appropriately throughout the year. It's a fine line to walk, but I guess I feel pretty confident that the Republican leadership can pull it off.

So how about those backscatter scanners? Everybody hates them. "Don't touch my junk" is about to be added to "live free or die" and "give me liberty or give me death" in the pantheon of great expressions of American rebellion. I wish I could join in, but unfortunately I'm already on record a year ago as not caring:

I'll defer to the experts on how and where these devices are best used, but privacy concerns strike me as daft. Yes, the machines show the shape of your body under your clothes. Big deal. That strikes me as way less intrusive than pat-downs, wands, bomb-sniffing dogs, hand inspections, and no-fly lists. If we put up with that stuff, why on earth would we suddenly draw the line at a full body scanner?

I still feel this way. In fact, I think it's a pretty good sign of a country gone insane that this — TSA screeners occasionally viewing a vague outline of your body — is what's finally driven everyone over the edge. Shoes, laptops, liquids, wands, special screenings, warrantless wiretaps, you name it. They annoyed us, but we accepted them. But this! Finally left and right can unite in outrage over government run wild.

Meh. The health concerns are pretty obviously bogus, just an excuse piled onto the bonfire to help the cause. It's the "porno scanner" aspect that has everyone upset. "Virtual strip searches" the ACLU calls them. Meh again. Are we children?

But fine. I'm a phlegmatic middle-aged man, and I understand not everyone feels as cavalierly about this as I do. I think it's crazy, but I get it. But craziness aside, I still want to know if the things work. That's about a hundred times more important than whether they confirm to a bored TSA screener that I really ought to lose a few pounds. And here's the thing: it sure seems as if they work. It's the very fact that they work that has everyone so outraged. They can show things an ordinary scanner can't. So I was interested in Noah Shachtman's take on this in the Wall Street Journal today:

The larger question is whether the TSA's tech-centric approach to security makes any sense at all. Even the most modest of us would probably agree to a brief flash of quasi-nudity if it would really ensure a safe flight. That's not the deal the TSA is offering. Instead, the agency is asking for Rolando Negrin-style revelations in exchange for incremental, uncertain security improvements against particular kinds of concealed weapons.

Wait a second. That's it? A bald assertion that the scanners offer "incremental, uncertain security improvements" and nothing more? No explanation of why these improvements are uncertain? No explanation of what they can and can't detect? What's the deal here?

Like I said, I think the privacy concerns are close to insane. But I do care about whether we're spending billions of dollars on technology that doesn't do us any good. Looking at the pictures the scanners produce, it sure seems as if they're more effective than standard screening. So can someone please explain why they aren't?

Matt Yglesias wants the liberal community to drop its longtime love affair with a VAT as a way of raising revenue and instead start showing some love for a carbon tax:

I really think the VAT is a decent idea whose time is past and is now obsolete. VAT recommends itself as an economically efficient revenue raiser, with the downside being that it’s regressive. The result is that from a 2010 point of view it’s completely dominated by the idea of a carbon tax. A carbon tax is also an efficient, but regressive, form of consumption tax. But by specifically taxing consumption of carbon dioxide emissions it also manages to contribute to solving a massive ecological problem. The political obstacles to a carbon tax are formidable, but so are the obstacles to a VAT. Under the circumstances it would be tragic for a political coalition to muster the power necessary to implement a hefty regressive consumption tax that isn’t specifically targeted at greenhouse gas pollution.

I agree, and the regressive nature of both kinds of taxes can be minimized with decent implementation choices. There are plenty of plans on the table for doing this.

But I'll add one other thing. A few days ago I wrote a poorly phrased post in which I said that any plan for reducing the budget deficit should also include a plan for reducing the trade deficit. It sounded vaguely as if I was suggesting that reducing the trade deficit would directly affect the budget deficit, but that's not really what I meant. What I meant was that, other things equal, you can only reduce the budget deficit if you also reduce the trade deficit at the same time. One corollary of this is that policies to reduce the budget deficit are more likely to be effective if they work with policies to reduce the trade deficit rather than against them.

A carbon tax is a good example of this. On one level, it raises revenue and helps close the budget deficit. But it also makes energy more expensive and is likely to reduce our imports of oil. Whether it actually does or not depends on a lot of other issues, but at least it pushes in the right direction. You're giving budget deficit reduction a tailwind instead of a headwind.

So: a carbon tax is good for the environment, probably good for the trade deficit, and therefore probably also helpful for reducing the budget deficit. What's not to like?

I imagine I'll still be asleep when Pete Domenici and Alice Rivlin announce their version of a deficit reduction plan on Wednesday morning, but their op-ed in the Washington Post sure makes it sound awfully similar to the Simpson-Bowles plan. That's no surprise, I guess, since there are only just so many ways to skin this particular cat. Short version: Cut tax rates and eliminate most deductions and credits. No carbon tax, no VAT, no financial transaction tax. Freeze domestic and military discretionary spending for several years at 2011 levels, which amounts to a gradual cut of about $100 million on each side, and then cap future growth. Balance Social Security by raising the earnings cap, cutting benefits for high earners, and changing the COLA calculation. Control healthcare costs by phasing out the tax exclusion for employer-provided health care and reforming medical malpractice laws.

A few things are different. They make a point of phasing in their plan gradually beginning in 2012 so it doesn't interfere with the current economic recovery. There's a one-year payroll tax holiday for 2011 to stimulate the economy. They raise some revenue via a 6.5% "debt-reduction sales tax," whatever that is. They don't increase the retirement age for Social Security. And they address the health costs tied to rising obesity by imposing a tax on high-calorie sodas. Seriously.

More later, I'm sure. Like it or not, it's deficit season in Washington D.C. Resistance is futile.

Irish Eyes

The latest on Ireland:

Senior European officials laid the groundwork for a bailout of Ireland that could reach €100 billion ($136 billion), saying experts would travel this week to Dublin to examine the country's finances amid alarm about the dire straits of the Irish banking system.

I suppose this statistic is going to be splashed everywhere before long, but this is roughly 60% of Ireland's GDP. It would be about equivalent to the United States getting a bailout of $9 trillion. Just so you know.

The Senate Banking Committee met today to hold hearings about the foreclosure fraud crisis. MarketWatch has a brief summary here. After it was over, Dave Dayen, Atrios, and Mike Konczal (rortybomb) chatted on Twitter:

ddayen: It's a national crime that this foreclosure fraud hearing won't lead the nightly news

ddayen: hearing ending, yes these things are a lot of hot air, but I think this one might have done some good

Atrios: what possible good? nice that maybe some senators get it, but... then what?

ddayen: point is that this has gone from a backwater on blogs to the chair of Senate Banking saying this is a crisis. Baby steps

Atrios: yes that's progess but..Treasury unlikely to do anything and of course congress is useless

ddayen: Congress is useless but investors, AGs not necessarily. Investors watched this hearing and $ signs lit up in their eyes

Atrios: true, long thought that the only slim hope for this mess was investor uprising

rortybomb: You only need a little bit of successful investor uprising to put ratings agencies into motion, which sends whole thing collapsing.

Atrios: true, tho i think problem with investor uprising solution is that many investors are on both sides of this

rortybomb: You could also have an investor uprising which doesn't really help homeowners/communities at all. That's a worry.

Atrios: yes i agree with that, investor uprising no guarantee of helping homeowners. just slim possibility

ddayen: That is a worry, but there are a combination of pressures here, particularly from courts denying foreclosures....pt. being, a multi-pronged attack w/courts, investors, munis and AGs, could get the banks to a homeowner-friendly endgame

So will investors who bought securities backed by fraudulent mortgages lead a revolution against the banks who sold them? Maybe! Though probably not. In any case, I just thought everyone might enjoy eavesdropping on the postgame show a bit.

Is the mortgage interest deduction a "middle class" benefit? Sort of. Based on data from the Tax Policy Center, Ezra Klein offers the chart on the right, which shows how much it saves various income groups. If you're low-income, the average benefit is 0-0.1% of your income. If you're smack in the middle of the income range, the benefit is about 1% of your income. If you're at the top of the income range — but not in millionaire land — the benefit is about 1.6-1.7% of your income.

The reason for this is obvious. Lower income people are unlikely to own homes or have big mortgages, so they get no benefit. Median earners are more likely to own homes, but their mortgages are still small. High earners nearly all own homes and all have big mortgages. The result is a tax break that doesn't merely rise linearly with income. Even in percentage terms it's actively more beneficial the more money you make.

So what if you wanted to make it a little less plutocratic? Some ideas are here, but probably the simplest would be to reduce the cap. Currently the mortgage interest deduction can be taken on loans up to $1 million. If you cut that to, say, $250,000, the middle class would largely keep the same benefit it has now and the upper income brackets would get a benefit about the same or a bit lower (in percentage terms). Plus it would reduce the artificial incentive to buy ever bigger houses. Seems like the least we should do.

I almost wrote this myself a couple of days ago, but Karl Smith beat me to it. Or, rather, Mrs. Smith beat me to it:

As a quick note, the Fed for good reasons does not have a mandate to maintain a strong dollar. I wish I could devote more time to this. My wife says that we could clear up a lot of confusion by replacing strong dollar/weak dollar with fat dollar/skinny dollar. Then we could just say that the dollar is morbidly obese and millions of Americans would immediately think it a moral imperative to make the dollar lose weight.

I'm pretty much convinced that conservatives instinctively believe that strong = good in all cases, and this causes all sorts of problems for currency policy. Eons ago, we happened to choose the adjective "strong" to refer to overvalued currencies, so now conservatives are hellbent on insisting that the U.S. dollar must always be overvalued even though that's about the last thing the U.S. economy needs right now. Because, you know, that's strong. And who'd choose weak over strong?

So sign me up for the fat/skinny dollar club. Right now the dollar needs to lose some weight and get into fighting trim. Doesn't that sound like a much better pitch than arguing that we need a weak dollar?