2012 - %3, September

What Could Obama Do With a Second Term?

| Tue Sep. 4, 2012 4:06 PM EDT

The punditocracy seems to be in agreement: Barack Obama can't just run a negative campaign designed to eke out a slim victory over a bruised and ultimately punch-drunk Mitt Romney. He also needs to offer a vision. But what? David Brooks offers three alternatives:

  • Global warming
  • Fixing broken capitalism
  • Deficit reduction

James Wimberley offers two alternatives:

  • Global warming
  • Campaign finance reform

Andrew Sullivan offers two alternatives:

  • Deficit reduction
  • "Radical" tax simplification and regulation reform

It's discouraging that none of these seem remotely feasible. Global warming is unquestionably the most important item on these lists, but a serious climate change bill couldn't even get close to passing two years ago, when Democrats had a big majority in the Senate. There's no plausible argument that Obama could succeed on this front during a second term any more than King Canute could keep the tide from coming in. (An unfortunately apt analogy.)

So how about fixing broken capitalism? It's not clear to me that Obama thinks capitalism is seriously broken, so that seems pretty unlikely. Campaign finance reform? Liberals have been dashing themselves against the shoals of CFR for four decades now, and have failed utterly. In fact, they've not only made no progress, but things are arguably quite a bit worse today than they were when the CFR battles started. What's more, recent Supreme Court decisions have considerably narrowed the scope of what Congress could do even if it wanted to.

So that leaves deficit reduction and tax reform. Obama, as near as I can tell, really does think long-term deficit reduction is important. His otherwise inexplicable behavior during the debt ceiling showdown certainly suggests that he takes it seriously. But there's a reason his efforts last year failed: He won't accept a package without tax increases and Republicans won't accept one with tax increases. I have no reason to think that either side is going to budge on this.

So that leaves tax reform. This has the virtue of not being flat-out impossible. Unfortunately, it has the drawback of being soul-crushingly boring. I'm willing to predict right here and now that no presidential candidate in history will ever ride to victory on the coattails of tax simplification and regulation reform.

Personally, I'd like to combine tax reform and climate change: Cut personal and corporate tax rates (possibly along with simplification) and make the cuts revenue neutral via a substantial carbon tax. Even better: Don't make it revenue neutral, and use the additional revenue to fix Social Security and rein in the long-term deficit. That would combine tax reform, climate change, entitlement reform, and deficit reduction all in one package. Booyah!

What's more, this is a plan that should appeal to conservatives, since it would cut marginal tax rates and make up for it with something that's essentially a consumption tax. It would also attack carbon externalities, which is extremely congenial to orthodox conservative economics, and reduce the long-term deficit, ditto. And there's more! It would broadly stimulate investment in clean energy without picking winners and losers, which ought to be a good thing even for conservatives, and it would do it in a very predictable way, which would be good for business.

Of course, this would require conservatives to admit that climate change exists, and that doesn't seem to be on the horizon. It would be different if we were dealing with actual conservatives: something like this might seem like a very appealing compromise. Unfortunately, it's been a long time since we had genuine conservatives to deal with. The bright-eyed true believers of today's Republican Party are something else entirely.

So I leave it to the hive mind. Are there any other bright ideas floating around out there? Are there any big visions Obama could offer that are both inspiring and politically conceivable?

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Who Are the Worst Tax Dodgers in Greece?

| Tue Sep. 4, 2012 1:34 PM EDT

Fascinating tidbit of the day: Tax evasion is so widespread and so culturally embedded in Greece that loan officers in banks have standard multipliers they use to convert reported income into real income. If you're a doctor, for example, they assume your income is 2.45x what you report to the tax man. If you own a restaurant, they multiply by 1.99. If they didn't do this, they'd never approve any loans at all because no one would have enough income to qualify.

It just goes to show how people manage to adapt to almost anything. But why the different multipliers for different industries? The Economist summarizes the paper that came up with the multipliers:

One hypothesis is that people in industries which generate a bigger "paper trail"—because they use more intermediate goods as inputs, for example—are at greater risk of being caught and therefore evade tax less. The authors do indeed find that industries that generate lots of traceable information have lower levels of evasion. But they also find another interesting correlation, between the professional backgrounds of Greek parliamentarians and the industries with high levels of tax evasion. Stripping out lawyers, who have a disproportionately nasty habit of becoming politicians, the three most tax-dodging professions account for about half the votes among Greek MPs. That, the authors say, might explain a lack of political willpower on the issue of tax evasion.

Apparently the retail industry in Greece desperately needs to elect more of its own to parliament. A multiplier of 1.27 is pathetic.

Quote of the Day: Paul Ryan Misses by a Factor of 30

| Tue Sep. 4, 2012 11:47 AM EDT

From Paul Ryan, on the stump in North Carolina yesterday:

In 1980 under Jimmy Carter, 330,000 businesses filed for bankruptcy. Last year, under President Obama’s failed leadership, 1.4 million businesses filed for bankruptcy.

It turns out this isn't true. In 1980 there were 43,000 business bankruptcies. Last year there were 47,000.

But here's what's weird: Ryan's numbers are right if you include both personal and business bankruptcies. So why not just say that? Why not just say "individuals and businesses" in the sentences above. It would still have the same impact. There's really no reason to mislead his audience this way.

It's sort of like his marathon whopper. Why claim he ran a sub-three-hour marathon? To convince people that he's in really good shape? Well, he is in really good shape. He doesn't need to bother inventing weird stuff like this to make that point. And no one's going to change their vote because of his marathon prowess anyway.

I dunno. Maybe Ryan doesn't have the steel trap mind everyone thinks he does. Maybe he forgets a lot of stuff. Maybe he likes his applause lines a little too much. Or maybe he's just really sloppy. It's a little hard to figure out.

Daily Caller Hawks Racially Tinged Obama-Recession Conspiracy Theory

| Tue Sep. 4, 2012 11:21 AM EDT

Did BHO and his regard for minority mortgagees ruin the economy?

As conspiracy theories go, this one's The Unified Theory of Barack Obama's Disastrous Hand Ruining Everything: Before he entered politics, the president was a crafty trial lawyer whose push to get easy money for black folks in liberal Chicago caused the mortgage meltdown and Great Recession.

That's not exactly how the Daily Caller sums up its new hit piece, but it's close. Led by Neil Munro (yes, that Neil Munro), the conservative tabloid site reports that "President Barack Obama was a pioneering contributor to the national subprime real estate bubble," as the lead attorney in a "landmark 1995 mortgage discrimination lawsuit against Citibank" that sought relief for hundreds of African-American would-be borrowers—many of whom have since defaulted on their loans.

If the Caller's package was all you read, you might conclude that Obama spearheaded a move to force the poor banks to ease its lending standards to put unworthy blacks in homes they couldn't afford, thus causing the financial collapse of 2008. But as Media Matters points out today, it's a craptastic orgy of falsities:

Factlet of the Day: Prosecuting Bribery Leads to More Prosecutions for Bribery

| Tue Sep. 4, 2012 11:15 AM EDT

Here's a fascinating little factlet. The New York Times reports today that most big prosecutions under America's anti-bribery law are against foreign companies. Siemens, for example, paid a fine of $800 million even though it's a German company and the bribes in question were paid to Argentinians. Their American presence, however, was big enough to make them liable under U.S. law. American companies argue that this is a matter of leveling the playing field: they're at a disadvantage competing against companies that feel free to pay bribes, so they're eager for the Department of Justice to use its authority to put a stop to it.

But Henry Farrell points to a paper that concludes that these prosecutions also have a knock-on effect:

Holding all other variables constant, the odds of a country enforcing its first case [of bribery] are twenty times greater if a country has experienced extraterritorial application of the FCPA as compared to countries that have not.

"In other words," says Henry, "many countries that have anti-bribery legislation on their books are disinclined to enforce this legislation against their firms, until the US makes an issue of prosecuting their firms for them. This results in a remarkably large rise in the likelihood of subsequent enforcement."

I have no broader point to make about this at the moment. I just thought it was interesting.

Democrats Retreat on Civil Liberties in 2012 Platform

| Tue Sep. 4, 2012 11:02 AM EDT
US Soldiers jog by a guard tower at Camp Delta in 2010.

What a difference four years makes.

In 2008, Democrats were eager to draw a contrast with what they then portrayed as Republican excesses in the fight against Al Qaeda. Since then, the Obama administration has in many cases continued the national security policies of its predecessor—and the Democratic Party's 2012 platform highlights this reversal, abandoning much of the substance and all of the bombast of the 2008 platform. Here are a few places where the differences are most glaring:

Indefinite Detention
2008: "To build a freer and safer world, we will lead in ways that reflect the decency and aspirations of the American people. We will not ship away prisoners in the dead of night to be tortured in far-off countries, or detain without trial or charge prisoners who can and should be brought to justice for their crimes, or maintain a network of secret prisons to jail people beyond the reach of the law. We will respect the time-honored principle of habeas corpus, the seven century-old right of individuals to challenge the terms of their own detention that was recently reaffirmed by our Supreme Court."

2012: Nothing. The Obama administration has maintained the practice of indefinitely detaining certain suspected terrorists. It has also made use of "proxy detention," by which foreign countries detain US citizens under questionable conditions, although the administration did do away with the Bush-era "black sites."

Warrantless Surveillance/PATRIOT Act
2008: "We support constitutional protections and judicial oversight on any surveillance program involving Americans. We will review the current Administration's warrantless wiretapping program. We reject illegal wiretapping of American citizens, wherever they live. We reject the use of national security letters to spy on citizens who are not suspected of a crime. We reject the tracking of citizens who do nothing more than protest a misguided war…We will revisit the Patriot Act and overturn unconstitutional executive decisions issued during the past eight years."

2012: The platform is silent on this issue. This isn't surprising since, at the urging of the Obama administration, congressional Democrats passed up the opportunity to reform the PATRIOT Act when they had a majority in both houses of Congress

Gitmo
2008: "We will close the detention camp in Guantanamo Bay, the location of so many of the worst constitutional abuses in recent years. With these necessary changes, the attention of the world will be directed where it belongs: on what terrorists have done to us, not on how we treat suspects."

2012: "[W]e are substantially reducing the population at Guantánamo Bay without adding to it. And we remain committed to working with all branches of government to close the prison altogether because it is inconsistent with our national security interests and our values." In 2009, most Democrats voted against funding to close Gitmo, and there were substantial internal battles within the administration over doing so

Racial Profiling in Fighting Terrorism
2008: "[W]e will ensure that law-abiding Americans of any origin, including Arab-Americans and Muslim-Americans, do not become the scapegoats of national security fears."

2012: Nothing. The Obama administration has in fact retained the FBI's Bush-era guidelines allowing race or religion to play some role in investigations.

Torture
2008: "We reject torture."

2012: "Advancing our interests may involve new actions and policies to confront threats like terrorism, but the President and the Democratic Party believe these practices must always be in line with our Constitution, preserve our people's privacy and civil liberties, and withstand the checks and balances that have served us so well. That is why the President banned torture without exception in his first week in office." Despite Obama's executive order banning torture, Americans who allege they have been detained abroad by foreign governments at the United States' request say they have been abused while in custody. It does not appear as though anyone will face charges over the Bush administration's torture program, including those who went beyond its legal guidelines.

The section of the 2012 Democratic platform titled "Staying True to our Values at Home" states, "We must always seek to uphold these values at home, not just when it is easy, but, more importantly, when it is hard." The distance between the 2008 and 2012 platform shows just how hard it has been, and starkly illustrates the extent to which the Democratic Party has given up on its 2008 promises to roll back the national security state that emerged and expanded in the wake of the 9/11 attacks.

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Obama Super-PAC Sets New Record With $10 Million Haul in August

| Tue Sep. 4, 2012 10:40 AM EDT

The super-PAC backing President Obama had its best fundraising month yet in August, hauling in $10 million. That brings Priorities' total fundraising to roughly $35 million for the 2012 election, according to the Center for Responsive Politics. August's record haul, first reported by the New York Times, is good news for Priorities, but it reflects an uneasiness among wealthy Democratic donors about Obama's chances of reelection.

Many Democratic donors didn't feel the need to give to the pro-Obama super-PAC this winter and spring, fundraisers say, because they thought Obama was a lock to win re-election. That was evident in Priorities' underwhelming fundraising numbers—the super-PAC raised $2.5 million in April, $1.6 million in May, and $4 million in June. But Romney is now neck-and-neck with Obama in national polls, leading in several battleground states, and GOP and conservative super-PACs and nonprofits could spend upwards of $1 billion to defeat Obama and help Republicans take full control of Congress.

Priorities was founded last year by two ex-Obama White House aides, Bill Burton and Sean Sweeney, in response to powerful GOP super-PACs like American Crossroads, co-founded by Karl Rove, and the pro-Romney Restore Our Future. American Crossroads has raised $47 million this election cycle, and Restore Our Future has banked more than $80 million. Priorities' staff includes veteran fundraisers Harold Ickes, Paul Begala, and Diana Rogalle.

The Democratic National Convention in Charlotte this week represents a prime opportunity for Priorities and other Democratic super-PACs to woo donors and fill their war chests for the final two months of the campaign season. Priorities and affiliated super-PACs focusing on congressional races will host "Super-O-Rama," a series of invite-only confabs for donors featuring celebrities and musical acts including Pitbull and the Scissor Sisters.

American Bridge 21st Century, the super-PAC focusing on opposition research against GOP candidates, will also fete donors with a Wednesday evening party called the "Celebration of Truthiness." Alice Waters, the event's special guest chef, will dish up food for attendees, and featured guests will include Democratic strategists and TV talking heads Begala and James Carville, Howard Dean, and Sen. Al Franken (D-Minn.).

My Personal Stake in the Election

| Tue Sep. 4, 2012 10:16 AM EDT

Ramesh Ponnuru writes today that if Barack Obama wins reelection, nothing will change. Republicans will not feel chastened one bit. Instead, they'll conclude that they can't win with a faux conservative like Romney, and will spend the next four years amping up the obstruction machine while they wait for Paul Ryan or Marco Rubio to save them. It will be gridlock as far as the eye can see.

I think he's probably right. For the most part, the American public has a choice this November between four years of Republican radicalism and four years of nothing much changing. But Ed Kilgore points out at least one major change that Americans can expect if Obama is reelected:

For the record, there's at least one area of highly significant, powerful activity that will occur automatically if Barack Obama is re-elected, even if Republicans make congressional gains and convince themselves to go even crazier: the Affordable Care Act will be implemented, and 30 million or so Americans without health insurance will be covered, making the big step back towards "individual responsibility" for health care conservatives crave that much less likely.

This is true. And here's an interesting thing: for the first time that I can remember, this means that I have a personal stake in the election. It's not just that I find one side's policies more congenial in the abstract, but that one policy in particular could have a substantial impact on my life.

You see, I've never really intended to keep blogging until I'm 65. I might, of course. Blogging is a pretty nice job. But I'd really like to have a choice, and without Obamacare I probably won't. That's because I'm normal: I'm in my mid-50s, I have high blood pressure and high cholesterol, a family history of heart trouble, and a variety of other smallish ailments. Nothing serious, but serious enough that it's unlikely any insurance company would ever take me on. So if I decided to quit blogging when I turned 60, I'd be out of luck. I couldn't afford to be entirely without health insurance (the 4x multiplier that hospitals charge the uninsured would doom me all by itself), and no one would sell me an individual policy. I could try navigating the high-risk pool labyrinth, but that's a crapshoot. Maybe it would work, maybe it wouldn't.

But if Obamacare stays on the books, I have all the flexibility in the world. If I want to keep working, I keep working. If I don't, I head off to the exchange and buy a policy that suits me. No muss, no fuss.

So yes, this election matters, and it matters in a very personal way. It does to me, anyway. It's not just about gridlock as far as the eye can see.

We're Still at War: Photo of the Day for September 4, 2012

Tue Sep. 4, 2012 9:59 AM EDT

Company B Marines with Marine Barracks Washington, take cover after a live grenade explosion during a live grenade range training exercise at Marine Corps Base Quantico, Va., Aug. 21.
U.S. Marine Corps photo by Cpl. Dengrier Baez.

Paul Ryan Is a Tax Hawk, Not a Deficit Hawk

| Tue Sep. 4, 2012 8:23 AM EDT

Are Republicans—and in particular, Paul Ryan—dedicated deficit hawks? Let's make this simple. Here's a timeline:

2001-08: Republicans, including Ryan, repeatedly vote to increase the deficit during the George Bush administration. This includes votes in favor of two huge tax cuts, two huge wars, and a big Medicare expansion, none of which are paid for.

January 20, 2009: Barack Obama is inaugurated.

October 2009: After nine months of focusing on stimulus and job creation, Obama begins his famous "pivot" toward long-term deficit reduction.

January 2010: A Senate proposal to create a bipartisan deficit commission is filibustered. Politico explains what happened: "The tepid support from Democratic leaders contributed to the loss, but more decisive was the number of Republicans switching under pressure from their party to block the measure. Six Republicans who had co-sponsored the bill as recently as last month voted against it."

One day later: In his State of the Union address, Obama announces that he'll act on his own: "I've called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad....Yesterday, the Senate blocked a bill that would have created this commission. So I'll issue an executive order that will allow us to go forward, because I refuse to pass this problem on to another generation of Americans." This is the birth of the Bowles-Simpson Commission.

March 2010: Republicans appoint six members to the commission. One of them is Paul Ryan.

December, 2010: The Bowles-Simpson commission fails to agree on a plan. All three of the House Republican appointees vote against it, including Paul Ryan.

July 9, 2011: House Speaker John Boehner abandons negotiations with President Obama over an ambitious plan to cut the deficit by $4 trillion. The Washington Post explains why: "Boehner (R-Ohio) told Obama that their plan to 'go big'....was crumbling under Obama’s insistence on significant new tax revenue." One of the key opponents of compromise on taxes was Paul Ryan.

July 22, 2011: Boehner abandons yet another set of deficit negotiations when it becomes clear that House Republicans won't support tax increases of any kind. Sam Stein quotes a Republican aide explaining that Ryan was, once again, one of the key opponents: "There were certain people ... who thought the pursuit of the grand bargain was a useless pursuit because it could never pass anyway. Ryan was one of them. Ryan is opposed to tax increases."

August 2012: The Romney/Ryan campaign explicitly endorses tax cuts, but declines to take a stand on how they would pay for this by closing tax loopholes. The campaign also explicitly rejects any cuts in defense spending. Their Medicare plan proposes no cuts at all for a decade, and after that it proposes the same growth rate cap as Obamacare. However, unlike Obamacare, it doesn't include any plausible mechanisms for meeting that cap. Social Security reform is not addressed at all.

Actions speak louder than words, and I think you can draw your own conclusions from Ryan's actions. Aside from a fondness for scary charts, there's really nothing in his career that demonstrates any serious concern with the deficit. What he has demonstrated is consistent opposition to tax increases under any and all circumstances. I think you can also fairly say that he has no problem with spending cuts to social programs.

So that's that. Ryan wants to cut taxes on the rich and cut spending on the poor. That's his real preoccupation, not deficit reduction.