A recent study of Danish savers suggests that tax breaks for retirement accounts have almost no effect on the amount people sock away for their golden years. This doesn't surprise me, since I read Joel Slemrod and Jon Bakija's Taxing Ourselves a long time ago (highly recommended!), and they told me the same thing. Nearly every study, they said, agrees that "any response of the saving rate to the incentive effect of a higher after-tax rate of return is likely to be fairly small." As for IRAs, they act as "a reward, but not an inducement, for saving." Andrew Sprung puts this into personal terms:

My wife and I are savers....Since the late '90s I've had the kind of solo retirement accounts allowed to the self-employed....I am always acutely conscious that a large chunk of every allowable dollar that I fail to contribute goes to taxes — avoidably. So I come as close to maxing out as I can. I've always assumed that this a good thing — that this incentive is working as it should.

What dawned on me after reading about this study, which focused on Danish savers since reams of detailed data are available there, was that the incentive doesn't really shape how much I save — it just controls where I put it.

....About 90% of our savings, excluding home equity, is in retirement accounts. That's not good. Or rather, it's only "good" if you assume that it's in the natural order of things for retirement funds to be especially privileged....What the Danish study tells me is that all savings should be equal, and all citizens should be able to avail themselves of the same limited tax credits to save. And oh yes, we should be free to put those tax-protected savings into whatever investment vehicles we choose.

That makes sense. There's probably some incentive effect at work—though in 401(k)s it's most likely the employer match that's doing the heavy lifting—but for the most part these vehicles are used by people who'd be saving regardless. Virtually all of the benefit ends up going to the upper middle class and the wealthy, who generally don't need much of an incentive to build up savings.

I don't really have anything against tax-advantaged retirement plans. You won't see it becoming a hobbyhorse here. Still, it's worth knowing that this is a tax expenditure that costs a lot of money without really accomplishing much of anything.

A couple of days ago John Boehner unveiled his fiscal cliff proposal, which included $800 billion in tax revenue that he refused to provide any detail about. That gave everyone a good chuckle. But if you ignore Boehner's pro forma insistence that we should lower tax rates on the rich, the truth is that his figure is at least plausible. A cap on deductions of about $40,000 would probably do the job. That's a big political lift, but it's not impossible and it's not mysterious.

What is more mysterious is Boehner's contention that he can get $600 billion in health care cuts. (All numbers are savings over ten years.) There's no simple solution for that. Raising the Medicare eligibility age is a bad idea for a bunch of reasons, but even if we do it, it will only save about $100 billion. Where's the rest coming from? The answer won't come from any Paul Ryan-ish plan, which explicitly doesn't affect current and near-retirees and wouldn't begin saving money for many years.

This is the part of Boehner's plan that I'd really like to hear more about. The Simpson-Bowles proposal includes a long laundry list of small changes in health care policy that amount to about $80 billion per year, but it includes things like higher costs for military retirees (not likely); tort reform (obviously not going to happen in the next three weeks); cuts in medical education (probably not a good idea since we need more doctors over the next decade); and a strengthening of IPAB (the fabled "death panel" of the tea party's fevered imagination). Beyond that, there are a bunch of smallish benefit cuts that add up to a few tens of billions of dollars per year.

In other words, there's no easy answers here. You can punt, by simply declaring that Medicare growth will be limited to GDP + 1 percent and calling it a day, but that's a chimera. The truth is that cutting health care costs is really, really hard. Obamacare includes a bunch of provisions that will probably reduce the rate of growth, but they'll take years to kick in and no one knows for sure how well they'll work. Alternatively, you can just flatly cut benefits, but Republicans have (to be charitable about it) taken a fairly erratic set of positions about that.

This is the part of the plan to watch. For all the bluster, a deal on taxes is eminently possible. Discretionary cuts of $300 billion are also possible, especially if you agree to split them between defense and domestic cuts. Even a $300 billion deal on Social Security is possible.

But $600 billion in medium-term health care savings? It's not impossible, but it's pretty damn close.

Membership in the pro-secession Texas Nationalist Movement has increased 400 percent since President Barack Obama won re-election on November 5—or so the TMN claims. Last week, the group has announced on its website that it's taking the next step: forming a political action committee:

The Texas Nationalist Movement on Tuesday filed paperwork with the Texas Ethics Commission appointing a treasurer for the Texas Nationalist Movement Political Action Committee (TNM-PAC), signaling the organization's most significant venture into the legislative process in pursuit of Texas independence.

TNM president Daniel Miller said the TNM-PAC was formed "for the purpose of supporting and endorsing candidates at all levels that are in-line with the mission, vision and values of the Texas Nationalist Movement."

The Texas Nationalist Movement's foray into the world of campaign finance is its biggest step yet in an effort to enter—and eventually become—the political mainstream. It's also peaceful, which is a noted break from another modern-day Texas secession movement, the Republic of Texas, which was helmed by an eccentric named Richard McLaren who launched an armed invasion and occupation of his neighbor's house in Far West Texas in the 1990s.

TNM-PAC doesn't mention any specific candidates it plans to support, but from the site it's possible to speculate. Perennial candidate Larry Kilgore, who recently changed his middle name to "SECEDE" (yes, allcaps), received 250,000 votes in the 2008 GOP Senate primary and is planning on running for governor in two years. (Among his other issues: instituting the death penalty as a punishment for adultery) The group also touts on its site a November lecture on secession by Wes Riddle, a blogger and historic theater owner who lost a 2010 U.S. House primary despite picking up an endorsement from retiring Rep. Ron Paul.

One candidate TNM-PAC probably won't be supporting: Governor-for-life and occasional secessionist-sympathizer Rick Perry, whose office told the Dallas Morning-News last month that he "believes in the greatness of our Union and nothing should be done to change it."


The political media is at it again, attempting to convince the general public that the just-finished 2012 presidential election was little more than the first course in a much longer and more grueling meal.

Scanning the top headlines at political punditry aggregator Memeorandum, you might hazard a guess or two about the state of politics this post-election season.

First, you might surmise that all this talk of Hillary Clinton being at the top of the 2016 food chain and the repetition of the names "Rubio" and "Ryan" adjacent to one another in headline after headline, indicates that the media is already circling the wagons around their favorite candidates.

Second, you might guess that this means there's a deficit of current news to keep the fires burning.

Conservative Activist Edward Blum.

You may never have heard of him, but Edward Blum could turn out to be the nation's most successful opponent of laws designed to mitigate racial inequality. Working virtually alone, this failed Republican congressional candidate has helped orchestrate legal challenges that could polish off affirmative action and a key section of the Voting Rights Act. 

According to an illuminating profile from Reuters, Blum, under the auspices of his Project of Fair Representation group, spent three years looking for a white college applicant who had been rejected from her institution of choice despite having adequate credentials. The "former stockbroker" eventually settled on (now) 22-year old Abigail Fisher, who had failed to secure admission to the University of Texas at Austin. Reuters notes that civil rights groups also find candidates to "tee up" cases for laws they don't like, but Blum never actually found the kind of applicant he was looking for, because UT says Fisher's credentials weren't good enough to get into the school in the first place. Blum did find a case: Fisher's challenge to UT's attempt to supplement its color-blind top ten percent admissions policy with race-conscious affirmative action was argued before the Supreme Court this year, and found a slate of conservative justices eager to strike down affirmative action. 

The Fisher case is not Blum's only accomplishment. He's also responsible for helping set up two challenges to Section 5 of the Voting Rights Act, the landmark civil rights legislation that ensured black access to the franchise after decades of Jim Crow. Jurisdictions covered by Section 5 have to submit their election rule changes to the Justice Department for pre-approval because of a history of discrimination. Most—but not all—covered jurisdictions are in the South. Jurisdictions can "bail out" with a history of good behavior, but many conservatives still consider the law an anachronistic form of federal overreach because racism is over and stuff. In 2009, Blum financed Northwest Austin Municipal Utility District Number One (NAMUDNO) v. Holder, which lead to a Supreme Court ruling that left Section 5 hanging by a thread. He's also financing Shelby County, Alabama v. Holder, which may kill Section 5 once and for all.

What motivated Blum's crusade in the first place? Reuters describes him as a former Democrat whom Commentary magazine and Ronald Reagan converted to conservatism, but suggests that the major catalyst for his legal efforts was a failed congressional bid: 

After noticing that his heavily Democratic district had trouble fielding a Republican congressional candidate in 1990, Blum decided to enter the 1992 Republican primary. He won it, and in the general election faced an African-American incumbent Democrat. When Blum and Lark walked the district to shake hands with voters, he said, he had to carry a map because the borders zigged and zagged. "Multi-ethnic neighborhoods were split apart," he said. "Block by block. Blacks over here. Whites over here. Hispanics over here."

Blum lost by a wide margin. At the time, court challenges were starting to mount over "majority minority" districts like his that had been gerrymandered to consolidate minorities and maximize their voting power. In 1993, the Supreme Court ruled that districts appearing to segregate voters by race, even if designed to help minorities, violate the Constitution's guarantee of equality. Blum decided to sue Texas officials, alleging the districts unlawfully segregated voters by race.

So Blum didn't just recruit Abigail Fisher, he kind of is Abigail Fisher. 

Although incumbents can certainly exploit its provisions on minorities and redistricting to entrench themselves, Section 5 also helps prevent things like Republicans deliberately slicing districts so as to deprive Latinos of their political influence on the assumption that Latinos are more likely to vote for Democrats. The Texas GOP actually tried that in 2012, only to be blocked by the Justice Department. Scrapping Section 5 won't stop racial gerrymandering, but it will make the kind of racial gerrymandering Republicans like a little easier. 

If the Blum-financed challenges succeed, colleges will be less diverse—at least while they figure out new ways to foster diversity—and the federal government will be deprived of a key tool for ensuring politicians don't try to disenfranchise voters based on demographic assumptions. Blum's crusade against race-conscious laws may be motivated by his disgust for segregation. But winning at the Supreme Court will have no impact on ongoing racial segregation in American life—although perhaps fewer white Republicans will suffer the life-changing humiliation of losing congressional races to black Democrats.

First things first: No, the World Wildlife Fund (WWF) is not using drones to vaporize poachers. But thanks to a five million dollar grant awarded by Google on Tuesday, the organization is expanding its use of unmanned aerial vehicles to track and deter criminals who illegally hunt endangered animal species around the world. 

WWF spokesman Lee Poston is not calling these vehicles drones, because he doesn't want people to confuse them with the military kind. According to Poston, they are "sophisticated radio-controlled devices like hobbyists use" that can be "controlled from your iPad or other device." But the WWF website does call them "conservation drones."

Prior to receiving the Google grant, the WWF had already deployed trackers in Nepal's national parks. These drones are light enough to be launched by hand and can be programmed to fly about 18 miles at a maximum elevation of 650 feet, for almost an hour. The cameras on the drones allow rangers on the ground to spot would-be poachers, especially in hard-to-reach places.

The Google funding will enable WWF to expand its drone program in Asia and Africa to protect rhinos, which are hunted for their horns; elephants, which are pursued for their tusks, and tigers, which are killed for everything from their eyes to their reproductive organs. The grant will also be used to advance wildlife tagging technology, specialized sensors, and ranger monitoring software.

The anti-poachers are exploring other high-tech measures as well. "We are looking into how to track animal parts using things like DNA," says Poston. "So if a ranger find a rhino horn on the ground, we can figure out what happened." 

The grant is part of Google's flagship Global Impact Award program, which this year, is providing a total of $23 million in funding to nonprofits addressing various challenges through technology and innovation. Some of the other organizations that received awards on Tuesday included the Geena Davis Institute on Gender and Media (which recently put out a study on why women have fewer speaking parts than men) and charity: water, which increases water access in developing countries through technology. 

This grant "is going to have a huge impact," says Ian Morrison, another WWF spokesman. "The poachers and the crime syndicates that fund them are getting more and more sophisticated, and it's time for us to step up our game too, and level the playing field." 

Note: This image is not an actual Google-funded drone. 

A few days ago I quoted a negotiator for the shipping companies at the port of LA saying that clerical workers there had been offered a deal that would raise average annual pay "to $195,000 from $165,000, 11 weeks' paid vacation and a generous pension increase." That's a lot! Today the port strike is over, and the LA Times provides a more accurate picture of pay for these workers:

The workers don't have ordinary clerk and secretarial jobs. They are logistics experts who process a massive flow of information on the content of ships' cargo containers and their destinations. The clerical workers, among the highest-paid in the country, are responsible for booking cargo, filing customs documentation, and monitoring and tracking cargo movements.

According to union officials and the Harbor Employers Assn., the average hourly rate for clerical workers is $40.50 an hour — which amounts to about $84,000 a year. In comparison, the median annual wage for cargo and freight agents was $37,150 in May 2010, according to the most recent data from the Bureau of Labor Statistics.

As talks dragged on, employers offered to raise the union workers' total compensation package. The employers had said total compensation currently averages $165,000, but that amount includes healthcare, pension contributions, time off and other benefits in addition to salary.

That's still a lot, and obviously these folks have a pretty rich benefits package if it's about equal to base pay. But since I wrote about this earlier, I just wanted to follow up with the straight dope now that we have it. You can decide for yourself what you think about it.

Chris Matthews spent an entire segment yesterday on Hardball going ballistic over the notion that financial markets will implode if we don't reach an agreement on the fiscal cliff by December 31. Is that true? Neil Irwin says Wall Street is taking the whole thing in stride:

The markets’ sense of confidence — or, arguably, complacency — is rooted in two strains of thought.

One is that all the tough talk from the negotiators is mere posturing, nothing more than a signal to their allies that they are taking a stand in advance of real dealmaking closer to the deadline. Investors and executives have repeatedly seen brinkmanship out of Washington — including over raising the cap on government borrowing in the summer of 2011 — conclude with an agreement at the last possible moment.

....Another argument for why there is no need for huge concern is that a short-term voyage off the cliff would do no lasting damage to the economy. Even if there is no deal on Dec. 31, Treasury Secretary Timothy F. Geithner could order that income tax withholding tables not be adjusted to reflect higher tax rates on Jan. 1, which would mean that Americans would not immediately see smaller paychecks. The government could adjust the timing of payments to defense contractors and others to take the sting out of automatic budget cuts in the initial days of 2013

These aren't competing theories. They're complementary, and they're both true. Negotiations like these really do usually go down to the wire, so lots of huffing and puffing at this stage is hardly something to get too worried about. At the same time, January 1 isn't some magical date carved on an ancient Mayan stone. Going over the cliff for a few days or weeks won't do much harm, and politically it might be better to do a deal in January, after tax rates have reverted to their pre-Bush levels, than before. If we're still nowhere near a deal by the end of January, I'll start getting worried. Until then, I'm with Wall Street: there's no need for panic yet.

Cpl. Ben Edwards, Lima Company, 3rd Battalion, 9th Marines, Regimental Combat Team 7, speaks with Afghan Local Police 3rd Lt. Shah Mohmmad, during a patrol around the area of Forward Operating Base Geronimo, Helmand province, Afghanistan, Nov. 27, 2012.
U.S. Marine Corps photo by Lance Cpl. Robert Walters

Mehmet Oz: Be democratic, forget organic.

"There's nothing like a block of frozen spinach to make you feel bad about your family dinner," observes heart surgeon, TV personality, and health pundit Dr. Mehmet Oz in the latest Time. The advice in Oz's piece is mostly on point—foodie trends shouldn't keep people from eating unglamorous, wholesome foods like frozen veggies or canned beans, especially if that's all they can afford.

But I think the good doctor misdiagnoses the case when he paints organic food as a frivolous luxury:

Organic food is great, it's just not very democratic. As a food lover, I enjoy truffle oil, European cheeses and heirloom tomatoes as much as the next person. But as a doctor, I know that patients don't always have the time, energy or budget to shop for artisanal ingredients and whip them into a meal.