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Top Marginal Tax Rates Through Time

| Wed Mar. 11, 2009 1:42 PM EDT
Next time you hear someone complaining about how the rich shoulder a massive tax burden, point them to the first graph at this FiveThirtyEight post. The top marginal tax rate in this country is at one of the lowest points in the past 100 years.

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Political Interference

| Wed Mar. 11, 2009 1:07 PM EDT
The New York Times reports that banks are getting tired of Uncle Sam constantly looking over their shoulders:

Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens....The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.

Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo.

Obviously, everyone's first reaction is here is to break out their tiny violins so we can all play sad songs for the nation's bankers.  Songs like this: If you don't want taxpayer oversight, then don't take taxpayer money after you've run your bank into the ground.  Until then, suck it up.

That's pretty much my second reaction too.  Still, there's a germ of an issue here.  One of the arguments against bank nationalization is that unlike Sweden, where those nice sensible Scandinavians were willing to let their technocrats run things after their housing bust, Americans have no such discipline.  Nationalize a big American bank and Congress will promptly use it as a piggy bank for every half-baked scheme their staffs can cook up.  I mean, it's not as if Congress was exactly a positive influence on Fannie Mae and Freddie Mac, was it?

Which suggests these complaints deserve a hearing.  Some things just make sense: if you're accepting bailout money because your capital has become dangerously low, then it's hardly unreasonable to demand that you stop depleting capital even more by continuing to pay out full dividends.  That's directly related to the problem at hand and it's a reasonable regulatory response to a serious problem.

On the other end of the spectrum, though, you get populist grandstanding like the recent fuss over Northern Trust hosting a bunch of client parties at a golf tournament they were sponsoring in Los Angeles.  Aside from the fact that money for the events all came out of the bank's marketing budget — which no one in their right mind thinks should be shut down during a recession — they almost certainly would have wasted more money by calling off their parties than by holding them.  Those kinds of things are scheduled far in advance, and the contracts they signed probably didn't allow them to recover more than a pittance if they cancelled at the last minute.  So if they had cancelled, they would have ended up paying out 90% of their budget and getting nothing for it, instead of paying out 100% and getting something in return.

Now, you can argue that they should have cancelled anyway purely for the PR value.  And maybe so.  And it's obviously a judgment call about what kinds of rules should apply to bailed out banks that ought to be conserving cash.  Still, those of us who tentatively favor nationalization should also favor a process that keeps Congress at arm's length.  The whole point of nationalization is to restore both solvency and confidence, and let's face it: sober management isn't really Congress's stock in trade.  I'm not quite sure where the balance lies, but it's worth an open discussion.

Treasury Staffs Up, Brings More Progressives On Board

| Wed Mar. 11, 2009 1:00 PM EDT

President Obama has taken a lot of heat for having an understaffed Treasury Department, so earlier this week he named three new assistant secretaries. I have a web article up on one of the three, Alan Krueger, who will be the assistant secretary for economic policy. Krueger has never worked for a bank, doesn't have any connection to TARP or its later iterations, and has never pushed finance sector deregulation. Oh, and he shifted the conventional thinking on the minimum wage dramatically leftward in the 90s. From my article:

"To my mind, he would be one of the best people we could hope to get in this position," says Dean Baker, head of the left-leaning Center for Economic Policy Research. Adds CEPR's chief economist, John Schmitt: "He has done a lot of research that progressives would be very happy about. He is certainly one of the absolute top labor economists in the country." One-time Clinton economic aide and Berkeley economist Brad DeLong calls Krueger a "good choice."

Krueger is best known for his work on the minimum wage. In 1997, he co-wrote a book with economist David Card called Myth and Measurement: The New Economics of the Minimum Wage. They argued that the moderate increases in the minimum wage typically seen in the US don't raise unemployment numbers—a thesis that went against much of the conventional wisdom at the time—and that such pay boosts have a substantial impact on the take-home pay of low-wage workers. The book, says progressive economist James K. Galbraith, established the minimum wage's value "very firmly and to the horror of the mainstream." At first, Krueger's ideas on the minimum wage were highly controversial. "He took a lot of heat for that, and stood up," says Schmitt. Krueger's extensive background on issues related to job creation and wage distribution, Schmitt adds, will serve him well as the Obama team attempts to implement the stimulus bill, which aims to create over 3 million new jobs.

Obama Proposes Making Earmarks Subject to Competitive Bidding

| Wed Mar. 11, 2009 12:23 PM EDT

In a statement today, Obama acknowledges that the budget just passed by Congress is loaded with earmarks -- the Administration has argued that O's campaign promises about earmarks don't apply to it because it was written before he took office -- and introduces new ways to reform them. Anything he suggests will have to be approved by earmark-hungry Congress, so don't hold your breath. But here are the President's ideas. The boldest and most promising one is to make earmarks subject to competitive bidding, which, because it strikes at the very heart of the idea of the earmark, will probably be the first to get rejected by Congress.

...earmarks must have a legitimate and worthy public purpose.  Earmarks that members do seek must be aired on those members’ websites in advance, so the public and the press can examine them and judge their merit for themselves.  And each earmark must be open to scrutiny at public hearings, where members will have to justify their expense to the taxpayer.

Next, any earmark for a for-profit private company should be subject to the same competitive bidding requirements as other federal contracts. The awarding of earmarks to private companies is the single most corrupting element of this practice, as witnessed by some of the indictments and convictions we have seen. Private companies differ from the public entities that Americans rely on every day – schools, police stations, fire departments – and if they are seeking taxpayer dollars, then they should be evaluated with a higher level of scrutiny.

Obama added: "if my administration evaluates an earmark and determines that it has no legitimate public purpose, we will seek to eliminate it, and we will work with Congress to do so." We'll see. Congress doesn't share Obama's zeal for reform, a fact we see time and again. So consider me pessimistic, but willing to be proven wrong.

Vitter's Meltdown

| Wed Mar. 11, 2009 12:06 PM EDT
Roll Call reports that Sen. David Vitter (R–Hookerville) had an airport meltdown last week:

According to an HOH tipster who witnessed the scene, the Louisiana Republican arrived Thursday evening at his United Airlines gate 20 minutes before the plane was scheduled to depart, only to find the gate had already been closed. Undeterred, Vitter opened the door, setting off a security alarm and prompting an airline worker to warn him that entering the gate was forbidden.

Vitter, our spy said, gave the airline worker an earful, employing the timeworn “do-you-know-who-I-am” tirade that apparently grew quite heated.

That happened to me once.  I didn't barge through the door, and I wasn't important enough to credibly demand if the gate agent knew who I was, but I sure was pissed.  Obviously Vitter needs to learn a little impulse control, but I guess I sympathize a little bit here.  If you show up at your gate 20 minutes before the flight is scheduled, they really ought to let you on.

Advise and Consent

| Wed Mar. 11, 2009 1:32 AM EDT
Bruce Ackerman is unhappy that lots of powerful executive branch appointments can be made without Senate approval:

Modern presidents have increasingly gained the power to make key appointments unilaterally — with President Obama taking this process to new heights. His White House czars such as Lawrence Summers and Carol Browner are likely to overshadow the Cabinet secretaries in their respective domains. Yet, as presidential assistants, they escape the need for Senate scrutiny.

....Consider, for example, the treatment accorded Eric Holder as attorney general and Gregory Craig as counsel to the president. Holder was carefully vetted by the Senate, and his work in previous administrations was the subject of much debate. Yet Craig, who will also be involved in important and public legal matters, largely escaped scrutiny. Why?

Craig, a distinguished lawyer and public servant, is an outstanding choice for his key position. But it is not enough to trust the president to make good appointments. The challenge is to make it difficult for future presidents to appoint less-qualified officials — such as Alberto Gonzales or Harriet Miers — without serious outside review of their credentials. That, after all, is the aim of our system of checks and balances.

Ackerman has a point, but here's a different suggestion: how about doing away with Senate confirmation entirely? It wastes tons of committee time, it promotes endless grandstanding by bloviating pols, it discourages all but the hardiest from working for the government, and — most important of all — it doesn't actually seem to produce a better class of appointees, does it?  Is the country really better off with a system that confirms Alberto Gonzales but deep sixes Tom Daschle?  Has the White House staff, on average, been any less competent or less honest in recent years than the Senate-confirmed cabinet staff?  Does the Senate, as Ackerman would like, really make it difficult for presidents to appoint underqualified officials?

The Senate would never agree to give up its precious consent privilege, of course, but I'm frankly not sure they add much to the process these days.  In the meantime, allowing the president to have a White House staff of his choosing — whether I like his choices or not — seems more important than providing yet more cannon fodder for the greatest deliberative body in the world.  They've got plenty to chew on already.

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The Green View From Hong Kong

| Tue Mar. 10, 2009 11:57 PM EDT
Well, it's spectacular, 15 floors up overlooking the waterfront, complete with a skyline of mylar and mirror highrises, fleets of water taxis, ferries, more buses than I thought existed on Earth, and mountains to put Maui to shame. I haven't been to Hong Kong since the handover and it's different. There's a green theme sprouting from tarmac, billboards, newspapers. Hard to tell how much of it will stick and what's glitter—but the same could be said for the US.

One thing of interest: the Green Long March, built on the iconic Red Long March of Chinese history. It's an army of college students fanning out across the countryside each summer spreading green messages to villages, schools, orphanages, factories, farms. Two thousand students participated in 2007, the debut year, spreading awareness about water and all its issues. Five thousands students marched by foot and via trains and so on throughout 2008, carrying messages about green enterprise.

Caroline Hsiao Van, a trustee of the nonprofit Future Generations and founding member of the Green Long March movement (FutureGenerations/CHINA), tells me she's not sure how many students will march this year—but the Green Long March has become a year-round platform for students from over 50 universities to have a voice and affect change in their communities. Since it's possible that as many as 2 million of last year's 6-7 million graduating college students in China are unemployed.. and this year... well, there could be a lot of diploma-bearers, undergrads, members of the China Youth League and university environmental clubs looking for something to march toward this summer and the theme on the calendar is green energy.

Most amazing: the Green Long March has gained the support of the government of China despite its notorious skittishness about movements and students. FutureGenerations/CHINA is also partnered with dozens of Chinese universities. Corporate sponsors and foundations support students on their summer odyssey.

The idea is that the marchers bring a message, listen to the responses, and forge evidence-based decisions. The plan is to build from known successes, spread the solutions, and let the good ideas proliferate at the grassroots level. It's an approach grown from the founding father of FutureGenerations, an American, Daniel Taylor, who's been working to green and improve the lives of people in Tibet, Afghanistan, India, and Peru for decades.

So what about a Green Long March in the US? The machinery exists, left over from the Obama campaign. Why let it become landfill? Why not recycle the energy of so many eager to forge solutions? Who among us wouldn't march out to the greenless realms and talk and listen and make change?

Obama=Bush?

| Tue Mar. 10, 2009 11:13 PM EDT

I cannot wrap my head around this op-ed by Jackson Diehl in Sunday's Washington Post. The theme? President Obama is starting to look a lot like President Bush:

The Bush administration pushed through the USA Patriot Act in October 2001 by suggesting that opponents didn't want to stop another al-Qaeda attack. In his first news conference, Obama suggested that congressional opponents of the stimulus package "believe that we should do nothing" about the economic emergency...

So Obama hasn't strayed far from Karl Rove's playbook for routing the opposition. But surely, you say, he's planning nothing as divisive or as risky as the Iraq war? Well, that's where the health-care plan comes in: a $634 billion (to begin) "historic commitment," as Obama calls it, that (like the removal of Saddam Hussein) has lurked in the background of the national agenda for years. We know from the Clinton administration that any attempt to create a national health-care system will touch off an enormous domestic battle, inside and outside Congress. If anything, Obama has raised the stakes by proposing no funding source other than higher taxes on wealthy Americans, allowing Republicans to raise the cries of "socialism" and "class warfare."

Just as Bush promoted tax cuts as a remedy for surplus and then later as essential in a time of deficits, so Obama has come up with strained arguments as to why health-care reform, which he supported before the economic collapse, turns out to be essential to recovery. Yet as he convened his "health care summit" at the White House on Thursday, the stock market was hitting another 12-year-low; General Motors was again teetering on the brink of insolvency and the country was still waiting to hear the details of the Treasury's proposal to bail out banks. George W. Bush might well be asking: Is the president taking his eye off the ball?

Billy Corgan Asks Congress For Money

| Tue Mar. 10, 2009 9:12 PM EDT
Okay, the Smashing Pumpkins frontman was actually asking the House Judiciary Committee to pass the Performance Rights Act, which would give artists royalties for having their songs played on the radio, rather than just the songwriters, but the end result would be more moolah for Mr. Mopey more bucks for baldy an increased revenue stream for Mr. Corgan. Pitchfork found the Getty page with pictures if you want to see him, all decked out in a suit and stuff. The Chicago Sun-Times has a transcript of Corgan's full testimony, including gems like "ours is a business that always begins with the brilliance of the artists." Sure, unless it starts with the cynicism of a label exec. But that's a kind of artistry! Anyway, Corgan was speaking on behalf of Music FIRST, an organization whose whole reason for being is to revise the royalty structure; internet and satellite radio pay royalties to artists and songwriters, while regular old AM/FM stations just pay songwriters. After the jump: your farcically-named DJ tries to untangle this moral web.

Rihanna and Chris Brown Recording Duet

| Tue Mar. 10, 2009 8:41 PM EDT
If you, like me, have been watching the Rihanna/Chris Brown scandal unfold with sick horror, get ready to have that feeling step up to a scream/hurl combo. Reuters is confirming TMZ's reports that Brown and his alleged victim of assault have been in the studio working on a "love song." The song was originally meant for Rihanna alone, but producer Polow Da Don apparently thought it would be a super idea to have Brown join in and make it a duet. The track's themes apparently touch on "overcoming difficult challenges as a couple." Insert scream/hurl noise here. A source told TMZ that the recording sessions were "very emotional... the feeling in the room was pure love." Insert louder scream/hurl noise here. Apparently the producer urged them to hurry up and record the track, since "the heightened emotions would translate powerfully into the music." Insert enormous scream/hurl noise here with additional sound of head exploding.