Blogs

Taxes of the Rich and Famous

| Tue Dec. 16, 2008 2:19 PM EST

TAXES OF THE RICH AND FAMOUS....Ezra Klein is doing tax wonkery over at his place, and I can't let him have all the fun. So just for the record, here's a look at effective federal tax rates in general:

Not very progressive! Add in state and local taxes and it would look flatter still. And just to remind everyone of exactly what that "Top 400 Taxpayers" segment at the far right looks like, here are the pinkos over at the Wall Street Journal to explain it to you:

The top 400 taxpayers have greatly increased their share of individuals' income since the mid-1990s. The group accounted for 1.15% of total income in 2005....more than twice as large as its 0.49% share a decade earlier.

....The average federal income-tax rate for the group was 18.23%....well below the average income-tax rate of nearly 30% back in 1995, when Bill Clinton was in the White House.

So there you have it. The top 400 taxpayers, a group so rich and elite that I'd need scientific notation to properly represent their proportion of the population, have doubled their share of income in the past decade or two but have decreased their tax burden by nearly half. Nice work! As you can see, Warren Buffett wasn't exaggerating when he said his secretary paid a higher tax rate than he does. If she pays more than 18% — not exactly a tough hurdle when you figure that payroll taxes already account for about 8% of that — she probably does.

UPDATE: So how do the rich do it? Jonathan Stein interviews David Cay Johnston here to find out.

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Arne Duncan for Ed Secretary

| Tue Dec. 16, 2008 1:49 PM EST

ARNE DUNCAN FOR ED SECRETARY....It's odd, but possibly the most contentious appointment Barack Obama has in his portfolio is someone to head up the Department of Education. The war on the left between the "reformers" and the "everyone elses" in the ed world makes battles over Afghanistan or bailing out GM look tepid by comparison, and apparently Obama decided he didn't really want to pick sides. Dana Goldstein comments on Obama's pick of Arne Duncan, the latest in his almost unbroken series of senior staff needle-threading exercises:

Duncan is one of the only prominent education leaders in the country who signed both the Broader, Bolder and the Education Equality Project manifestos. Duncan, a longtime Obama friend and adviser, has shown particular interest in early childhood education, a major part of Obama's education and anti-poverty agenda. And he sends his own kids to Chicago public schools. Here's hoping he'll live in the city when he moves to D.C. and continue his family's track record of support for the public system.

....Any pick of an actual superintendent to head the Department of Education, as opposed to a governor relatively ignorant of the nitty gritty of education debates, is a move by Obama in the direction of serious, hands-on reform. That's good news, I think, for those of us — regardless of ideology — who hope education will become a first tier issue under the Obama administration.

I guess so — though Rod Paige was a superintendent too, and that didn't do much to make education a first tier priority in the Bush administration beyond passing NCLB.

There's something a little surreal about all this, though. At the risk of sounding like an idiot TV talking head, I'm beginning to wonder if Obama plans to appoint anyone who's even the teensiest bit controversial to his senior staff. (And no, Rahm Emanuel very decidedly doesn't count. Give me a break.) There's something sort of oppressively bland about this entire exercise, and I say that as someone who's about as personally bland as you could ever hope to meet. Still, while I may be all for technocratic competence, I can't help but feel that No-Drama Obama could use an appointment or two whose only purpose is to mix things up a little and piss off the right people. Who will be his Harold Ickes?

The Top Ten Ethics Scandals of 2008

| Tue Dec. 16, 2008 1:43 PM EST

Citizens for Responsibility and Ethics in Washington (CREW) has released its year-end list of the "top" 10 ethics scandals of 2008. Why isn't the recent criminal complaint against Illinois Gov. Rod Blagojevich on the list? Well, for one, it's not a Washington-centered problem. But Melanie Sloan, CREW's executive director, adds that while the Blagojevich case may be the flavor of the week right now, she thinks the scandals on her administration's list will have more of an impact in the long run. Here they are:

1. "Unchecked Congressional Ethics": CREW wants Congress to have a high-powered ethics office with subpoena power. MoJo Blog covered the vote on this earlier this year; we looked at this issue last year, too.

2. "No Guarantee that Bush Administration Records will be Properly Archived": We've been keeping you up to date on the ongoing missing White House emails problem.

3. "Speech or Debate Clause": Lots of politicians who are charged with crimes seek to have their indictments dismissed under the "Speech and Debate" clause of the Constitution, which they claim protects anything in their congressional office from being used against them in court on the grounds that its "legislative material." Sloan says that this may be the biggest of the ten scandals her organization highlighted. If Blagocevich had been a member of congress, Sloan says, he would have been protected from much of US Attorney Patrick Fitzgerald's investigation. Law enforcement would not have been able to tap his office phone or include anything he did in the course of his legislative work as part of an indictment, Sloan says. And both Democrats and Republicans are protecting this hard-line interpretation of the speech and debate clause. "This is a bipartisan issue of protecting members accused of corruption from investigation and prosecution," Sloan says. Mother Jones covered this problem as early as 2006, with the raid on the offices of now ex-Louisiana Democratic Rep. William Jefferson.

Cheney Spinning His Way Out the Door (on Gitmo and Torture)

| Tue Dec. 16, 2008 1:17 PM EST

In his first--dare we say it?--farewell interview, Vice President Dick Cheney told ABC News correspondent Jonathan Karl that he'd like to keep Guantanamo open until the "end of the war with terror." How long will that be? "Well, nobody knows," the veep said. To defend his hold-'em-forever stand, Cheney referred to the much-repeated claim that many of those released from Guantanamo have returned to terrorism. He said:

We've had, as I recall now--and these are rough numbers, I'd want to check it--but, say, approximately 30 of these folks who've been held in Guantanamo, been released, and ended up back on the battlefield again, and we've encountered them a second time around. They've either been killed or captured in further conflicts with our forces.

This figure of 30 back-to-the-battlefied Gitmo vets has been used by the administration and its supporters for some time now. One problem: it seems to be hype.

Last year, researchers at Seton Hall University School of Law researched this contention, examining the extensive records covering those who have been released from Guantanamo, and they found that the data did not support this claim:

Oil Exploration

| Tue Dec. 16, 2008 1:08 PM EST

OIL EXPLORATION....Dan Drezner is puzzled by news that that the oil majors are cutting exploration projects:

So, let me see if I have this right:

  1. If oil prices are sky-high, the energy sector explains that it will be slow to develop new fields, because exploration requires massive fixed investments and no one knows what the price of energy will be 5-10 years from now;

  2. If oil prices are low, the energy sector explains that it is unprofitable to develop new fields because… energy prices are low.

Seriously, am I missing something here? Given lag times and the natural propensity to consume more of something when prices are low, doesn't it make sense to "drill, baby, drill" when the price of energy is low?

High oil prices do spur extra exploration, but not by as much as you'd expect. And while uncertainty about future oil prices is certainly part of the problem, I doubt it's a major one: generally speaking, everyone knows which direction oil prices are going in the long term, and it's the opposite of "down."

No, the underlying issue here is that there really aren't that many great places left to explore. Last week, for example, Lesley Stahl of 60 Minutes did a breathless segment on Saudi Arabian oil exploration that would have done credit to a nine-year-old. She went out to Shaybah, a drilling project that's been three decades in the making, and spent ten minutes gushing over the almost impossible odds the Saudis overcame to get the project up and running. 135 degrees in the shade! Hundreds of miles from nowhere! One hundred million cubic feet of sand! 400 miles of pipeline! Oil that didn't want to flow! Storage tanks with roofs that move!

But she never asked the one question she should have: if Saudi Arabia really has as much easily extractable oil as they say they do, why are they building projects like Shaybah? Why not just sink a few holes into the easy stuff instead?

Almost certain answer: because there isn't any easy stuff left. It's either Shaybah or nothing. And that's pretty much the story in the rest of the world too. There just aren't any easy sources of oil left. It's almost all in desolate wildernesses, deep underwater, in polar regions, or locked up in tar sands. And just to make it worse, projects to extract this stuff are risky too. At least half will come up dry after tens of billions of dollars worth of test drilling.

This is why oil companies are so eager to open up the American coast to drilling. There's not really very much oil there in the big scheme of things, but at least it's relatively easy to get to. In the rest of the world, the easy pickings are gone, and the appetite for sinking vast sums to get what's left just isn't always there. Like it or not, we're running out of oil. Spending money on alternatives is looking like a better and better bet to everyone, including even the oil companies.

Will Sect. of State Clinton Ban Private Contractors?

| Tue Dec. 16, 2008 1:03 PM EST

In the presidential primaries, Hillary Clinton frequently touted her tough-as-nails stance on private contractors. She was the co-sponsor of the Stop Outsourcing Security Act, which, in her words, would keep firms like Blackwater from performing "combat-oriented and security functions in Iraq." Blackwater employees could keep slinging slop in cafeteria under Clinton's bill, but they couldn't get themselves into horrifying situations like the Nisour Square shooting.

Justin Elliot of Talking Points Memo reports that part of that bill (which did not see any success in the Senate) instructed the Secretary of State to remove private contractors from their posts guarding State Department personnel:

Not later than 6 months after the date of the enactment of this Act, the Secretary of State shall ensure that all personnel at any United States diplomatic or consular mission in Iraq are provided security services only by Federal Government personnel.

Now that Clinton is about to take over at Foggy Bottom, she can either institute this rule without getting congressional approval or can prod Congress into taking the Stop Outsourcing Security Act more seriously. But Elliot reports that there is no indication she will do either. Clinton's Senate office isn't answering any questions about Clinton' current position on the use of private forces in Iraq. This may mean that Clinton doesn't want to steal Obama's thunder by appearing to make policy, or it could mean that Clinton's anti-contractor pledge in the primaries was simply campaign bombast. We'll soon know.

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The Best Singles of 2008

| Tue Dec. 16, 2008 12:42 PM EST

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What a bonkers year for singles. The undisputed heavyweight champion song of the year, with the magical combo of hipster cred and unexpected popular appeal, is, inarguably, copyright 2007, so any replacement #1 will necessarily feel kind of anticlimactic. I suppose it's stretching it to include MGMT as well, but everybody else is, so I'm going to look the other way. It's a mess. To be honest, I finally settled on 20 great songs and then scrambled the order until it looked right. What emerged on top was at first a surprise, but the more I think about it, the more it makes sense: it's a convention-smashing ode to staking a claim on your future, no matter what the haters say.

In Defense of Caroline Kennedy

| Tue Dec. 16, 2008 12:40 PM EST

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Over at his blog, Kevin Drum joins "the almost unanimous blogosphere consensus" that New York Gov. David Paterson should appoint someone other than Caroline Kennedy to fill Hillary Clinton's Senate seat:

Rich and famous people already have a huge leg up when it comes to winning political office, but at least they still have to run and win. Appointing them instead so they can avoid the whole messy business of engaging in a campaign is just a little too Habsburgian for my taste.

That's fair enough. In general, I agree: appointing the scion of a political dynasty to political office reeks of royalism. But let me play the devil's (or Kennedy's) advocate. The Senate, and especially the Senate in New York, seems to me to be a special case. Each state gets two senators, regardless of population. That means most states are tremendously overrepresented in the Senate, but a few big ones, like California and New York, are hugely underrepresented. (David Sirota pointed out last year that senators representing just 11% of the US population represent enough votes for a filibuster—allowing the representatives of a small fraction of the country's population to block just about anything.) Since every senator gets one vote in the Senate, big states can only really compensate for their underrepresentation in two ways: with seniority (which Clinton's replacement won't have in any case) and celebrity (which Kennedy has in spades).

Why does celebrity help? Well, for one, it gives you a more effective bully pulpit. The national media is more likely to cover Sen. Kennedy (D-N.Y.) than someone that nobody outside of the state has ever heard of. Caroline's celebrity status will garner her instant press attention, regardless of her actual abilities. Press attention magnifies your attacks on your opponents and amplifies your message.

Maybe New York's underrepresentation problem doesn't outweigh the arguments against Kennedy's candidacy. Not everyone gets to be powerful in the Senate by virtue of being a bonafide political celebrity beforehand, Hillary Clinton-style, or by racking up seniority, like Robert Byrd (D-W.V.). Chuck Schumer, the senior senator from New York, built up his power base by raising enormous amounts of campaign cash for his fellow Democrats. (Of course, celebrity helps with fund-raising, too.) In any case, New York is in big trouble, and I'm not sure it has time to wait for a new senator to earn power. Big states like Ohio and Michigan were certainly regretting the Senate's bizarre one-state, two-votes structure after the auto bailout failed. When New York needs a high-profile Senator to rail against small state obstructionists preventing the next, say, Wall Street rescue, will New Yorkers regret not having a Kennedy in their camp?

Inflation

| Tue Dec. 16, 2008 12:29 PM EST

INFLATION....The consumer price index fell last month, but this was mostly due to falling oil prices, so it's no big deal. It's a good thing, in fact. Remove oil prices and inflation was up very slightly, perhaps 0.1% or so.

That's worryingly close to zero, and that's a much bigger deal, especially since we're still in the early days of this recession. If prices fall any further, we're in deflation territory, and that would be dismal indeed. So as much as I dislike the auto bailout on its merits, this would not be a good time to let GM go under. Nor is it a good time to cavil about federal stimulus spending or to force state governments to slash expenditures. So tell me again: how many days are there until January 20th? It would be nice to have an actual president again.

China Jumps To Hybrid

| Mon Dec. 15, 2008 9:11 PM EST

277211.jpg China's first mass-produced hybrid electric car hit the market today. The car is made by BYD Auto and backed by Warren Buffett who owns 9.9 percent of the company. The F3DM (if you say so, C-3PO) can be charged from powerpoints at home or at electric car charging stations. That's a first for mass produced. The hybrid runs 62 miles on a full battery and costs under $22,000 dollars.

BYD Auto says it doesn't expect the F3DM will succeed with Chinese customers initially because of the high price, reports AFP. Instead the company is focusing on sales to company fleets. The strategy is to leapfrog past traditional cars—where Chinese technology lags badly—straight to hybrids.

Smart strategy. Remind me again why exactly we're bailing out our own loser car companies? BYD already specialized in producing rechargeable batteries and only started making cars in 2003 when it bought a bankrupt state-owned car company. Since then it's beaten Toyota and General Motors to the punch as those companies won't launch home-chargeable hybrids cars before 2009 and 2010 respectively. Can't we leapfrog past the traditional car companies straight to hyperdrive mass transit? Can't we, as the Chinese say, transform the current mass chaos into mass opportunity?

Julia Whitty is Mother Jones' environmental correspondent, lecturer, and 2008 winner of the PEN USA Literary Award, the Kiriyama Prize and the John Burroughs Medal.