Kevin Drum - December 2009

Quote of the Day: Plutocrats!

| Thu Dec. 3, 2009 5:37 PM EST

From Felix Salmon:

When you have a progressive tax system, especially when there are surcharges on people making seven-figure incomes, you also have a system where for any given level of national income, the greater the inequality, the greater the government's tax revenues. And indeed federal revenues have been rising faster than median wages for decades now, thanks to the rich getting ever richer.

Given the government's insatiable appetite for cash, it's only natural that it would prefer to tax plutocrats, spending some of that money on poorer Americans, rather than move to a world where poorer Americans earn more (but still don't pay that much in taxes), and the plutocrats earn less, depriving the national fisc of untold billions in revenue.

The government's interests, then, are naturally aligned with those of the plutocrats — and when that happens, the chances of change naturally drop to zero.

This is true.  But it's not very true.  To see why, take a look at how progressive the federal tax system is.  The chart on the right is from a 2004 paper by Piketty and Saez, and it shows the total federal tax rate (income tax, payroll tax, etc.) for various income groups.1  As you can see, it's progressive, but it's not that progressive.  And that makes a difference.

Here's why: although the top 1% (the four richest groups in the chart) has a lot of income, the 60-80th percentile has about the same amount.  That's because although their incomes are a lot lower, there are a lot more of them.  So what happens if that group loses, say, 10% of its income and it goes instead to the very tippy-top earners?  Answer: total revenue to the government goes up about 1%.  The same is roughly true for the other income groups as well.

In other words, the federal government doesn't have much of an incentive to maintain lots of income inequality.  Not much fiscal incentive anyway.  For the most part, the political incentives swamp the fiscal ones, and unfortunately they aren't very closely balanced.  Pursue policies that raise middle class wages, and the effect is so diffuse and so slow that hardly anyone notices.  Pursue policies that benefit the rich and you get immediately showered with oceans of campaign contributions.  That's mostly what motivates our political economy, I think, not tiny changes in the total tax take based on changes in income inequality.2

1The chart starts at the 60th percentile because, basically, there's hardly any income to tax below that.  This is mostly an argument about the middle class vs. the rich.

2Plus, of course, the fact that the rich basically control the country and have an entire political party dedicated to their interests.  But that's a whole different post.

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What's the Plan for Afghanistan?

| Thu Dec. 3, 2009 1:29 PM EST

One of my frustrations with Barack Obama's Afghanistan speech was that he didn't explain what the strategy for deploying all those new troops was going to be.  Luckily, Joe Klein asked him that question:

I asked him what instructions he had given the military to make the next 30,000 troops more effective than the 21,000 troops he sent last March, whose presence didn't seem to improve the situation on the ground at all. "Look, the fact that there were increased casualties this year I think is to be expected from increased engagement by our forces." True enough, but the NATO coalition lost ground to the Taliban this year, by Obama's own admission. And the President could only come up with speed of deployment and a clearer sense of mission as strategic game changers. Later, when I asked him about what changes he had ordered for the training of the Afghan army and police — a frustrating proposition, so far — he deferred to his commanders in the field but said the new order of battle would include "a partnering situation, a one-to-one match between Afghan troops and U.S. troops" in combat, which "produces much stronger results."

That's pretty discouraging, especially since Klein says that (unsurprisingly) Obama was well briefed and obviously understood the problems at hand.  But Klein's question is clearly the central question, and surely one that Obama must have anticipated.  If, after months of planning, he still couldn't come up with a decent answer, that's bad news.

It's not clear that the surge in Iraq is a good model for success in Afghanistan in the first place, but to the extent that it is, you have to at least understand the model.  Petraeus didn't just send in a bunch of extra troops.  He had a plan for how to use them in an inventive way.  The vast bulk were sent to Baghdad, where they represented a doubling of the American presence.  Separation walls were constructed all over the city.  Counterinsurgency tactics were implemented up and down the line.  Sunni tribes were bribed coopted into supporting us.  Even at that the jury is still out on whether it will ultimately succeed, but at least it provided some additional security and gave the Maliki government a shot at making things work.

But I still haven't heard anything like this for Afghanistan.  There are plenty of people out there with ideas, but I have no idea which of those ideas Gen. McChrystal is planning to try out.  Unfortunately, it looks an awful lot like Obama doesn't know either.

Why They Hate Us

Thu Dec. 3, 2009 12:58 PM EST

Stephen Walt pushes back on Tom Friedman's view that Muslims ought to realize that over the past couple of decades "U.S. foreign policy has been largely dedicated to rescuing Muslims or trying to help free them from tyranny."  After estimating the fatalities in various conflicts, he figures that since 1983 Muslims have killed about 10,000 Americans while Americans have killed about 300,000 Muslims:

I have deliberately selected "low-end" estimates for Muslim fatalities, so these figures present the "best case" for the United States. Even so, the United States has killed nearly 30 Muslims for every American lost. The real ratio is probably much higher, and a reasonable upper bound for Muslim fatalities (based mostly on higher estimates of "excess deaths" in Iraq due to the sanctions regime and the post-2003 occupation) is well over one million, equivalent to over 100 Muslim fatalities for every American lost.

[Several paragraphs of caveats.]

....If you really want to know "why they hate us," the numbers presented above cannot be ignored. Even if we view these figures with skepticism and discount the numbers a lot, the fact remains that the United States has killed a very large number of Arab or Muslim individuals over the past three decades. Even though we had just cause and the right intentions in some cases (as in the first Gulf War), our actions were indefensible (maybe even criminal) in others.

....Some degree of anti-Americanism may reflect ideology, distorted history, or a foreign government's attempt to shift blame onto others (a practice that all governments indulge in), but a lot of it is the inevitable result of policies that the American people have supported in the past. When you kill tens of thousands of people in other countries — and sometimes for no good reason — you shouldn't be surprised when people in those countries are enraged by this behavior and interested in revenge. After all, how did we react after September 11? 

Raw numbers like this obviously aren't the whole story.  On the other hand, when you get beyond the raw numbers it's not as if the scales suddenly tip overwhelmingly in our favor.  So whole story or not, it's a data point worth keeping sharply in mind.  Click the link for Walt's entire list.

Cheap Oil!

| Thu Dec. 3, 2009 12:35 PM EST

A headline today from CNN Money:

Why cheap oil is here to stay

Bruce Bartlett says this must mean that oil prices are due for a runup.  Sounds right to me.

Just Another Day in the Senate

| Thu Dec. 3, 2009 11:59 AM EST

The LA Times reports on Ben Bernake's confirmation hearings for a second term as Fed chairman:

Reflecting the antagonism Bernanke faces in Congress, Sen. Bernie Sanders of Vermont placed a hold on the Fed chief's nomination late Wednesday.

The move by Sanders, an independent who caucuses with the Senate's Democrats, isn't expected to derail Bernanke's confirmation.

Aside from my general dislike of the whole hold process, this is a pretty good example of a big specific problem with it: namely that I don't think Sanders has even the slightest hope that his hold is genuinely going to keep Bernanke from being confirmed.  I mean, Paul Krugman and Dean Baker both favor his reappointment, for God's sake.  So all this does is gum up the gears and force the Senate to spend time on Bernanke instead of the million other things it should be spending time on.

Alternatively, I suppose maybe Sanders is just using this to get leverage for something he wants.  I still think holds are a lousy way to do this, but I suppose some good could come out of it if it raises public awareness of the fact that the Fed is supposed to bear some responsibility for maintaining full employment, not just controlling inflation.  Unfortunately, it's more likely to raise public awareness of cranky Ron Paul-esque Fed bashing, which doesn't do anyone any good.  (Except for Ron Paul, of course.)  All in all, just another day in the Senate, the world's worst legislative body.

The Political Ecosphere

| Thu Dec. 3, 2009 11:45 AM EST

Glenn Greenwald on Jane Hamsher:

“I think Jane’s success in a prior career has made her immune to the rewards of access — and fear of punishment — which keep most younger inside-the-Beltway progressives obediently in line,” he said. “She’s not 26 years old and desperate to work for a DC think tank, a Democratic politician or a progressive institution. She doesn’t care in the slightest which powerful people dislike her, but rather sees that reaction as vindication for what she’s doing.”

Matt Yglesias objects to this because he's 28 years old and works for a DC think tank.  Fair enough.  But the bigger problem with this quote, I think, is that it misapprehends the incentive structure at work in political activism.  Implicitly, the idea here is that Jane sits outside that structure completely, but that's really not true.  Just as beltway types have incentives that generally lead them to compromise in a centrist direction, base activists have incentives that push them in exactly the opposite direction.  They can get ostracized for being too accomodating exactly the same way that think tank folks can get ostracized for being too shrill.

In any case, I really think temperament drives most of this stuff in the first place.  After all, I'm in pretty much the same situation as Jane.  Maybe more so, in fact, since I live 3,000 miles away from DC and rarely even socialize with other bloggers.  And yet, obviously, I have a pretty moderate, accommodating blogging style.  But that's more because of who I am than because of who I work for.

Anyway, I generally like both the activists and the beltway types and figure they have symbiotic roles in the political ecosphere.  So more power to both of them as long as they're roughly on my side.  How's that for accommodating?

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Where are the Jobs?

| Thu Dec. 3, 2009 1:52 AM EST

Here's the end of Robert Samuelson's column today:

Obama can't be fairly blamed for most job losses, which stemmed from a crisis predating his election. But he has made a bad situation somewhat worse. His unwillingness to advance trade agreements (notably, with Colombia and South Korea) has hurt exports. The hostility to oil and gas drilling penalizes one source of domestic investment spending. More important, the decision to press controversial proposals (health care, climate change) was bound to increase uncertainty and undermine confidence. Some firms are postponing spending projects "until there is more clarity," Zandi notes. Others are put off by anti-business rhetoric. The recovery's vigor will determine whether unemployment declines rapidly or stays stubbornly high, and the recovery's vigor depends heavily on private business. Obama declines to recognize conflicts among goals. Choices were made — and jobs weren't always Job One.

Is he serious?  Unemployment is high because we don't have a trade agreement with South Korea and new oil fields haven't been opened up?  To say that's tissue thin is to insult tissues everywhere.  And suggesting that healthcare reform and "anti-business rhetoric" are slowing down the recovery hardly passes the laugh test either.  Surely Samuelson could have invented something better than this if he was really that desperate to hang something on Obama?

If Samuelson really cared about job growth, he might have spared a word or three for Republicans in Congress, who have steadfastly refused to consider the kind of serious stimulus measures that might actually promote employment.  But they stay oddly out of the picture.  I wonder why?

Housekeeping Update

| Thu Dec. 3, 2009 1:14 AM EST

Ok, let's see if everything works.....

Hooray, it works!  Normal blogging to commence shortly.

Housekeeping Note

| Wed Dec. 2, 2009 1:55 PM EST

We're upgrading our site today to newer, faster, better, and more reliable software.  Hooray!  That also means the site will be shut down for the next few hours.  Boo!  You'll still be able to read everything, but comments will be shut down and there will be no new posting for the rest of the afternoon.

I'll be back later tonight if everything goes well.  We may encounters a few hiccups as we settle in (did I mention that this is a software upgrade?), but after that everything should be much smoother around here.  Keep your fingers crossed.

New Frontiers in Obstructionism

| Wed Dec. 2, 2009 1:49 PM EST

The filibuster is far from the only delaying tactic available to Republicans as they try to hold off healthcare reform.  Taegan Goddard glosses an article from Roll Call for us:

For instance, instead of offering a conventional amendment to the bill this week, Republicans used "an esoteric procedural tactic" that would send the bill back to committee with instructions to eliminate certain cuts. If successful, Republicans would force Democrats to "hold another filibuster-killing vote on whether to restart debate on the bill."

"Republicans said they are likely to use the procedural tactic repeatedly during debate this month as they seek to make the point that the Senate should go back to the drawing board on the health care bill."

This is going to be fun couple of months, isn't it?