Kevin Drum - December 2010

Chart of the Day: Tax Cut Fever

| Thu Dec. 2, 2010 12:47 PM EST

Speaking of tax cuts, I thought everyone should see a nice picture that compares the Obama position with the Republican position. As you can see, under the Obama plan (in blue) everyone gets a tax cut. According to the Joint Committee on Taxation, your average middle class household gets a cut of $916. An upper middle class household gets $3,766. A millionaire household gets $6,349. Money for everyone!

But that's not enough. The red lines roughly show the additional tax cuts under the Republican plan. Everyone making up to $250,000 gets nothing. But the tiny number of households above that threshold get huge pots of money, and the pots get bigger the more money they make. I don't have enough room on the blog to show it properly, but millionaire households get an extra $100,000 or so over and above what they'd get from Obama's broad tax cut.

That's what we're fighting over: a broad tax cut with something for everybody, or a broad tax cut plus an extra bonus for the upper middle class and an extra super duper bonus for the millionaire class. That's what the Republican Party has unanimously staked its future to.

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Barack Obama: President, not King

| Thu Dec. 2, 2010 11:59 AM EST

Email from a moderate lefty friend:

We crossed the Tipping Point yesterday. Last night L told me she's "over" Obama and thinks he's in over his head, politically. Up until yesterday, she was a die-hard supporter/defender. I'm nearly there.

I don't think he or his advisors have any idea how fast his supporters are fleeing. It reminds me — painfully — of Carter, circa 1979. Obama's about one "killer rabbit" away from certain defeat by any Republican, including Palin.

Easy solution: eliminate middle class payroll taxes and/or reduce tax rate on first $250K to as close to zero as possible and tax everything north of that at 40%, including dividends and capital gains.

Apropos of last night's post, I told him to wait until January to see what Obama is really made of. But it reminds me of something else, and I don't remember for sure if I've blogged about this. That's the problem with our modern cornucopia of communications channels. Maybe I tweeted this. Maybe I said it in a talk. Maybe I emailed about it. Or maybe I've already blogged it ten times and just forgotten about it. Who knows?

But anyway, here it is: Obama is a president, not a king. On taxes, for example, his position has been steady and clear all along: extend the broad tax cuts but kill the cuts aimed solely at the rich.

So why hasn't it happened? Because of opposition from within his own party. A tax bill could have been passed by reconciliation in the Senate, but for some reason it wasn't. It could have been passed in the House, but a combination of Blue Dogs and fainthearted centrists afraid of attack ads blocked it. And as much as we all like to pine for the days of LBJ and the "treatment," those days are long gone. It's genuinely not clear what kind of leverage Obama has over recalcitrant members of Congress. Not a lot, in any case.

I figure that Obama probably could have done more, but I'm not absolutely sure of that. What really happened was a failure of the Democratic caucus in Congress. That doesn't make as juicy a target, but it's a more accurate one. In this case, blame the party, not the president.

Republicans for New START

| Thu Dec. 2, 2010 1:37 AM EST

Five Republican secretaries of state who served the last five Republican presidents all say the Senate should approve the New START arms control treaty:

It is a modest and appropriate continuation of the START I treaty that expired almost a year ago. It reduces the number of nuclear weapons that each side deploys while enabling the United States to maintain a strong nuclear deterrent and preserving the flexibility to deploy those forces as we see fit....The defense secretary, the chairman of the Joint Chiefs of Staff and the head of the Missile Defense Agency — all originally appointed by a Republican president — argue that New START is essential for our national defense.

....Whenever New START is brought up for debate, we encourage all senators to focus on national security. There are plenty of opportunities to battle on domestic political issues linked to the future of the American economy. With our country facing the dual threats of unemployment and a growing federal debt bomb, we anticipate significant conflict between Democrats and Republicans. It is, however, in the national interest to ratify New START.

I have two questions: First, how can this possibly be a difficult vote for Republican senators? It should be a no-brainer. Second, what happened to Condoleezza Rice? Every other living Republican secretary of state signed onto this op-ed. Why didn't she?

Obama 2.0

| Wed Dec. 1, 2010 6:00 PM EST

Ezra Klein has a good post up today about Barack Obama's inexplicable ongoing dedication to bipartisanship in the face of mountains of evidence that Republicans simply have no interest in negotiating with him. It ends with this:

The White House's critics think the proof is in the election. Democrats just got "shellacked." Obama gained absolutely nothing by seeming more reasonable than his opponents. In fact, the Republicans ran some notably unreasonable candidates and still won the election. The question, they say, isn't why Obama wants this strategy to work. It's when he'll admit that it's failed.

I'll repeat something here that I said at a talk I gave last weekend: basically, Obama has another two or three weeks to prove he's not an idiot. During the lame duck session, a continuing public dedication to bipartisanship might make sense because there may still be a few bills that he can pass with just a few Republican votes. And it's easier to get those votes if he's not out in the Rose Garden every day telling the world that Republicans are all obstructionist assholes.

But — starting next year that won't be true anymore. Republicans will control the House, and in the Senate it will take a significant chunk of the GOP caucus to get anything passed. Sweet talking Olympia Snowe will no longer even arguably be a viable strategy. Obama's only hope is to draw dramatic contrasts with Republican orthodoxy, call them out relentlessly on their obstructionism and corporate obeisance, and try to rally public opinion to his side. It might not work, but there's no better alternative.

Obama's legislative strategy was defensible during his first two years because it might have been his best opportunity to peel off a few votes here and there and get stuff passed. But if he keeps it up next year, he's just being willfully blind. Next year is put-up-or-shut-up time.

Party Discipline

| Wed Dec. 1, 2010 5:03 PM EST

Dan Foster tweets:

Cornyn tells @NRO that "all incumbents" that voted against earmarks ban "need to be prepared for primaries."

John Cornyn is the chairman of the National Republican Senatorial Committee. Can you even imagine his Democratic counterpart saying something like that? Any Democratic counterpart? And no, alternate universes don't count.

Ireland's Problem

| Wed Dec. 1, 2010 3:33 PM EST

Via Paul Krugman, Barry Eichengreen writes today about the recent bailout of the Irish banking system. "I’m probably the most pro-euro economist on my side of the Atlantic," he says. "I’m also a believer in the larger European project. But given this abject failure of European and German leadership, I am going to have to rethink my position."

The problem is simple: Ireland's banks are insolvent, so the EU has provided the Irish government a truckful of money that it's going to use to guarantee its banks' debts. Basically, this means that bank bondholders are being bailed out via loans that Irish citizens will eventually have to repay. "Ireland will be transferring nearly 10 per cent of its national income as reparations to the bondholders, year after painful year. This is not politically sustainable, as anyone who remembers Germany’s own experience with World War I reparations should know."

So why not just let the banks fail and pay off their debts at pennies on the dollar? Answer: because a lot of their bondholders are French and German and British, and if they get stiffed there might be a domino effect throughout Europe. In other words:

Policy makers in Germany — and in France and Britain — are scared to death over what Ireland restructuring its bank debt would do to their own banking systems. If so, the appropriate response is not to lend to Ireland — to pile yet more debt on the country’s existing debt — but to properly capitalize their own banking systems so that the latter can withstand the inevitable Irish restructuring.

But European officials are scared to death not just by their banks but by their publics, who don’t want to hear that public money is required for bank recapitalization. It’s safer, in their view, to kick the can down the road in the hope that something good will turn up — to rely on “the luck of the Irish.”

As a resident of California, I have some advice for the EU: something good is really unlikely to turn up. Kicking the can down the road just makes the can mad. Like it or not, you're better off dealing with this stuff sooner rather than later.

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Is Julian Assange Guilty of Espionage?

| Wed Dec. 1, 2010 2:22 PM EST

Can the United States charge Julian Assange with violation of the 1917 Espionage Act? The whole idea seems crazy to me. U.S. law applies to crimes committed on U.S. soil or, at most, to crimes committed by U.S. citizens abroad. There's no way we can pretend that our laws cover actions taken by a foreign national working in another country.

Which just goes to show how much I know. A recent CRS report summarized the extraterritorial application of U.S. law and concluded that there's plenty of it:

Application is generally a question of legislative intent, expressed or implied. In either case, it most often involves crimes committed aboard a ship or airplane, crimes condemned by international treaty, crimes committed against government employees or property, or crimes that have an impact in this country even if planned or committed in part elsewhere.

Hmmm. Mostly ships and planes or crimes against humanity. But what about other kinds of laws? Here's some more from the report:

To what extent does international law permit a nation to exercise extraterritorial criminal jurisdiction? The question is essentially one of national interests....The most common classification of these interests dates to a 1935 Harvard Law School study which divided them into five categories or principles corresponding to the circumstances under which the nations of the world had declared their criminal laws applicable: (1) the territorial principle which involves crimes occurring or having an impact within the territory of a country....(4) the protection principle which involves the crimes which have an impact on its interests as a nation.

....If the territorial principle is more expansive than its caption might imply, the protective principle is less so. It is confined to crimes committed outside a nation’s territory against its “security, territorial integrity or political independence.” As construed by the courts, however, it is understood to permit the application abroad of statutes which protect the federal government and its functions. And so, it covers [...] conduct which Congress has characterized as a threat to U.S. national security.

.... General rules of statutory construction....The first of these holds that a statute will be construed to have only territorial application unless there is a clear indication of some broader intent. A second rule of construction states that the nature and purpose of a statute may provide an indication of whether Congress intended a statute to apply beyond the confines of the United States. Although hints of it can be found earlier, the rule was first clearly announced in United States v. Bowman.

....The natural implications of Bowman and Ford are that a substantial number of other federal crimes operate overseas by virtue of the implicit intent of Congress. In fact, the lower federal courts have read Bowman and Ford to suggest that American extraterritorial criminal jurisdiction includes [...] (4) counterfeiting, forging or otherwise misusing federal documents or checks overseas by either Americans or aliens.

If this is correct — and if I'm interpreting it correctly — it means that the Espionage Act might apply to Assange after all if (a) the text of the statute suggests an intent for it to apply overseas, or (b) the Department of Justice decides that Assange's actions are a threat to national security or can be construed as "misuse" of federal documents. Beyond that, of course, there's also the question of whether his actions violate the provisions of the law in the first place, and whether he has a First Amendment defense even if they do.

This seems like tenuous stuff (though Julian Ku says here that "The Espionage Act has long been held to apply to foreign nationals who commits acts while abroad") and in practice it's meaningless unless some foreign country is willing to arrest Assange and extradite him to the U.S. based on this legal reasoning. Which makes it even more tenuous. But not quite as outlandish as I thought, apparently. Further analysis is welcome from anyone with experience in this area.

(Via Opinio Juris.)

UPDATE: Mark Hosenball talks to some experts here and concludes that prosecutors "could face insurmountable legal hurdles" if they tried to bring a case against Assange.

UPDATE 2: Trevor Timm lays out the case here for believing that even if the Espionage Act can be applied to foreign nationals residing on foreign soil, WikiLeaks hasn't violated the act in the first place. So it's a moot point.

Net Neutrality Deal Getting Closer

| Wed Dec. 1, 2010 12:59 PM EST

Apparently a deal on net neutrality is close to completion:

Although the exact details of the plan have yet to be unveiled, analysts agreed that the FCC had made two big concessions to the US cable industry in its plan....Cable groups staunchly opposed a plan unveiled by Mr Genachowski earlier this year that could have led to price controls by the FCC — and that proposal now appears to be dead.

....The FCC has also, in effect, given a thumbs up to tiering practices that are already in place that allow companies to charge consumers based on internet usage. “The exception to that is if, for example, a cable company charges Netflix more to carry traffic because it is video content. That would not be permissable. But they could certainly charge by volume or by the speed that they are carrying traffic,” said Rebecca Arbogast, an analyst at Stifel Nicolaus.

I don't have a firm position on the issue of regulating cable companies as telecommunications services, which would have given the FTC authority over pricing, but I think it's probably secondary to getting some strong net neutrality rules put in place. What's more, if real net neutrality is in the works — and we won't know for sure until we see the details — I also don't have any problem with allowing internet providers to institute usage-based charges. That's a market decision, and as long as the charges are strictly bit-based and not content or provider based, that's fine. I have no problem with the idea that if you want more of something, you have to pay for it.

In any case, this tentatively seems like good news. Stay tuned for the details.

Privacy on the Web

| Wed Dec. 1, 2010 12:46 PM EST

Good news! The FTC is backing a plan called "do not track" that would "make consumer privacy the default position and would let Web users decide whether Internet sites and advertisers can build profiles of their browsing and buying habits as well as collect other personal information." Sounds great. But, um, there's a catch:

“I do not think that under the F.T.C.’s existing authority we could mandate unilaterally a system of ‘do not track,’ ” David Vladek, the director of the commission’s bureau of consumer protection, said Wednesday at a conference sponsored by Consumer Watchdog, a nonprofit group.

“There are ways we could coax, cajole and charm industry in that direction,” Mr. Vladek said. But, he added, “If the decision was made by Congress that ‘do not track’ should be put in place immediately, it would take an act of Congress.”

So this requires Congress to do something? Then I guess that's that. No privacy for you.

Quote of the Day: No Meddling, Please

| Wed Dec. 1, 2010 11:51 AM EST

From Stephanie Mencimer, on the bipartisan passage of the food safety bill yesterday despite tea party opposition:

Food safety may simply be an issue that doesn’t get tea party activists frothing the way, say, health care reform or auditing the Fed do. But what’s more likely is that the tea party is no more effective in fighting corporate interests than MoveOn.

Republican politicians care about the rich, not the tea partiers. As long as tea party interests align with the rich — or, at a minimum, don't interfere with them — everything is fine. But meddling with the primal forces of nature is always a no-no.